Presentation Outline • Overview of Westar • Programs Affecting Bioenergy Industry • Policy Outlook • Policy Recommendations • Question & Answer Session
Mission Statement Westar Trade Resources is committed to assisting clients to develop sustainable businesses in three ways: Sustainable Ecology - Providing solutions that protect, preserve and enhance the environment for the needs of today without detracting from the capability to provide for the needs of future generations. Sustainable Technology - Developing new and improved sustainable technologies that can provide technical solutions for a wide range of problems and also create new opportunities. Sustainable Profitability - Creating long-term financial stability by developing and executing cost-effective financing solutions, risk strategies, and an adequate capital base.
Business Development Services Include:Planning Developing FinancingFeasibility Studies Marketing Development Traditional FinancingBusiness Plans Off-take Contracts Non-TraditionalSite Selection Product Development FinancingFeedstock Sourcing International Marketing, USDA & DOE LoanRisk Assessment Development & Financing GuaranteesBusiness Development Government GrantsStudies OPIC and Ex-Im Bank Financing Governmental Liaisons
Key Client Sectors Technology Investors & Banking & Providers & Industry Finance Stakeholders Stakeholders Stakeholders • Biofuels & Bioproducts • Traditional & Investment • State & Federally • Renewable Power Banks Charted Banks • Value-Added Agriculture • Venture Capital Companies • Investment Banks • Water Production & Recycling • Multinational Corporation • Equity Providers • Smart Grid Technologies • Family Office & Hedge • Family Offices & • Sustainable Fiber Production Funds Hedge Funds • Energy Efficiency • Oil & Gas Companies • International Technologies • Food Production Development • Transformational Technologies Companies Banks • Air Transport Companies • Air, Land, & Water Fuel Users
Westar Bioenergy Clients $54 million USDA Loan Guarantee $99 million USDA Loan Guarantee $250 million USDA Loan Guarantee $105 million USDA Loan Guarantee $232 million USDA Loan Guarantee $88 million USDA Loan Guarantee *Westar has assisted clients in obtaining over $900 Million in total financing. 4
Programs Affecting Bioenergy Industry Current ARRA EISA Section DOE Legislation 2009 of 305, Rural Budget 2007 2008 Farm Bill Programs Electrifica Appropria tion Act of tions 1936; 7 U.S.C. 904, 935 Type 1603 Tax RFS2 USDA USDA USDA USDA Value- B&I USDA DOE Grant 9003 9007 9011 9008 Added Loan Rural Grants Loan Grant BCAP BRDI Producer Guarant Utility Progra & Grants Grants Grant ee Service m Loans Program ProgramPellets X x x x x xPower X x x x x x xThermal X x x x x x xBiogas X x x x x x xAdvanced x x x x x x x xBiofuelsChemicals x x x x
1603 Tax Grant - $11.6 Billion • As of May 8, 2012, the 1603 Program had awarded $11.6 billion to almost 38,000 projects and $38.6 billion in total investments. • Awards under the program have been made to all 50 states. Eight states have received over $350 million in 1603 program awards. Source: NREL: 1603 Treasury Grant Expiration: Industry Insight on Financing and Market Implications
USDA 9007 Renewable Energy for AmericaProgram (REAP) - $800 million (2003-2012) • The REAP Program has assisted rural producers and small businesses in developing thousands of renewable energy and energy efficiency projects, and created or saved thousands of jobs. • REAP loans and grants allow for a longer- term loan for these type of investments that can be paid for with the energy savings or profits from the investment. • Since 2003, REAP has funded more than 1,000 solar projects and over 560 wind projects.
USDA 9003 Biorefinery Loan GuaranteeProgram – $1.08 billion • Program has been very successful at assisting in the construction of advanced biofuels projects. Currently, nine projects have been awarded with a combined total loan guarantee value of over $1 billion. • Another $1 billion leveraged in equity and provided a bridge for technology risk for a first of a kind commercial facility. • This program has been instrumental in bridging the technology risk gap for financing, and getting some steel in the ground as well as establishing commercial production targets for RFS2.
RFS2• With long development timeline and barriers to entry for advanced biofuels, the RFS has stood as the best worldwide development policy platform.• Stability and strength of a long-term policy like the RFS has encouraged investors to make these long-term investments with the goal of an assured, long-term market in the future.• Total private sector investments surpassed $10 billion in 2011 of which $3.8 billion was in new biofuels financing or in advancing early-stage companies. The U.S. leads the world as the leader in new investment, with 22 transactions totaling $1.104B (Source: Biofuels Digest, “Biofuels DealFlow”).• If the RFS were to be modified or eliminated, investment dollars would be quickly diverted into other sectors.
USDA Business and Industry GuaranteedLoan Program - $1 billion for 2013 • Strong program with mandatory appropriations each year, and can be used for a wide variety of projects in rural areas, including all of the types of renewable energy projects that we are examining. • Recent drawbacks included the lowering of the lending limit from $25 million to $10 million. As most renewable energy and biochemical projects are usually over this limit, the B & I program will have a diminished ability to commercialize the industry in the near term.
USDA Rural Utilities Service - $263 million in2012 • As recently reported in Biomass Magazine, the Rural Utilities Service (RUS) recently awarded $263 million in loan guarantees to three biomass power plant projects. • As other sources of financing are drying up or changing the in the renewable electricity space, this program is a good one to consider for future funding if a company is committed to walking through the process and can live with a slow approval process. • Funds are available as the RUS has been a fixture at USDA since 1936, and funding for this program is provided by interest and principal payments from other loans made over the years to fund most of the rural electric and telephone cooperatives.
Policy Recommendations • Expedited review process for the USDA 9003 program: Because the review process is shared by USDA, DOE, and OMB, a more seamless, transparent, and customer service-oriented approach would assist in implementing the process of approval and allow for the evaluation and review process to proceed in a more timely manner. • Increased Research and Development Dollars: This is important to establishing lower cost technologies, better feedstocks, and more efficiency in the marketplace. However, the majority of these dollars need to be directly tied to commercialization performance in the short term as opposed to basic research and development.
For more information, contact:Cindy Thyfault, Founder and CEO Westar Trade Resources 2030 Main Street, Suite 410 Dallas, TX 75252 214-320-0900 www.westartrade.com