Milbank LLP
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PRACTICE NOTES
This Practice Note sets out the principal funding routes for biomass projects and reviews the standard project finance architecture and documentation in a biomass context. As external lenders chiefly focus on a project’s ‘bankability’, it also identifies the key risks they should assess when backing a biomass scheme.
Introduction
What is biomass?
Biomass is a broad term for organic matter sourced from plants or plant-derived materials used to produce heat, electricity or transport fuel. More specifically, Forest Research—the research agency of the Forestry Commission (FC) and Great Britain’s leading organisation for forestry and tree-related research—defines biomass as biological material from living or recently living organisms, such as wood, crops and the biogenic components of municipal, human and animal waste.
For further information on biomass technologies, see Practice Note: Waste to
Banking & Finance
PRACTICE NOTES
Types of tidal and wave technologies
Tidal energy encompasses methods that capture the force of ocean water surging during the ebb and flow of tides. At present, tidal power falls into three principal types: tidal stream, tidal barrage and tidal lagoon. Tidal stream employs carefully sited turbines, either floating or fixed to the seabed, to extract energy from moving water as the tide comes in and goes out. Barrages are constructed across rivers, bays or estuaries, acting as a dam that holds water as the tide rises and releases it through turbines to generate power. Tidal lagoons are comparable to barrages, retaining water within a man-made coastal structure and generating power through turbines as the lagoon fills and empties. Wave energy describes technologies that harness kinetic energy from changes in the height and speed of ocean swell. Wave power is still in its infancy and there is no
Banking & Finance
PRACTICE NOTES
Introduction
An offshore wind farm is a generating plant comprising all the infrastructure needed to capture and gather wind energy, convert it into electricity, and securely deliver it to the main power network or a nearby local grid as required. Offshore wind is gaining prominence as a renewable solution to address climate change, with the UK and Europe leading globally in the development of large-scale offshore wind farms today. Though the recent gas shortages and spells of low wind in Europe have revealed the fragilities of relying on offshore wind for energy security, it unquestionably remains a crucial and growing share of the global energy mix, bolstered by rapid expansion in China. In recent years, the European offshore wind industry has flourished, most notably in the UK, which ranks among the largest markets and hosts several of the biggest operational offshore wind projects
Banking & Finance
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