Financing Sustainable Aviation Fuels 2025

Project lifecycle of a greenfield SAF production facility FIGURE 6 200+ SAF refineries HEFA: 6-12 months FOAK: 12-24 months12-18 months 12-18 months 24-36 monthsIdentification and preliminary assessment of potentially viable project opportunity that aligns with strategic objectives and market demand. $0.5-2m for feasibility studies, initial market research and concept development.$15-30m for legal fees, financial advisory and support to negotiate and finalize financing and off-take agreements.Cost depends on pathway selected, ranging from $0.7bn for a 500kt HEFA plant up to $6+bn for a 500kt PtL plant.Typically, $10-15m for engineering, licensing and feasibility studies. Costs can exceed $100m for FOAK advanced pathways.A comprehensive analysis of the project's technical, financial, environmental and social aspects is conducted. Lenders and investors commit to providing funding for the project, based on agreed-upon terms and conditions. This phase concludes with the final investment decision by operator. Could run slightly in parallelContractors are engaged, materials and equipment are procured, and construction activities are undertaken according to the project schedule and specifications.Revenue generation begins. Debt payments are made to lenders and investor returns are distributed to investors, based on cashflows and financial performance.Conceptualization and pre-feasibilityFeasibility and front-end engineering and design (FEED)Project financing and final investment decision (FID)Construction and implementationCommissioning and operation1 2 3 4 5 ~60 refineries ~90 refineries HEFA: 6-12 months FOAK: 12-24 months Note: FOAK = first-of-a-kind. Fully mature and operational plants are also included in this figure. Sources: Kearney analysis, expert interviews, S&P Global. The overall timeline can vary significantly, influenced by several key factors, some of which include factors affecting CapEx requirements as discussed above: –Technology readiness level: The maturity of the chosen production pathway plays a significant role in determining the project development timeline. The HEFA pathway has been successfully proven at a commercial scale and there are early indications of viability for Alcohol-to-Jet facilities. Nevertheless, technical challenges in developing HEFA can also be faced, affecting project timelines and ultimately FID. Facilities using Gasification Fischer- Tropsch and Power-to-Liquid are likely to take substantially longer to be built. –Location of the facility: The choice of location is crucial, as it directly impacts access to essential resources such as cheap renewable energy or green hydrogen, abundant feedstocks and fuel distribution infrastructure. Feedstocks often lie in regions where the infrastructure, regulatory environment and supply chains may be less mature, increasing the likelihood of disruptions and project delays. –Experience of the operator: Operators with experience in constructing and managing large-scale chemical plants can often expedite the project lifecycle, particularly in the initial phases. An operator working on their third or fourth plant may be able to streamline certain processes, reducing the overall timeline. However, finding EPC operators with the appropriate expertise and risk management is challenging, especially as multiple plants look to scale-up simultaneously. –External capital requirements: Securing adequate investment is a complex and time- consuming process. In most cases, multiple sources of financing will be necessary. This will require multiple investors and financing/ developing institutions. If a developer can invest substantial equity into the project, this can simplify and accelerate the fundraising process, potentially shortening the project financing phase. If the proposed technology is not ASTM-approved, this will significantly add to the complexity of project financing. Achieving technical certification entails a four-step approach from fuel specification review to full aircraft and engine testing, which can take three to six years and cost up to $6 million.7 To invest in new technology, investors will want to be reassured that the production pathway has the potential to be used safely in aircraft. To invest in new technology, investors will want to be reassured that the production pathway has the potential to be used safely in aircraft. Financing Sustainable Aviation Fuels 15