RE: Today Financial Times6 May 2024 16:49
WP
From Archea own site
“ Our goal is for Archaea to be a stable, predictable, profitable business, and we seek to remove variability from our financial returns where possible,” said Light. “Our differentiated commercial strategy is focused on selling a targeted 70% of our expected RNG production volumes under long-term, fixed-price contracts with creditworthy counterparties. This enables us to lock in expected double-digit returns in a downside case, looking only at contracted volumes. We take a ‘highest and best use’ approach to remaining production volumes, which today are sold into the transportation market where they can generate renewable identification number [RIN] and/or low-carbon fuel standard [LCFS] credits. We prefer to reduce our exposure to these markets, which can be volatile and have regulatory risk, through our long-term contracting strategy. Additionally, we focus on landfill gas, which is a low-cost, stable, predictable, long-term feedstock, with landfill gas production expected for more than 20 to 30 years or longer on average at our project sites. Further, we are implementing the Archaea V1 plant design this year, which is a standardized, modularized design that is expected to significantly reduce capital costs and build timelines compared to industry averages.”
So double returns for 70% of their production and aiming for higher it the other 30% ,I’m interested to see where this goes.
Costs are very predictable.
Price paid might be a concern, but I think it may prove ok