As with any complex project, there are many decisions to be made. One of the most overlooked decisions impacting the profitability of clean energy projects is when and where to buy or develop renewable energy. That’s where we come in! Here is an overview of TRUELight’s best practices for profitable clean energy project location decision making.
The North American renewables sector continues to experience impressive growth. This growth has been fueled by state specific policies aimed at jump starting industries, expanding investor interest, and reducing cost curves from scale that are starting to develop with clean energy technologies.
The energy market continues to underestimate wind and solar energy generation’s value to our regional power grids and demand from consumers. Be it offshore wind development or corporate off and on-site renewable generation, clean energy generation will continue to disrupt the typical wholesale and retail energy markets. The expansion and diversification of players in this space will call for more risk mitigation options as well as more comprehensive support to properly execute new projects or manage existing ones.
As with any complex project, there are many decisions to be made. One of the most overlooked decisions impacting the profitability of clean energy projects is when and where to buy or develop renewable energy.
The ever changing landscape of cost curves for various renewables technologies, state and federal regulatory policies, and power grid hourly energy price volatility can make it difficult for the best of us to manage development decisions for any renewable energy project.
That’s where we come in! Here is an overview of TRUELight's best practices for profitable clean energy project location decision making.
1.) Gain access to an independent commodity market analysis, strategy alignment, and execution capabilities to properly facilitate your power purchase agreement (PPA) and renewable energy credit (REC) transactions.
For each potential project location, regardless of which side of the transaction you sit, one must start with a proper commodity market analysis to provide intelligence on …
Value of all clean energy technology attributes in the specific wholesale and retail energy markets
Development and interconnection status of each project
Developer experience and long term support structure for each project
Location specific pricing risk analysis - detail on the short and long-term price risk factors
Unique attributes from each state or utility zone that could enhance the project’s value
The majority of buyers and projects we at TRUELight have analyzed in the clean energy space do not have access to long-term project cost and forward energy pricing risk analysis services that are so needed for project efficiency and profitability. Although the temptation has been to cut out this kind of support in the name of short term cost savings, the lack of long-term analysis and execution support often leads to slow deal flow and greater losses to long-term ROI.
2.) Identify your long term asset management needs to optimize your asset.
Once the project location and logistics have been established and a deal has finally been executed, you will have a long-term operating asset on your hands that requires daily management and revenue optimization. Your project location will be a significant determinant of how dynamic your portfolio management needs will be. Furthermore, selecting the right location for your unique needs can be a comprehensive hedging strategy in and of itself.
Industry standard portfolio management aspects to consider are wholesale market pricing and settlement for all market-based components, including energy, capacity, RECs and ancillary service positions. In order to ensure the entire billing and payments match up for each project, project operation should extend to…
ISO or Utility participation services and associated REC tracking system interface management
Daily asset bidding, scheduling and monitoring review
ISO/utility settlement bill auditing and reconciliation
The path to a carbon free electric energy strategy may not be simple, but it is a valuable and worthwhile investment. Last year alone, thousands of megawatts of wind and solar energy were purchased by corporations across North America, setting a high standard that we want to make available to all energy consumers. Engagement in this process has several inherent risks, but with the right partner and project location, you can secure a long-term energy hedge that will meet your sustainability goals.
The TRUELight team provides our clients with direct access to wholesale energy markets, as well as execution support services. We bring the benefits of a professional energy portfolio management team by leveraging proprietary market analysis, execution and portfolio optimization capabilities.