Jigar Shah, DOE Loan Programs Office, and Ajay Kochhar, Li-Cycle
Inevitable
Do You Have a Diligence Process?
I think it's so different than any delicious process to be frank. I mean, and again, each company has to be clear with themselves. Because you have to be able to share enough that there can be comfort gained. And because I think it is a long process is worth it in the end. Not all companies are going to be set up to do it to be frank."
Today's guests are Ajay Kochhar, President, CEO, and co-founder at Li-Cycle, and Jigar Shah, Director of the Loan Programs Office at the United States Department of Energy.
Jigar is a multi-time guest on the show and a friend of the pod, and he reached out to us to see if we'd want to record an episode discussing Li-Cycle's experience in applying for and receiving a conditional commitment from the Department of Energy's Loan Programs Office for a loan of approximately $375 million to help Li-Cycle scale up their work with a production facility in Greece, New York near Rochester.
We cover a lot of ground today. We reintroduce Jigar and the Loan Programs Office. For those of you who want to go deeper, you can visit the My Climate Journey pod archive for other episodes featuring Jigar, including one from a year ago with him and Rob Hansen of Monolith Materials. We also introduce Ajay and the business he's building with Li-Cycle to recover and recycle critical lithium-ion battery metals. Then we spend most of the conversation talking about how the Loan Programs Office works with prospective applicants as well as what Li-Cycle's experience was as an applicant. We learn how the LPO helps companies define and lay out their plans across a wide array of considerations, including, of course, financial and technical, but also their plans for community involvement, workforce development, environmental impact, permitting, and so much more.
The LPO provides a unique role in the funding landscape for climate tech. Venture funding can help a company grow, and it can help a company navigate initial market risk. But for us to make a real dent in the climate problem, it's going to take moving atoms at scale. For infrastructure-heavy businesses, there's a need for sizable capital to put steel in the ground and build a production facility. It’s possible for a startup to leverage a small pilot facility to prove that its technology can work, but to provide a commercial solution at a fully deployed scale, it may need to invest tens or hundreds of millions of dollars into infrastructure and facilities, and oftentimes, the venture debt markets are reticent to fund large, first of its kind build-outs. This is where the LPO plays a key role. A major takeaway from Ajay and Jigar's discussion is the significant partnership between the LPO and a company during the application process as they collectively uncover and work through assumptions and hypotheses together.
In this episode, we cover:
- [4:43] Introduction to the Loan Programs Office
- [9:20] An overview of Li-Cycle and the company's success
- [14:14] $375 million loan from LPO to help scale Li-Cycle's hub and spoke approach
- [16:43] Importance of community engagement
- [20:28] An inside look at Li-Cycle's processing facilities and attention to safety
- [25:52] How the DOE evaluates projects and determines where investments are needed
- [29:12] Li-Cycle's first commercial facility in Rochester
- [31:09] How and why Li-Cycle decided to partner with the LPO
- [36:07] The application process for working with the LPO
- [42:42] The government's role in the diligence side
- [47:37] Ajay's thoughts on how the LPO terms may differ from future commercial loans
- [50:51] How Jigar has streamlined the LPO's process
- [54:23] Tips for companies seeking a loan from the U.S. DOE
Get connected:
Cody Simms Twitter / LinkedIn
Ajay Kochhar Twitter / LinkedIn
Li-Cycle
Jigar Shah Twitter / LinkedIn
Loan Programs Office
MCJ Podcast / Collective
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Episode recorded on February 15, 2023.
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*Editing and post-production work for this episode was provided by The Podcast Consultant
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