Case Study

Case study: Buy-side renewables transaction due diligence

A major European power company seeks to grow its U.S. presence

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The challenge

Wood Mackenzie was engaged by a major global independent power producer (IPP) to support their potential acquisition of a portfolio of solar and storage development projects across eight different regulated utility markets in the US.

Some of the projects in question had already contracted for long-term PPAs with utilities, while others had not.  Despite, all assets carried uncertainty with regards to the current or foreseen PPA values that each market could bear, putting significant uncertainty on asset value.

The solution

Wood Mackenzie provided the client with a view of each utility’s long-term resource plan and with a view of the utility’s historical resource sourcing process.

To clarify expected project revenues, Wood Mackenzie employed several different analytical techniques to achieve the ultimate expected contracting value (i.e. value of a PPA) for each asset.

This included a market-by-market view of PPA price trends, merchant operation value, and a specific view of expected “avoided cost” for each utility, as well as an analysis of the levelised cost of energy (LCOE).

The results

For each development, Wood Mackenzie provided contextual background on the relevant regulated utility market, and the estimated rate the project could capture when approaching expiration of the initial PPA (where applicable).

The client leveraged Wood Mackenzie’s deliverables in its presentation to the finance committee as a means of answering key commercial questions before submitting a binding offer for the developments in question.

Ongoing research and data

North America Power Service

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