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An Overview of the Development of a Renewable Energy Project . And the 5 Major Milestones to Achieve Financing. By Robert Hunter Director of Operations, Green Coast Energy Phone: 386-747-3741 [email protected] Milestone 1: The Concept. What technology, what fuel type?

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An Overview of the Development of a Renewable Energy Project

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An Overview of the Development of a Renewable Energy Project

And the 5 Major Milestones to Achieve Financing

By Robert Hunter

Director of Operations, Green Coast Energy

Phone: 386-747-3741

[email protected]


Milestone 1: The Concept

  • What technology, what fuel type?

    • Biomass, wind, solar, waste heat, etc

  • What State/County/City?

    • Choice of state will be contingent upon state renewable policies & permitting requirements

  • The Business Model/Pro Formas

    • How much will it cost? Is it cost-feasible?


Milestone 2: The Location

  • Local support

  • Zoning--generally Heavy Industrial

  • Rail and/or highway access

  • Size

  • Interconnection with local utility

  • Permitting--DEP, EPA, FERC, etc


Milestone 3: The Purchased Power Agreement

  • Primary source of revenues, most important part of a successful project

    -And the part that the PSC has the most ability to make a difference

  • Term

  • Capacity payments

  • Energy payments

  • Fixed energy payments

    -Mitigates fuel price volatility to customers

    -Makes financing more feasible due to less uncertainty in revenue

  • PSC Approval


Milestone 4: The Fuel Supply

  • Heat rate of fuel type, in BTU's per ton

  • Tons required per day to operate plant

  • Tipping fees from fuel suppliers

  • Cost of fuel preparation (cleaning, etc)

Note: This primarily describes an example biomass/waste-to-energy project. A solar or wind project would not face these same issues; either the resource is or is not there, and no contracts must be signed to utilize the sun or wind.


Milestone 5: The EPC Contract

  • Sign turnkey agreement with engineering firm that specializes in EPC

  • Or, a very experienced Developer's Engineer could purchase all the equipment from different manufacturers (a boiler from Vendor A, a turbine from Vendor B, etc)

  • Total cost to install per KW

  • Construction time frame


The 5 Steps are Completed: Now What?

  • To obtain financing, the renewable project must demonstrate

    • Enough revenues to meet a debt coverage ratio

    • An Internal Rate of Return that is satisfactory to equity investors

  • Debt vs Equity: The Financing Mix

    • High level of competition for equity funding from other states…required rate of return often 12%-30%, higher when more projects competing


What Can the Public Do to Help Bring Renewables to Florida?

  • Understand the full costs of NOT having renewable energy (pollution, dependency, upward-trend price volatility)

  • Understand the value that renewable energy brings in future price stability and environmental conservation

  • Keep these in mind if the price/kwh of renewables is initially higher than fossil fuels


Gas Prices Illustrated


What Can the PSC Do to Help Bring Renewables to Florida?

  • The PSC has great influence over the most key part of the renewable project: the Power Purchase Agreement.

  • Staff and Commission has been working diligently for some time, and has recently adopted a rule that makes great progress.

  • Now, it is up to the PSC to enforce this rule and require Standard Offer Contracts to fairly compensate renewable providers.

    • Contracts must provide enough revenues to cover expenses, and offer sufficient return to equity investors.


The Bottom Line

  • If the PSC requires and approves Standard Offer Contracts from the IOU’s as previously mentioned, then renewable energy will blossom and thrive in Florida.

  • This will encourage financiers to bring their investment money to FL, and provide environmentally-friendly, price-stable electricity to the customers.

  • Florida becomes a national LEADER in renewable energy, and a paradigm for other states.


Questions?


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