“The massive investment in PtX in the coming decades requires available long-term financing sources at scale. EIFO has a keen interest in supporting these projects, providing senior financing together with commercial banks. As the PtX-projects represent new technology and offtake structures - the task ahead resembles that of the early days in the wind power industry”
Anders Thorsen, Senior Vide President, PtX & CCUS Origination, EIFO
![Anders Thorsen 260x260[86]](https://www.topsoe.com/hs-fs/hubfs/2023%20SAF%20Study/Images/Interviewee%20photos/Anders%20Thorsen%20260x260%5B86%5D.jpg?width=260&height=260&name=Anders%20Thorsen%20260x260%5B86%5D.jpg)
EIFO ’s experience demonstrates the truth of SAF: in a world of shifting legal frameworks and production incentives, many innovative technologies have limited opportunities to scale without government guarantees available. Anders Thorsen sees the market swiftly evolving from the demo-/pilot project type in the offset into having more professional project developers and investment funds entering the PtX sphere – with an increasing role for PtX in EIFO ’s portfolio.
Read the Full Interview
EIFO (formerly EKF) is Denmark’s Export Credit Agency. EIFO works together with commercial banks to facilitating long term financing solutions for projects in and outside Denmark. While owned and guaranteed by the Danish State, EIFO operates on commercial terms and adds financing capacity through its participation. Today, much of its portfolio is based on the financing of wind power projects, but it’s looking further ahead.
As an EIFO Senior VP, trained economist Anders Thorsen is helping drive that diversification, working with commercial bank project owners to shape the bankable scenarios. The essence is to strike the right balance between the differences in mandate and risk appetite at the sponsors on one side and EIFO / financiers on the other.
For SAF producers, an understanding of the drivers that make a project bankable is essential. For EIFO there is a keen interest in early dialogue with developers and sponsors on these issues, so that more projects can succeed to the benefit of the environment while creating economic growth at project-level as well as in Denmark via exports.
DE-RISKING TO ENABLE INNOVATION
For most structured finance projects, the core task is de-risking. Analyzing a project risk can be split into five areas: technical, operational, commercial, legal, and environmental. For each area the identified risks must be addressed and mitigated to the greatest extent possible. The level of de-risking a project spills into the capital structure of a project i.e. the mix of equity and senior financing available.
Technical risk assessment looks at the innovator’s technology as well as its readiness for scaling up in the market. Construction & completion risks are also a key part of the analysis of the relevant contractors. Operational risk assessment concerns the robustness of the project during operation, which also trickles into the cash flow generation of the project. Commercial risks look at the surrounding ecosystem of suppliers to the project and the off takers contracting for the output, ensuring there are buyers for what’s on sale. The legal area takes in contractual terms, including incentives and mandates that make the venture viable, while environmental efforts focus on impact and compliance – such as whether the project will deliver the green outcomes it claims.
WATCH ANDERS THORSEN TALK TO SYLVAIN VERDIER ABOUT
"THE TRENDS IN FINANCING SAF PROJECTS"
INCREASINGLY INVESTABLE, YEAR BY YEAR
Some 70 percent of EIFO’s current portfolio is in wind energy, both onshore and offshore. EIFO is known worldwide as a leading public investment partner in wind, with projects as far apart as Canada and Australia.
Looking ahead to the emerging technologies of PtX, Anders sees a parallel with the last +20 years. Today, PtX is in its infancy however there is a massive interest to get these projects going, including a strong focus on the future potential of SAF production.
A DIVERSE PORTFOLIO OF SAF OPTIONS
Anders sees the decades to Net Zero filled with a mix of technologies and projects at scale, with agencies like EIFO expanding their focus to enable them. The key for both EIFO and their financing partners (and sponsors), is to share experience & information to help these new projects materialize.
INNOVATIVE TECHNOLOGIES NEED GOVERNMENT GUARANTEES TO SCALE
Denmark has long held a green outlook, and its export credit guarantee agency is no exception. Its ability to take a long-term view of each project and structure its financial plan to make it attractive to lenders suggests EIFO will be a major player in bringing Danish SAF technology out into the world.
