Tuesday, December 6, 2011

Mid-Day Update: Show Me the Money!

And we’re off! After an early morning registration, the Waste Conversion Congress, presented by Renewable Waste Intelligence, officially kicked off at 8:30 am with a warm welcome by Scott Green, Clean Tech/Regional Policy Officer. This is an excellent location for the conference because Mayor Reed of San Jose has made gasification demonstration a city goal. He hopes to have created 25,000 clean tech jobs by 2022 – impressive yet feasible given the progress they are making, we think!

The first session we sat in was called Financing Your Waste Conversion Project and was presented by John May, managing director of Stern Brothers & Co., an investment banking firm in Chicago and St. Louis. May is responsible for developing the firm’s renewable energy practice. He was joined by Mark Riedy, a partner at Mintz Levin and who serves on the general counsel of the American Council on Renewable Energy (ACORE), and Jonathan Silver, executive director of the Loan Progams Office at the DOE.

It was a sobering conversation as the trio explained that federal funding is going away and that most of the government grants such as 1603, will not be renewed after they expire. The message is that this isn’t the merchant-funding environment of the past. The sooner we accept it and move on, the sooner we can focus on what can work right now.

That being said, there were some good nuggets to take away from the lecture:

Ø    Municipal solid waste bonds are working. Projects will pay a higher interest rate but there is a great appetite for this high-yield paper.

Ø    Projects in some other countries will be easier to fund than domestically. Brazil has been mentioned as an example of a country that is open to projects right now.

Ø    The DOD is a great place to focus because it is coming into new money in 2012.

Better BTU Take: Too many developers are out there scrambling for funding because they’ve spent their own risk capital getting the project partially-funded. We suggest starting with a funding model first and then working your way backwards. Try to clearly understand what it will take to get a project funded BEFORE you empty your savings. The good news is that there are ways to get things done if you’ve done your homework.

From San Jose, Calif. we’re signing off!

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