Finance your VPP like a power plant, based on cash flows
Aggregating energy efficiency and demand response projects in a FLEXmarket requires access to the right kind of capital. There are upfront costs for prospecting, selling to customers, installing measures, and paying customer incentives, while payment to the aggregator comes on the back end after the performance is verified. So how does a company bridge this gap between upfront costs and the project payment?
The answer is Virtual Power Plan (VPP) Project Finance. Through VPP project finance, an investor pays a project aggregator a portion of future earnings upfront based on the value of future cash flows from a portfolio of projects. Turn your payment cash flow into working capital! |
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This structure quickly puts cash back into the aggregator’s business while providing a stable and predictable income to undertake more FLEXmarket projects.
Traditional power plants are financed based on the value of the energy they will produce and sell, not merely on the borrower’s credit or the asset’s value. If aggregated efficiency and demand response are to compete with power plants as part of the utility of the future, we need to finance these resources using the same infrastructure finance tools.
Why finance cash flows instead of taking a line of credit from a bank? Credit lines are based on a company’s creditworthiness, so if a bank thinks your balance sheet is sound, they may offer a form of financing. However, there may be strings attached — you may need to maintain specific debt ratios or put up personal collateral/company assets to secure a line of credit.
VPP Project Finance is not based on credit. Instead, just as a power plant is financed based on the energy it will produce, VPP Project Finance is based on the value of energy savings generated by your projects. Do you have a portfolio of high-quality projects with consistent, measurable savings that reduce the need for utilities to generate power in another way? Then you can finance the group of projects and get paid faster. The amount you can finance is not tied to your company’s balance sheet but rather to the quantity and consistency of savings you produce for your customers.
This means that VPP Project Finance can be a virtually unlimited source of capital without putting the burden on your company’s credit and balance sheet. Bundle your projects, agree on finance terms with an investor, and then you will have access to more operating capital that enables you to undertake more projects.
Getting Started
Talk to Recurve today! VPP Project Finance is designed to work with FLEXmarket programs. We can evaluate your projects’ past performance, which will let you forecast how much new projects are worth in the FLEXmarket. We will help you enroll new projects in FLEXmarket and connect you to investors who want to back your hard work.
Traditional power plants are financed based on the value of the energy they will produce and sell, not merely on the borrower’s credit or the asset’s value. If aggregated efficiency and demand response are to compete with power plants as part of the utility of the future, we need to finance these resources using the same infrastructure finance tools.
Why finance cash flows instead of taking a line of credit from a bank? Credit lines are based on a company’s creditworthiness, so if a bank thinks your balance sheet is sound, they may offer a form of financing. However, there may be strings attached — you may need to maintain specific debt ratios or put up personal collateral/company assets to secure a line of credit.
VPP Project Finance is not based on credit. Instead, just as a power plant is financed based on the energy it will produce, VPP Project Finance is based on the value of energy savings generated by your projects. Do you have a portfolio of high-quality projects with consistent, measurable savings that reduce the need for utilities to generate power in another way? Then you can finance the group of projects and get paid faster. The amount you can finance is not tied to your company’s balance sheet but rather to the quantity and consistency of savings you produce for your customers.
This means that VPP Project Finance can be a virtually unlimited source of capital without putting the burden on your company’s credit and balance sheet. Bundle your projects, agree on finance terms with an investor, and then you will have access to more operating capital that enables you to undertake more projects.
Getting Started
Talk to Recurve today! VPP Project Finance is designed to work with FLEXmarket programs. We can evaluate your projects’ past performance, which will let you forecast how much new projects are worth in the FLEXmarket. We will help you enroll new projects in FLEXmarket and connect you to investors who want to back your hard work.
Turn Your Payment Cash Flow Into Working Capital
