Sandness provides pre- and post- acquisition advisory services to Private Equity, Energy and Infrastructure Companies. Using in depth knowledge of accounting, finance and the revenue generating process, we identify value drivers, capture value in negotiation and work with target CFOs to accelerate investment hypothesis implementation.

As competition for top-quality renewable investment opportunities continues to increase, there is an even greater need to focus on three key aspects:

  1. Performance of the underlying assets.  Although eye-catching value gains can be captured through re-leveraging and asset sales as projects de-risk (discount rate compression), investors often overlook the fundamental value potential contained within the assets themselves.  For example, where in the portfolio are the optimal repowering / revamping opportunities and what other embedded expansion, or other real, options exist?
  2. Considering investments as a portfolio of assets.  Geographic and technology diversification within a platform company is key but benefits across investment vehicles also offer low hanging fruit.  While these benefits may be obvious to some private equity investors, few executives within the renewable energy space have a clear understanding of how to evaluate and benefit from such idiosyncrasies.
  3. Creative structuring of offtake arrangements and taxes.  Until power futures markets become more liquid and balanced, market inefficiencies in long-term Power Purchase Agreements (PPAs) and Forward Contracts will continue.  Given lender preference for low levels of merchant price risk, the most successful projects will require a degree of firm pricing for the foreseeable future. However, taking advantage of market inefficiencies, complex tax regulation, and local PPA nuances (baseload, solar curve, pay as produce, treatment of negative merchant prices, etc.) requires the use of more sophisticated approaches than most players are using today.

If your organization would benefit from some independent external analysis and advice on any of these topics, please don’t hesitate to reach out at craig@sandnessconsulting.com to start a conversation.