Myth vs Fact: Separating Wishful Thinking from Reality
As with most emerging industries, false hope of easy riches attracts a lot of interest. Reality sets in when making money turns out to require a solid business plan, experienced development partners, adequate funding, and a long-term strategy.
Myth: Everybody is making money
Fact: Industry cheerleaders downplay negative news, but there’s plenty of it. Inexperienced developers move too fast, make false assumptions, and get into trouble or go bankrupt. The developers that survive are taking the time to do everything the right way and learn continuously how to do it better.
Myth: Farmers can do it themselves
Fact: In the early 2000s, a small number of farmers found the technical assistance and $3M to $4M in funding to get a digester operating on their property. Since then, costs have risen so fast that farmers are priced out. A typical project now costs $15M to $35M.
Myth: Farmers are eager to make deals
Fact: Farmers trust other farmers. Everyone else is suspect. Farmers are also well educated about these projects, having learned from the mistakes of others and having been approached by multiple companies offering various deals. Farmers are cautiously evaluating which company is the most trustworthy and offers the best value proposition for them.
Myth: An agreement is money in the bank
Fact: Some developers announce their projects based on an agreement with a farm. Many of those projects will never be built because the developer can’t obtain the necessary permits and/or financing. Ag-Grid Energy announces projects only after we have all permits in hand and the bank loan finalized.