Efic finance solutions powering business growth
For many Australian businesses that work on overseas projects or as part of an export supply chain, getting access to finance solutions to secure and deliver on contracts can be challenging. Perth-based Balance Utility Solutions is no stranger to this scenario.
Established in 2011, the business provides sustainable turnkey power and water solutions with a focus on remote areas, both in Australia and overseas.
“We started the business in 2011 and were looking to build a business that offered complete turnkey power and water solutions with a focus on ‘edge of grid’ and ‘off grid’ regions, using the best local primary energy sources, for example, solar, wind or biomass,” said Rod Hayes, Co-founder and CEO of Balance.
“It’s about making energy more affordable. Renewables are significantly cheaper than diesel,” said Rod.
Exporting was always part of the plan
Export has always been part of the picture for Balance.
The business secured a contract to build a hybrid power station for an integrated coconut processing facility and energy supply to an unelectrified island in Micronesia.
“The power supply will be done in two stages. Stage one is the diesel backbone of what will eventually be a hybrid power station, and ready to plug in a substantial amount of storage and solar, which we expect to be doing in the back half of 2019,” said Rod.
Access to finance
To secure the project, Balance needed to provide advance payment and performance warranty bonds.
“There are two fundamental challenges when trying to get bonds from a banking provider. One is jurisdictional comfort and a lower project risk appetite. We’re talking about doing a technology project in a developing country in the North Pacific. While we’ve got a really good relationship with our bank they were happy to support the project on the proviso that Efic was a part of the transaction.
“The second challenge is the cash requirement. Banks mostly require full cash backing. For us, there is no way that we could do that for what would be 18 months. Efic being prepared to back the project with a lower cash backing was really important to us being able to take on this project,” explained Rod.
How Efic provided support
Efic, Australia’s export credit agency, worked together with Balance’s bank to provide a joint solution that would help them undertake this significant project: “The process worked really well for us and gave us an outcome that enabled us to take on this significant project,” said Rod.
Efic provided three advance payment bonds and one performance warranty bond totalling US$1.06 million.