TerraPro Solutions

North American Clean Energy

September/October 2022 Issue

Why a Solar Project

Risk Mitigation Framework is Critical for Investors and Financial Institutions

Author: Kimberlee Centera, CEO, President, of TerraPro Solutions

Kimberlee Centera CEO, President TerraPro Solutions utility scale renewable energy project consultant
Kimberlee is a leading risk management expert for the development and financing of large-scale generator energy projects. Under her leadership, TerraPro Solutions has generated over 12 GWs in solar, wind, and energy storage. With a total financed value of over $6 billion, TerraPro Solutions is the top development consultancy in the renewables market.
Kimberlee Centera
CEO, President
Why a Solar Project Risk Mitigation Framework is Critical for Investors and Financial Institutions,Kimberlee Centera CEO, President TerraPro Solutions North American clean energy

Why a Solar Project Risk Mitigation Framework is Critical for Investors and Financial Institutions

The recent passing of H.R.5376, the Inflation Reduction Act (“IRA”), has extended the Investment Tax Credit (“ITC”) for solar and reinstated the Production Tax Credit (“PTC”) for solar through at least the early 2030s.  While this legislation is designed to offer tax credit monetization incentives that encourage investment in new utility scale solar projects, basic challenges that face developers remain.

A June 2022 Science Direct study examined 53 utility-scale wind, solar, and geothermal energy projects that were delayed or terminated between 2008 and 2021 in 28 U.S. states. Researchers found that 34% faced significant delays and difficulties securing permits, 49% were cancelled permanently, and 26% resumed after being stopped for several months or years.

Examined 53

utility-scale wind, solar, and geothermal energy projects

that were delayed or terminated between 2008 and 2021 in 28 U.S. states.

delayed
0 %
cancelled
0 %
Resumed
0 %

A major challenge in project financing is the perception that renewable energy projects are high-risk. The statistics presented in the Science Direct study certainly justify this assumption. That is why due diligence and fatal flaw analysis are critical at the outset.  A comprehensive risk analysis framework provides a decision-making matrix defining the critical factors that must be considered, in order to reach a sound decision. It addresses the goals of the investors to ensure that the financial realities of the project are clearly delineated at the outset, and transaction milestones are met. It instills stakeholder confidence, because vital data is easily accessible throughout the development and financing continuum.

Review & Evaluation

Off-taker review and evaluation of the time required for the off-taker to build the transmission line to ensure that it meets project completion deadlines.

Tax Incentive

Analyzing the regulatory and tax incentive environment of the project.

Risk

Assessing high-level risk factors associated with the project.

Public Impact

Examining site feasibility and identifying potential sources of public impact or opposition.

Mineral Research

Assessing the surface vs. subsurface of the land for mineral development.

Project Impact

Evaluating project impact if it includes indigenous or tribal lands.

Key factors in the

decision-making matrix should include:

Kimberlee Centera CEO, President TerraPro Solutions

Solar Farm

Wind
Farm

Transmission

Conducting a transmission analysis including load and transmission capacity, to obtain an energy yield assessment.

Permitting

Conducting a comprehensive permitting and jurisdictional review.

Title review

Initiating a title search and review.

Review Regulations

Conducting a compliance review to ensure that the project adheres to relevant regulations.

Site Control

Overseeing site control to ensure that executed leases or options and easements are in place, and that power can be exported into the grid.

Timeline

Structuring a comprehensive timetable for various phases of development.

A meticulous business case assessment recognizes the goals of the investors to ensure that the financial realities of the project are clearly addressed. This considers both technical viability and environmental impact, as well as long-term financial soundness. A detailed decision-making matrix diminishes the potential that risk factors will be overlooked. Vigilant due diligence is a critical investment in the success and resilience of every renewable energy project.

Why a Solar Project Risk Mitigation Framework is Critical for Investors and Financial Institutions, Kimberlee Centera CEO, President TerraPro Solutions North American clean energy

Experience Consultant's

in Project Development

We work with clients for the life of the project, from initial planning through construction.

projects
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