Ecostrat and New Energy Risk (NER) have formed an alliance to launch a new insurance product, Feedstock Supply Insurance (FSI), designed to mitigate risks in biomass feedstock supply chains.

This new offering aims to cap feedstock costs and secure long-term project debt repayment obligations, addressing a significant barrier to the growth of the global bioeconomy.

The bioeconomy faces challenges due to the fragmented nature of biomass supply chains, which often consist of smaller suppliers like forestry companies, sawmills, farmers and truckers.

These suppliers typically lack bankable, long-term supply contracts, making project finance a slow, complex and costly process.

FSI intends to convert non-investment grade supply chains into bankable, investment-grade assets by transferring risk to A-rated insurance markets.

Ecostrat president and CEO Jordan Solomon said: “As recognised leaders in our respective sectors, Ecostrat and NER are natural partners in creating this game-changing insurance product.

“Ecostrat’s state-of-the-science predictive analytics will identify failure modes and quantify impact, and NER will use these stochastic mathematics to provide underwriting capacity for feedstock insurance policies.”

Through the collaboration, FSI will enhance the creditworthiness of biomass feedstock risk backstops and ensure key warranty obligations such as debt repayment.

The initiative is expected to result in reduced project debt costs and expanded access to capital, thereby accelerating the scale-up of the bioeconomy.

New Energy Risk managing director George Schulz said: “Ecostrat has developed the tools and expertise required to assess this risk and we are excited to collaborate on solving this challenge with a novel insurance product, removing a key bottleneck in the sector’s growth.”

NER, a unit of Paragon Insurance Group, specialises in large-scale technology performance insurance solutions.

Paragon Insurance Holdings, established in 2014, writes commercial insurance across more than 25 programmes.