TC Energy and 3 Rivers Energy have partnered on a $29.3 million investment to construct and operate an anaerobic digestion and biogas upgrading plant for the Jack Daniel Distillery in Tennessee.
The facility will convert a byproduct of the Jack Daniel’s distilling process into pipeline-grade renewable natural gas and liquid fertilizer through a biological process involving anaerobic digesters, reducing waste in a way that creates clean energy and supporting local agriculture.
MUFG arranged a green loan and ancillary revolving credit facility for Lynchburg Renewable Fuels, the special-purpose vehicle created to fund the project.
Due to idiosyncrasies in waste-to-renewable energy project finance has not been a well-trodden path for developers.
“A lot of projects are quite difficult from a debt finance perspective because you’re relying on agricultural waste and so there is a lot of feedstock risk,” explained Christopher Buckingham, director, Project Finance at MUFG. “The concept here is that you’re relying on an industrial process that has consistently been running for a long time and has a consistent waste product. It’s really unique because you have a really high visibility to the feedstock you need to produce RNG, and that feedstock is a waste product for someone who is looking at ways to better manage it.”
“There hasn’t been a lot of project financing of these [energy-to-waste] projects – there has been some – but it’s a really interesting asset so there should be more project financings to come,” he added.
TC Energy and 3 Rivers Energy Partners have also committed to jointly develop future RNG projects, with this investment as TC’s first in the production of renewable natural gas.