The risks and rewards of investing in renewable energy schemes

Transcription

1 The risks and rewards of investing in renewable energy schemes Matthew Rhodes April 2015

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3 Encraft has been working at the leading edge of the low carbon energy sector since 2003 We support asset owners, investors, and project developers nationally through three specialised teams. Distributed Energy Projects Building Physics Web Applications Community Energy Smart networks District heating and CHP Technical assurance Project development Programme management Certified Passivhaus Consultants Building energy modelling Very low carbon retrofit First-principles design Technical assurance Microgeneration specification tools Planning compliance Asset review Bespoke web applications Mobile devices Kate Ashworth CEng MIMechE Practice Head Helen Brown MPhys, Certified Passivhaus Consultant Practice Head Graham Eastwick CEng MIET Practice Head

4 We have a broad customer base, typically working on more than 100 projects every year Housing Services Commercial Public and Community Private Investors/Developers Octavia Matrix Sanctuary Gallions Trent and Dove Orbit West Mercia Your Housing Emh Hastoe Liverpool Housing Trust Poole Housing Partnership Keepmoat Group Regeneco Waxman Energy Mark Group Numerous installers BAE Systems Moog Aerospace E.ON Aubrey Allen Worcester Bosch Jones Lang Lasalle Westfield Shopping Towns EC Harris Solihull MBC Oxford University Northamptonshire County Council US Department of Energy Worcestershire CC Carbon Trust National Trust Warwick University Innovate UK Poole Council Birmingham City 15+ district councils LEAF, CSEP etc EST Salisbury Partners WHEB LLP High net worth individuals Sjolander da Cruz Architects KKE Architects Land owners Farmers PA Consulting Group PCPT Architects Glen Howells Architects Private estates

5 Agenda On-going opportunities in renewables and localised energy The characteristics of good renewables projects Understanding risks

6 Opportunities in local renewables projects have been growing consistently since 2010 UK Installed Renewables Capacity Source : DUKES 2014

7 There is still considerable scope for investment in the UK 40,000 Total installed PV across EU countries in ,000 30,000 25,000 MWp 20,000 15,000 10,000 5,000 0 Source: EurObserver

8 The technical and economic opportunity is supported by political commitments and ambition

9 Successful projects share similar characteristics, mostly independent of technology Predictable, long-term, economically-valuable output (=stable returns) Established and proven technologies Large and open * market for energy Significant labour component to project costs Significant sensitivity of yields to context (location) Significant system compliance issues Typically a rapid fall in risk after initial development phase * Regulated for commodity trading and safety, not project investors

10 The key to success is managing risk Technology risk Regulatory risk Fundamental Product O&M Energy market FITs, RHI, EMR Project risk Planning + grid connection System integration Installation quality Project management Commercial risk Market Supplier stability

11 Fundamental technology and product quality risks should be low in renewables projects High Novel biomass Technology risk Low Hydro Standard Biomass Wind Solar PV Solar thermal Low Product quality risk High

12 Project risks increase with more complex sites, so project quality assurance becomes more important Now the easy wins have gone, systems integration and project issues become more important It s about picking the right sites, the right installation and maintenance teams to minimise development risk and cost and maximise yield Number of systems Percentage and notes Total systems reviewed 294 Systems performing on target Systems performing 25% better than predicted Systems performing 10% lower than predicted % - In total these systems are on average generating 103% of that predicted 1 <1% - Anomalous data 64 22% - 36 issues due to shading and design issues with the remaining being resolvable data issues.

13 Commercial and regulatory risks are diminishing as the UK track record strengthens There are fundamental drivers in this market towards increased diversity of supply Energy security Community energy Smarter networks (lower cost ICT) able to manage diversity Increasingly competitive and open energy market Regulated incentive schemes in the UK are increasingly stable and supported by cross-party political consensus Feed-in-tariffs RHI CfD It s not about what it s about where and how

14 Any questions Matthew Rhodes Managing Director Graham Eastwick Technical Director