Investment Appraisal Checklist

PEI typically takes at least two months for a full investment review dependent on its current workload.

Appraisal Checklist for Investments in Clean Energy Projects
Shareholding and ownership

• There is a clear shareholding and ownership structure which is reflected in a well structured Shareholders’ Agreement.
• The owners and sponsors of the project have enough verifiable financial resources to contribute as equity according to the financial institution’s minimum requirements.
• The owners and sponsors of the project have enough collateral and/or other guarantees to provide whenever required.
• The owners and sponsors of the project have good track record and experience in implementing a project of similar nature and magnitude.

Feedstock/fuel aspects

• The ownership of fuel (if biomass), or waste water (if biogas) or water rights (if hydro) is ascertained.
• The availability of fuel is surveyed and is proven to be available and enough for the use of the energy plant.
• An agreement for the supply of fuel (Fuel Supply Agreement) on a long-term basis (at least as long as the duration of the loan) is reached.

Technology supply, construction and operation

• Conceptual engineering has been done to ascertain the configuration of the plant and the technology has been or will be selected appropriate for the chosen system.
• The main technology supplier(s) have been or will be selected through a transparent and competitive process and their reliability/reputation ascertained.
• The complete scope of supply has been established and a turnkey supplier or an integrator (in the case of non-turnkey supply) has been or will be selected.
• The equipment supply and construction contract reflects crucial aspects such as fixed costs conditions, performance guarantees and liquidated damages.
• An operation & maintenance (O&M) programme has been defined via a competent in-house team or a reputable external O&M company.
• The off-taker of energy (power and/or steam) has been ascertained and a sound, long-term agreement (Power Purchase Agreement) obtained.
• If electricity is sold to the grid or to a third party, the regulatory, logistical and technical aspects have been studied and ascertained.

Commercial viability and financing aspects:

• The financial analysis shows that the project is viable using conservative assumptions at different likely scenarios.
• The financial modelling shows acceptable cash flow and adequate debt service coverage.
• There are verifiable commitments from banks or financial institutions for the provision loan or other financial instruments appropriate for the project, or at least, the Information Memorandum summarizing the major aspects of the project has been prepared for submission to the financing institutions.

Other aspects, including environmental and development issues:

• The project has verifiable positive impact on the environment in terms of GHG mitigation, local pollution control or other climate change issues.
• Studies and investigations related to the project development have been conducted such as: Environmental Impact Assessment, Fuel Availability Study and Feasibility Study.
• Permits, consents and other documentary requirements have been ascertained and completed.
• Risks have been thoroughly assessed, adequately mitigated and properly allocated to the relevant and competent parties.
• Acceptance of the community and relevant interest groups has been obtained to implement the plant.