In physics, energy is a quantity that is often understood as the ability a physical system has to do work on other physical systems. Since work is defined as a force acting through a distance (a length of space), energy is always equivalent to the ability to exert pulls or pushes against the basic forces of nature, along a path of a certain length.
Energy … without it the modern world would grind to a standstill, nothing could exist, and all living things and animals would perish.
In today’s fast paced, high-tech, I needed it 10 minutes ago world, energy is the lifeblood of society. But where does it all come from, and how are energy projects financed?
Energy can be found in many things and takes many forms. There is potential energy in objects at rest that will make them move if resistance is removed. There is kinetic energy in objects that are moving. Energy can also travel in the form of electromagnetic waves, such as heat, light, radio, and gamma rays. Your body is using metabolic energy from your last meal as you read this. Energy is constantly flowing and changing form. If you take your metabolic energy and rub your hands together, you have made metabolic energy into mechanical energy. Your hands will heat up. That is some of the mechanical energy turning into heat energy.
The 21st century, so far, sees a new and greater demand for energy, and new technologies and buzzwords. Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable. New renewables (small hydro, modern biomass, wind, solar, geothermal, and biofuels) are growing very rapidly. And wind power is growing at the rate of 30 percent annually.
Climate change concerns, coupled with high oil prices, peak oil, and increasing government support, are driving increasing renewable energy legislation, incentives and commercialization. New government spending, regulation and policies helped the industry weather the global financial crisis better than many other sectors.
But other funding sources exist, many of them. Equity investment groups, private investment groups and hard money lender groups were formed worldwide to pool the financial resources that remained after the global economic crisis took hold of world money and world money sources.
When one understands how the global economic crisis began it becomes blatantly clear the traditional lending sources quickly dried up and commercial lenders were not willing to make loans on commercial ventures without bankable assets as their choice of collateral. 100 percent project financing became obsolete. Commercial lenders became very selective on the types of projects they financed and looking at the big picture they soon realized which projects were more vital than others and energy led the field .. and still does. Why? Supply and demand.
The demand for energy finance is great and lenders know it. It’s a win-win situation. The project is financed and makes profit and the lender is compensated for making the loan. Because of this, there is now great competition between lenders vying to earn business, and on the other hand, energy companies recognizing their own importance, feel they are in the driver’s seat when negotiating financing with a lender. This however is a mistake.
Regardless of the type of project one is financing, there are universal rules in throughout the financing industry, which must be followed to complete a successful transaction, and the first rule is that the lender controls the deal, not the client.
An important tip is .. don’t shop your loan, ie work with one lender at a time. It’s a small world and if you advertise that you need x million dollars everybody knows and everybody questions why you are shopping. In the world of commercial finance this is a huge turn off to lenders.
So even though you’re in demand, and you know it … don’t get pushy and let the game come to you. Follow the lead of the lender and obtaining your funds will be simple and straightforward.
Written by David Fisher, The Web Lender Ltd.