Partnership and business model
During almost ten years of operations, Vireo has collected several valuable experiences and know-how to run a landfill gas business in any market. Together with equity partners that preferably also provide local administrative support, Vireo is able to take full responsibility for the implementation and operations of a landfill gas‐to-power project.
Vireo Energy AB has substantial experience from raising equity and debt to finance projects in Russia, Belarus, Poland and Romania. Together with local equity partners we are therefore in a position to support debt raising (project finance, bonds). Since there are few other types of energy projects with the same positive ecological footprint as landfill gas-to-power, international finance institutions are generally keen to finance this kind of projects provided there is an equity sponsor. Typically, debt levels can be 70–80 % of capital expenditure. Depending on tariffs and conditions of debt, equity IRR can be anything from 15 % up to 40–50 %, although the latter is rare since renewable energy tariffs are often adjusted depending on technology in order to limit return on equity.
In order to align interest with the equity partner, but also to create a possibility for financial upside for Vireo, a possible business model is for Vireo to obtain a share in the project and thereby a share of cash flow to shareholders. An alternative structure involves a fixed fee for implementation of a project or part of a project. In terms of operations, a structure whereby Vireo obtains a fixed operations fee or a fee per engine hour is also possible.
We are always welcoming potential partners to visit our own reference plants that are conveniently located in Belarus which is only around 1–2 hours flight away from Stockholm, Helsinki, Moscow or Frankfurt.
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