Investing in Renewables: The Game-Changing Impact of Technical Advisory for Financial Modelling

Modelling is an essential part of any investment. In the renewable energy industry, modelling of assets is intrinsically complex, as it depends on making projections based on natural resources, with its particular environment and regulation. In addition, there are specificities between the different technologies. From solar, to wind or battery energy storage systems (BESS), valuation method can be quite different. To build accurate models in the renewable fields, both technical expertise and financial knowledge are required. Successful investments rely on accurate capital expenditures calculations, correct anticipations of revenue streams and projections of the operational expenditures among many other technical specificities.

For instance, the performance measures, rates of degradation, and maintenance needs of solar panels, wind turbines, and BESS are not the same. For wind turbines, the power curves indicate how the wind speed relates to the power output and requires an in-depth technical analysis. For BESS, the duration and storage capacity of systems follows a particular mechanism. For solar panels, the efficiency of the inverters decreases over time at a particular pace. For long-term performance and maintenance costs to be reliably predicted, modelling has to take these considerations into account. These are non-exhaustive technical matters that need to be assessed  to build precise financial models.

In addition, regulation and market dynamics have considerable effects on investment in renewables. Government policies, subsidies, incentives, and requirements evolve quickly. Financial models need constant updates to fit the market standards. These complexities may not be properly considered in traditional financial models, representing a major risk when making forecasts. Essential factors to be considered when modelling renewable assets are the risk specific to the sector (operational, financial, regulatory and technical). Risk mitigation performed by technical advisor ensures that financial models are robust and can withstand the uncertainties. Financial risks lies partially within the volatility of the sector, the interest and exchanges rate fluctuations. Thorough risk assessment and mitigation are essential to build robust financial models that investors can rely on.

Traditional advisors tend to use generic financial model to value renewable assets, which can lead to false assumption regarding the profitability, viability of a project. The revenues and operational projections made with unfitted financial models can be unrealistic and even inaccurate, putting investments at substantial risk. Choosing technical advisor such as Greensolver to conduct modelling of renewable assets represents an upside for investor. Greensolver is an expert in a variety of renewable technologies and has a deep comprehension of financial and regulatory frameworks and market dynamics.  For instance, Greensolver’ take on MRA (maintenance reserve account) for inverter replacement, based on its technical team calculation and integrated to its financial model is a valuable insight for processing investment.

Greensolver’ expertise is a leverage for investors. Greensolver is able to provide and appreciate realistic financial models. Greensolver’ knowledge ensures that models are resilient and reliable, providing a solid foundation for successful investment in renewable energies. Greensolver helps you to minimize risk and maximize the return on investment in renewables with its team of financial and technical experts.

Written by Antra Ramboarison ,Financial analyst in our renewable energy financial advisory team