Preview: Project Finance Playbook

This summer, NER is joined by Ross Mazur, impact MBA corporate sustainability fellow from Colorado State University. Ross, a mechanical engineer and project manager focused on renewable fuels, is learning and contributing across our business development and diligence teams. By the conclusion of his fellowship, he will have co-authored a company whitepaper, which he previews for us here.

 

By Ross Mazur; Impact MBA Corporate Sustainability Fellow

Behind the scenes at NER, we’re drafting a whitepaper, the Project Finance Playbook, which will demonstrate how project finance is often a superior method to finance capital intensive first commercial technology deployments. The Playbook is structured to be both accessible and actionable to startups in the emerging energy and carbon technology space.

The Playbook will recount a brief history of project finance (having roots in Roman cargo-carrying merchant voyages). It will also explore the opportunities inherent in project finance, including risk management and minimally dilutive completion of large capital intensive projects. It then discusses project finance conceptual theory, with an emphasis on overcoming interest alignment challenges via purpose-driven contractual structures. The next section, full of acronyms, walks through project finance key stakeholder contract types, including construction contracts. Debt and equity sizing and market assessment are then reviewed to help identify applicable lenders and investors. And that’s just the first chapter!

The second chapter walks through commercial requirements, focusing on market strategy, building a term sheet, and the role of project risk and a credit rating mindset to speed-up development cycles and decrease time to financial close. The third chapter describes technical requirements, going into the details of scale-up strategy and development program planning to be best suited for proving efficacy of a technology at commercial scale. The last chapter, “A Vision for Success,” connects the dots for an energy technologist (or project developer) to more confidently navigate the project finance process.

The Playbook will be out by the end of the summer and we look forward to sharing it with our network. We appreciate peer review and we would be glad to hear (and possibly reference!) your perspectives on the topic. Or if you are just excited about the concept and would like to be notified when the Playbook is released, subscribe to our newsletter or reach out to us at [email protected]

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