The alarming collapse of California-based Solyndra, LLC—the third solar manufacturer  in the United States to file for bankruptcy in the last several months—serves as a reminder of the risks all startups must assess as they develop business plans in a rapidly advancing and extremely competitive global  technology market.

Ithaca, New York-based Palisade Corporation, which produces risk- and decision-analysis software used by an estimated 150,000 organizations—including oil, gas, and biofuel manufacturers —has the experience and the tools to help managers develop a profitable business for sustainable energy projects, balancing risk against return.

A case in point: Sark7, an international consultancy based in the Netherlands that specializes in “opportunity engineering,” is currently using Palisade’s DecisionTools Suite to enable

 potential capital investors to make an informed decision on whether a project is of interest to them, given a specific risk threshold and expectation of returns.

“Environmental experts and enthusiasts need to be realistic about whether their proposal is financially viable, if they are going to attract the funds that will make it a reality,” commented Scott Mongeau, founder and consultant at Sark7. “Palisade’s risk analysis tools provide the language that is familiar to the financial world—as a result of which the project is more likely to receive funding. Sustainability criteria can, therefore, be met at the same time as providing investors with a risk-balanced return….So everyone wins.”

For example, Sark7 uses various components of Palisade’s DecisionTools Suite to demonstrate the viability of a biofuel plant initiative:

• @RISK models the biofuel project’s Net Present Value (NPV),
• PrecisionTree informs strategic scenario decision-making, and
• Evolver suggests plant optimization strategies.

This approach offers a due-diligence tool for prospective sustainability entrepreneurs, investors, project managers, providers and organizations.

Overall, the @RISK model demonstrates that, given proper integrated engineering, financing, and risk hedging (via option and future derivatives), a biofuel plant can be managed in a profitable fashion —profitability being at risk where the margin between feedstock and ethanol prices narrows significantly.

Throughout the project, PrecisionTree guides the decision-making process by constructing different scenarios for analysis, depending specific combinations of integrated rollout factors. For example, an organization can decide whether to build a large-scale biofuel plant or a smaller plant by comparing central risk/reward factors, such as the investment required and the chance of technical success.

Evolver provides the ability to run complex, multivariate optimization problems, identifying the most cost -effective, efficient, advanced plant possible, while controlling financing costs and economic risk exposures.

Mongeau stated, “Palisade’s risk analysis software is simply ‘the best thing since sliced bread,’ especially in our increasingly complex, uncertain global world. “ He continued, “Because it runs in Excel, it is accessible to everyone and doesn’t become the exclusive domain of technical experts. Despite being highly sophisticated technology, it actually streamlines human conversations; because it allows for integrated, like-to-like analysis of risks from the standpoint of highly specialized but distributed experts.

“Integrated simulation allows for the combined assessments of lawyers, economists, engineers, managers, and financiers so that the proportional risks in mega-projects, large implementations, and new technologies are clear to all,” he concluded.