For some time in The Digest, we have examined the problem of matching capital to projects. As Ecostrat’s Jordan Solomon observed at ABLC Next a few weeks back, “the vast majority of projects are given junk ratings, if they can get rated at all.” And that leaves aside all the fine technologies that falter or find disheartening delays in raising capital as they make the journey from concept to technical readiness. Meanwhile, feedstock resources remain under-utilized, petro-economies remain untransformed, and those who are passionate about emissions, domestic employment or energy security remain unsatisfied.
For too many bio-based projects, it is not a question of surviving the Valley of Death, it is about surviving Slaughterhouse Five.
To address this challenge, along comes a shiny, almost unheard of process for developing bio-based projects — the Maine Born Global Challenge.
The founders sum up the goal, thus:
To commercialize “innovative technologies by providing physical locations and real projects for market expansion and value creation. Companies of complementary technologies will be grouped into project teams, assigned to specific power plant locations, given funding for business/implementation plans and provided with investment/project financing for project execution.”
Which is to say, a soup-to-nuts development and financing system — designed to address the capital inefficiencies that have plagued the sector (capital allocated to sketchy projects that fail, capital not allocated to strong projects that starve).
It is something more interesting than the theme of the past five years: capital light. For as Cellana CEO Martin Sabarsky once observed to The Digest, “capital light is a misnomer, because at the end of the day, to achieve anything at all for investors there has to be scale and someone has to put in a lot of capital.”
It’s All Titled “Stored Solar”
Right now, solar is all the rage, so companies that used to talk in terms of biofuels talk in terms of solar fuels, and we get it. So, it’s not a huge surprise that “feedstock,” under this initiative, has been renamed “stored solar energy.” Which it is. And since the over-riding problem that perplexes solar developers is how to store solar energy, ‘stored solar’ sounds a lot more interesting these days than the ‘bioeconomy’ to a lot of investors. So, just get going with the new nomenclature, and you’ll be fine.
The State of Maine has committed resources from the Department of Economic & Community Development, the Department of Agriculture and Forestry and the Department of Environmental Protection to support the full implementation of these projects in a timely and efficient manner.
Where Do You Fit In?
The Challenge covers a wide range of sectors, among them: Waste Collection, Biomass Handling & Storage, Algae/Other Unused Resources, Boiler Efficiency, Pyrolysis, Hydro-Processing Fermentation, Gasification, Methane Collection or conversion, Hydro-Thermal Carbonization, Biochar/Fertilizers, Greenhouses, Aquaculture, Sustainable Farming — and more.
The Maine Born Global Challenge aims to source proven technologies and forward-thinking strategic partners that are brought to create a sustainable, closed-loop circular economy to rejuvenate the rural areas with the shuttered paper and pulp plants as well as existing biomass to energy plants.
The Challenge is the first of its kind, in that it truly focuses on the commercialization of innovation — and focused on Maine’s old pulp & paper industry infrastructure and feedstock supply. Not to mention waste resources that any state has: organic food waste, MSW, construction waste and so forth.
Someone has finally come to the conclusion that there isn’t going to be found, anywhere soon, a better combination of feedstock and aggregation infrastructure than the pulp & paper industry — and that the old-line industry, excepting a few cases, is simply too financially weak to take the steps forward to repurpose those substantial assets. Maine came to the realization that the “same-old” approach to project formation was going to result in the “same-old” result in terms of project creation: only old-line projects can be financed by old-line project financing, since that financing structure, at its heart, avoids the very technology risk that fuels the economic transformation.
The Assets at Hand
The State of Maine has a unique combination of factors such as sustainable biomass supply, existing sites with operating biomass to energy plants, operating woodyards and transportation on major interstates and rail. These factors combined with the fact that Sponsor Owners already have revenue-producing energy plants in place is a major incentive to investors sensitive to market risk. The use of federal loan programs that buffer innovation risk levers un-bankable projects to become financially feasible.
The initiative is broken down into four distinct phases:
• Phase 1: Pre-qualification (Ends Mid-January 2017)
• Phase 2: Team Organization (March 2017)
• Phase 3: Project Planning (May 2017)
• Phase 4: Project Execution (2017-2019)
The Project’s Directors
Perhaps surprisingly and certainly happily, the state of Maine has done something that only a handful of states such as Iowa, California, Oregon, and Minnesota have attempted: a relatively hands-off approach that puts innovation squarely into the hands of experienced innovators — rather than into the apply-to-state-authorities-and-ye-shall-be-judged approach that has been traditional with innovation grant programs since time out of mind.
Synthesis Venture Fund Partners will be directing the Maine Born Global Challenge by establishing long term partnerships with corporations and entrepreneurs who share their vision for innovation and value creation. Synthesis is a Venture Fund Partner which bridges the gap between traditional project financing/private equity and the more entrepreneurial venture capital models. Synthesis’ role is to assist with financing, government support, policy, and technical due diligence to ensure the success of innovation commercialization. Synthesis works on a case-by-case basis to facilitate the right mix of funding mechanisms including equity and other financing alternatives to accelerate growth to commercial scale operations.
The Main Born Global challenge website is here.
This article was originally published by Biofuel Digest and was republished with permission.