Private-Sector Projects have no involvement government involvement whatsoever, tend not to be considered “infrastructure” projects, and are usually smaller than “government backed” projects and “public-private partnerships”.
Private sector companies tend to do things that either make them money, save them money, or improve a process. As examples of this, let’s look at a recycling company, a factory and an oilfield operation.
In order to capitalize on a long term profit opportunity in its marketplace, the recycling company might invest is a waste processing technology that would more commonly found in a municipal or county waste-to-energy plant. When this type of opportunity becomes know to us, we are able to enter into a joint venture with the recycling company, delineate responsibilities, obtain financing and move forward.
To reduce its electricity expenses, a factory consuming 10 megawatts of base load power might entertain building a renewable electricity producing power plant provided by one of our manufactuers. If the factory is paying about $0.20 per kilowatt hour for electricity from the utility, and we can set them up on a 20 year PPA at $0.15 per kilowatt hour, they will save a nickel per kilowatt hour. They consume 87,600,000 kilowatt hours per year, an annual savings of $4,380,000!
The oilfield operation has multi-fold needs. Due to increasingly more stringent regulations on how water is handled, they MUST have a better way to address wastewater. They also have problems with the availability of reliable electricity, which they need a lot of. Most locations are so remote, even if there are power lines, it can be hard to tell how much or what you’ll get out of them. Building more power lines is not an option due to the extreme expense. So most operators run diesel gensets, which foul the air. The solution here, is to build a combined cycle plant that is custom tuned to clean how ever many barrels per day the operator wishes, coupled with an electricity producing power plant. The power plant will be made to produce more than enough power to address the water equipment’s needs. With this “parasitic load” accommodated for, there will be electricity to run the rest of the operation. We can even build them a plant large enough to sell electricity on PPAs to neighboring oil fields!
Available Private Sector funding packages require the project be at least a $100,000,000, where the project developers come up with 10 to 20 percent of their project’s budget, in order to receive: 80% to 90% funding (inverse of up front amount), at 3 to 5%, with a repayment term of 10 to 15 or 20 years, and a 2 to 5 year ramp-up grace period.
This is a Structured Project Funding package where the project will receive a contractually specified number of tranches of funding, over a contractually specified period of time, until the entire project budget has been released.