Biomass

DAI’s appraisal services have supported biomass projects in a variety of financing applications, including project finance and lease. DAI is certified by the American Society of Appraisers and can valuation studies exactly to your level of need, including engineering evaluations of the installed equipment and also consideration of market-level details such as feedstock price and availability.

Recent Experience: For a prominent middle-market lender, DAI provided an appraisal of a wood-fired biomass facility in California. In addition to the most likely value of the facility, DAI also used Monte Carlo simulation analysis to examine the value of the facility in the presence of uncertainty about energy prices, feedstock availability, and price. The result provided support to the lender’s credit committee that demonstrated that the project’s credit metrics could support a variety of stress scenarios.

In many instances, a fossil fuel-fired facility – particularly one later in its design life – may find that a greater economic benefit can be realized by incorporating a renewable resource into its operation. Whether blending fuels or repowering, DAI can determine the value of all alternatives available to a particular facility from both an economic and a logistical point of view. Key factors in the decision-making process, including capital expenditures, operational limitations, state and federal incentive availability, and feedstock availability, are considered.

Recent Experience: DAI evaluated the potential for a waste coal facility to co-fire with biomass upon expiration of its PPA. By investigating the incremental capital expenditures, environmental permitting issues, and biomass fuel availability in con-junction with the potential economic benefits of new revenue sources (e.g., RECs), state and federal incentive availability, and a prolonged operating life, DAI’s analysis assisted the facility’s owners in pursuing a strategy fundamental to the plant’s future operation.

Many biomass facilities are eligible for special rates from regulators and utilities. In some cases, these rate structures are mixtures of administratively-determined and market-determined components. Accurately forecasting future revenues requires both the industry experience in rate evaluation and the economic insight to forecast competitively-determined market rates.

Recent Experience:  DAI prepared an energy price and revenue forecast for the Shasta biomass project for a large money center bank. The project received revenues based on California’s SRAC rate structure – an administratively-determined rate based on market-derived input parameters. DAI developed a model to replicate and forecast the SRAC rates, while illustrating to clients how uncertain market forces would influence SRAC prices.