Foreword

Francis Ugboma sets out here to assist developers of sustainable energy projects in successfully framing and ultimately delivering the project … This can only happen when we have secured the required financing for our projects … the financial perspective plays as great a part as the technical and commercial considerations. His mission is an important one, because too few would-be developers understand this at the outset; and life is too short to be reinventing the wheel when mankind is in a hurry to heal the planet.

I learned the disciplines of project development and risk management at Enron in its pre-scandalous heyday when it was transforming the energy world for the better. There, as a Board director of Enron Europe and also of its flagship powerplant Teesside Power (a huge project-financed CHP in England), I saw ample proof of a vital truth. People who understand the financial and risk aspects before they embark on their projects and transactions do much better business than those who unexpectedly find themselves confronting the demands for rigor and conformity with the norms of financing that are made by many of the agencies they will meet as they progress their plans.

Even if these demands were to be arbitrary, developers would still need to meet them—because they are being made by the people who hold the purse strings! But they are not arbitrary and should not be resented as some kind of unwarranted hurdle or barrier. On the contrary, they represent sound disciplines, informative metrics, and proven structures, providing a critical, independent sanity-check on the viability of the project. The financiers and consultants are indeed marking the developer’s homework, as Francis puts it. To know in advance what criteria they bring to bear, and to be positioned to meet them first time, can only be positives for any project.

That’s not just for reasons of avoiding wasted time. The book quotes Mark Carney as saying that the global movement toward sustainable energy is the greatest commercial opportunity of our time, and very large amounts of money are being mobilized accordingly. But that doesn’t mean financiers will drop their standards when it comes to project selection wherever in the world that project is situated. There is a well-known saying (attributed to Emerson): Build a better mousetrap, and the world will beat a path to your door: but that can be misleading. Are you so sure your mousetrap really is that much better? If you have been guided by the relevant financial and risk management precepts from the start, you can present a much more confident case, with a better chance of succeeding. Conversely, if you haven’t had those principles in mind ab initio, you may not be able to retro-fit them into your project when the bankers start asking questions. You can’t fatten the livestock on market day.

More than 20 years ago, after leaving Enron, I was one of small group that founded an energy services company and Francis was one of our earliest and most successful new hires. As we built that company for eventual flotation on the stock market, we took pains to acquaint ourselves with how banks and investors would assess our business model in due course; the norms they would be looking for, the metrics they would apply. These considerations translated into disciplines they would expect us to implement. Following this prescription became second nature to us, and the business we built thrived accordingly, enabling us to go public as we had hoped and planned. They were good disciplines and served us well.

Francis has gone on to gain many other valuable experiences in the energy sector and is imparting much of this wisdom here. He has met, and met successfully, the requirements that financiers will make of developers. The structures and disciplines he describes are “the way of the world” as regards financing sustainable energy projects, and if perhaps that world is less familiar to players in frontier and emerging markets, with this book he is doing them a service indeed.

Nick Perry
March 2021

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