The Bio Energy Experts

Olympic effort

August 16, 2012

In the aftermath of the Olympic games, as London prepares for the Paralympic games, I find myself returning from holiday to project and client meetings developing new business opportunities in BioEnergy. Winding the clock back 6 years, there was some interest in BioEnergy from the financial sector. A number of projects were under development in the UK alone. Most of them have been shelved. Very few have made it into successful operation.

What has got in the way?

Political flip flopping has a key role in the sector. Investors were looking at stable market structures and this stability has shown cracks and signs of crumbling. It is difficult to invest if the political framework that makes a market is unstable.

Funding became very difficult to get hold of. We have seen global credit issues. Business operating cargo to cargo, struggling to put in place working capital. Investors drawing in their horns and walking away from projects and even portfolio assets.

Short term market structures, that favour established business with the ability to raise capital off balance sheet as a strategic move. Customers buying spot cargos, or short term strips delivered over a quarter are great for established players with supply chains in place, but create a barrier to entry for entrepreneurial developers.

Concerns over sustainability of feedstocks have been raised by some quasi academics and activists. The poor provenance of some supply chains in relation to human rights, ecological impacts and broader climate matters is plainly evident. However, the arguments have been developed poorly and created confusion around what BioEnergy sources are plainly sustainable. This scatter gun approach to campaigning by the protagonists has created the uncertainty that leads to policy makers worrying about votes.

So, it feels like an Olympian effort to maintain energy and focus to deliver BioEnergy projects. In the face of poorly defined opposing campaigns and markets that are largely reluctant to engage on long term positions, developers need patience, skill and determination to get all the little details right.

It does seem that investors are beginning to recognise the role of BioEnergy solutions again. Whether this will lead to gold medal success is unclear. But success for an Olympian is in many ways defined by getting to the games. So I wish continued good luck to those looking to get into BioEnergy markets.