You know your business, but your stakeholders don’t.
Perhaps your core business is not bioenergy… It is certainly not the core business function for the stakeholders to your bioenergy project, such as banks and lenders. Bioenergy systems are complex, but they don’t have to be complicated. The greatest threats to the success of your project are the “unknowns” – real or perceived. The complexity of these systems is nothing to fear, yet it creates fear and doubt in those that you must acquire some level of approval from, such as internal management, lenders, investors, regulators, and even community leaders. Fear and doubt can be project killers, and can significantly add to the costs of developing your project.
Fortunately, there’s a solution to this doubt and fear – education and communication. The education of stakeholders is best accomplished through sharing knowledge, experiences, and expertise of professionals whose core business is bioenergy systems – like Cavanaugh.
The most effective, and generally accepted, manner of communicating the knowledge, experiences, and expertise to overcome the fears and doubt associated with your bioenergy project is through a Feasibility Study. In fact, most banks and lenders require a Feasibility Study, validated by a third-party, prior to committing funds for the project. (More information on validation can be found here)
A Cavanaugh Feasibility Study includes:
To determine the project’s cost benefit analysis and analyze the expect return on investment.
The capacity and stability of the markets for all the off-takes, including capitalized environmental attributes, sufficient to ensure success for the term of your project.
This should support the financial information supplied in the study by analyzing the processes in a summary format to do long term planning and troubleshooting and confirm the intended inputs, outputs, fields, program and procedures.
What are the critical operational parameters, and the performance metrics that will aid your management team in achieving optimum operations?
This process examines the feasibility studies to provide an understanding of top-down risks, taking into consideration the project’s pathway, target market, logistics, and considers investments and funding for any underlying developments.
Guarantors, such as USDA and EPA, similarly require a third-party validated Feasibility Study prior to providing grants and loan guarantees. In fact, the USDA has developed guidelines and templates for the development of Feasibility Studies for these purposes. The USDA guidelines are often referred to by other State and Federal agencies, as well as banks and lenders. (More information about the USDA guidance can be found here).
Cavanaugh also provides Independent Engineering (IE) Services to lenders and financiers to give opinions on the financial model and the project’s technical aspects in an unbiased manner, this may include making an assessment of the Power Purchase Agreements, EPC contract, service agreements, feedstock agreements and evaluation of the Operations and Maintenance (O&M) agreement.