AVON, Conn.--(BUSINESS WIRE)--New Energy Risk (NER), a wholly owned division of Paragon Insurance Group, and Ecostrat, a leader in assessing, developing, optimizing, and managing biomass supply chains, today announced a partnership to develop Feedstock Supply Insurance© (FSI), an insurance offering that aims to mitigate risk in biomass feedstock supply chains. It will do this by effectively capping feedstock costs and securing long-term project debt repayment obligations.
A key barrier to the rapid scaling of the trillion-dollar global bioeconomy is the fragmented nature of biomass supply chains, which often comprise small- and medium-size suppliers such as forestry companies, sawmills, farmers and truckers. Bankable, long-term supply contracts are rare, and balance sheet project finance is therefore difficult. As a result, bio-project finance is slow, complicated and expensive.
Through the partnership between Ecostrat and NER, FSI aims to transform non-investment grade supply chains into bankable, investment-grade ones by transferring risk from project developers and capital providers to A-rated insurance markets. This will strengthen the creditworthiness of backstops for biomass feedstock risk and help to guarantee key warranty obligations, such as debt repayment. The expected outcomes of FSI include lower project debt costs, greater access to larger pools of capital and a more rapid scale-up of the global bioeconomy.
“As recognized leaders in our respective sectors, Ecostrat and NER are natural partners in creating this game-changing insurance product. Ecostrat’s state-of-the-science predictive analytics will identify failure modes and quantify impact, and NER will use these stochastic mathematics to provide underwriting capacity for feedstock insurance policies,” said Jordan Solomon, President and CEO of Ecostrat. “Together, we will deliver a new tool to the market that will effectively securitize biomass supply chains and unlock much needed capital for bio-manufacturing.”
“For over a decade, NER has supported the energy transition and circular economy by enhancing technology bankability. Many of our clients in the bioeconomy face the added challenge of bankable feedstock supply,” added George Schulz, Managing Director at New Energy Risk. “Ecostrat has developed the tools and expertise required to assess this risk and we are excited to collaborate on solving this challenge with a novel insurance product, removing a key bottleneck in the sector’s growth. By mitigating supply chain risks and facilitating long-term financing, FSI will strengthen the viability of biobased projects, supporting its crucial role in achieving national renewable energy goals.”
For more information, or to learn how FSI can apply for your project(s), please visit www.ecostrat.com/feedstock-supply-insurance/ and www.newenergyrisk.com/feedstock-supply-insurance/.
About New Energy Risk
New Energy Risk is a pioneer of large-scale, breakthrough technology performance insurance solutions. The company provides complex risk assessment and serves as a bridge between technology innovators, financiers, and insurers. Insurance policies are administered through New Energy Risk affiliate, Complex Risk and Insurance Associates, LLC, CA License #0I24307. New Energy Risk is a wholly owned subsidiary of Paragon Insurance Holdings. Learn more: www.newenergyrisk.com.
About Paragon
Paragon Insurance Holdings, LLC, formed in 2014, writes all commercial lines of insurance across more than 25 programs. Paragon’s industry-specific and general underwriting facilities offer insureds, retail agents, carriers, reinsurers and service providers unique product, service, capability, and results. Learn more: www.paragoninsgroup.com.
About Ecostrat
Ecostrat is the North American leader in assessing, developing, optimizing, and managing biomass supply chains. Its mission is to propel the global bioenergy transition by pioneering tools that de-risk project development and investment and by delivering cutting-edge due diligence on biomass supply chain risk. Since its inception in 2008, Ecostrat’s Advisory Group has prepared over 300 Biomass Supply Assessments and feedstock due diligence for leading project developers, capital markets, power utilities, investment funds, engineering companies, governments and First Nations across North America. Learn more: www.ecostrat.com.
