Analysis of Investments in Renewable Generation (US DOE Section 1705 Loan Guarantees)
Advisory Services
The Situation
The US Department of Energy sought independent market expert reports to support the evaluation of potential investments in innovative, but commercially viable, renewable generation projects. The market report is one component of the extensive review and evaluation of repayment risk associated with the applicant’s request for a federal loan guarantee.
NERA's Role
NERA advised the DOE on a number of projects related to renewable and advanced generation technologies including solar thermal, solar thermal with storage, geothermal, and IGCC technologies. Our work involved:
- Analysis of the relevant power markets including long-term supply, demand, and pricing;
- Review of key terms related to pricing and performance in off-take agreements;
- Analysis of regulatory risks associated with off-take agreements, supply agreements, and transmission access;
- Review and status of related renewable energy projects; and
- Identification of key risks of the projects (excluding technology risks).
The Result
NERA developed individual market reports for the different applicants in which we provided our perspective on the long-term power markets, assessment of key regulatory risks including permitting, the risks associated with the purchased power agreements, and the risks associated with the individual applicant’s business plan and projections of free cash flow.
