Q&A: Akeida Capital Fills Funding Gap For Clean Energy Projects

Sep 23 2010 | 11:04am ET

Akeida Capital Management was founded in 2007 by portfolio managers Harvey Abrahams and David Kandolha, to invest in carbon reduction, energy efficiency and renewable energy projects.  In late 2009, the portfolio managers launched the Akeida Loan Portfolio to invest exclusively in U.S. renewable energy infrastructure projects.  The financial crisis significantly constrained access to credit for small to mid sized renewable energy projects. With a reduction of tax equity players and traditional lenders targeting projects over $100 million, Akeida has filled a critical gap in the renewable energy project finance market. 

What types of projects do you focus on?

Akeida specializes in providing project developers with “creative capital” in the form of senior secured and mezzanine debt financing solutions. Akeida seeks late stage renewable energy projects that are ready for construction, in construction or operational. Projects must utilize a previously commercially deployed technology, complete permitting and secure essential contracts such as fuel supply, energy sales, transmission and Engineering Procurement and Construction agreements. Akeida targets investments that have a cash flow within 6- 12 months and typically exits investments within 24-36 months of capital deployment.

What renewable energy sectors and technologies do you think hold the most long-term promise?

Akeida is technology agnostic, we limit our investments to projects that utilize commercially proven technology.

Are there any investments that you have made recently that are particularly interesting?

This July, Akeida closed on a $14.1 junior secured financing of a waste wood-fired biomass electric generation plant in Lufkin, Texas. The Aspen Power 57-megawatt facility is the first biomass plant to be built in Texas. Aspen Power will interconnect to the Electric Reliability Council of Texas electric grid. Unlike the intermittent wind resources that make up the majority of Texas’ renewable energy supply, the Aspen Power plant is a base load provider generating a steady flow of renewable power for the grid.  Aspen Power is currently finishing up construction and is set go online between Q4 2010 and Q1 2011.

Does U.S. government policy play a role in your investment decisions?

Akeida does not invest in projects that depend upon a regulatory change or pending legislation to be successful.  We structure our investments to fall within a visible window of government regulations. In addition, all energy sales and off take agreements entered into by our projects must be with credit worthy entities and not dependent on  government policy changes.

Many of Akeida’s investments benefit from U.S. government grants and tax credits. For example, our Blue Lake Power Plant received a $2 million grant from the U.S. Forestry Service for its contribution to forest health and the local community. We anticipate that some of our projects will qualify for the U.S. Treasury Department’s 1603 Program under the American Recovery and Reinvestment Act of 2009. Through this program, the U.S. Treasury department provides payments equal to approximately 10% to 30% of capital expenditures to project developers that bring their facilities online during 2010.

The BP spill has been a huge catastrophe for the U.S. and, in fact, the world. Have you seen any positive fallout, such as a renewed interested in clean energy?"

Many have speculated on how the BP spill will affect the renewable energy industry and upcoming energy legislation. In the short term, it appears that it has not created new momentum for a U.S. cap and trade program. A new draft of carbon legislation introduced by Senators Kerry and Lieberman last quarter did not have enough support to pass in the Senate. Politicians have nearly abandoned prospects for a U.S. cap and trade program in 2010, instead choosing to focus their attention on far reaching energy reform.

Having experienced such a significant environmental disaster, policymakers are undoubtedly considering the risks of traditional fossil fuel power more carefully which may influence their future support of regulations that are favorable for renewable energy. We are optimistic about the role renewable energy will play in our nation’s quest to improve the environment and reduce our dependence on foreign energy. Political and public awareness of the importance of renewable energy is increasing and Akeida’s investments in U.S. renewable energy infrastructure are making a significant contribution by bringing clean energy capacity online, creating jobs and benefiting our environment.

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