Many potential grant applicants come to me with a great idea, a business plan and a portion of their financial resources in place to begin a project. Good projects with savvy managers who understand business are looking for my assistance to ‘fill a gap’ and provide a level of help to secure a grant or perhaps a loan guarantee to gain a bank’s commitment to the project. In many cases, these folks have done some due diligence such as their own research on the technology they want to use, including seeing it in action somewhere else or touring a facility. The critical element that often lacks for these potential projects is the completion of a formal feasibility study.
What is a feasibility study and why is it important? This kind of study is really utilizing a professional in the industry that you’re looking at to ask a host of essential questions about the project’s technical and financial viability. For renewable energy, these questions will also include determining the amount of feedstocks and their cost and availability. Feasibility studies may also include an independent review of the company’s business plan and pro forma data as well as a review of the technical aspects of the project and its usefulness at a certain location.
The reasons for doing a feasibility study can seem obvious-after all if you’re going to spend tens of millions constructing a facility, then spending several thousand to study its viability in advance seems prudent at the very least. However, many grant applicants tell me they don’t want to mess with this expense. Well, if really evaluating viability doesn’t impress you, perhaps this will: Many grant programs require as a portion of the application that your feasibility study be included. Without it, the application is incomplete and therefore thrown out before it was thoroughly read.
So, moral of this little story is: do not only your homework, but get a feasibility study done. In next week’s post we’ll discuss some of the components of a good study.
To you Prosperity!
Sarah
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