Potential C2F Project: Geothermal
- A geothermal plant developer has drilled and proven some production wells but is unable to raise sufficient equity to cover the costs of continued drilling to reach full capacity.
- Debt is not available due to uncertainties in costs.
- Risk barrier – Power Purchase Agreement or fuel sale agreement is insufficient to cover a loan at the discount rate required based on resource assessment
- Cost barrier – Power price reduced by reducing debt/equity ratio and reducing interest rate on debt
- Provide a C2F subordinated debt (at below market rates if justified).
- Use barrier analysis to quantify the amount of subordinated debt needed to cover the default risk