Due Diligence and Independent Engineering Give CertaintyWed, 02/24/2016 - 18:19
Q: Understanding and mitigating risks associated with renewable energy projects is critical for developers, lenders, and investors alike. What is the criteria that you follow in your due diligence service?
A: AWS supported the financing arm of the largest wind farm in Mexico, La Ventika, which consists of two wind farms with a total capacity of 252MW. Through our technical perspective, we give the certainty that banks need and provide assurances regarding the viability of a project. Las Ventikas was an important project but involved a difficult process, since we had to review the complete project in order to detect areas in need of reinforcement. Our contribution in due diligence must extend to the medium term and offer support in all stages of the construction of the wind farm. Our services ensure that all stages of the project progress smoothly, and dealing with uncertainty is crucial in order to understand and mitigate risks associated with projects, as well as providing developers a higher chance of obtaining financing. We use the industry’s best practices and apply them into the unique characteristics of a project. Joan Aymamí, Vice-President, Latin America of AWS Truepower, said, “The Ventika I and II projects are a major advancement in the development of wind energy in Mexico and Latin America, and are also a great example of the growing momentum of wind projects globally.”
Q: Which other new projects are you targeting, and how will your services complement their creation and development?
A: In Oaxaca we continue to see the development of large projects that rival the Ventika wind farms, despite the social barriers that some companies encounter. Other regions, such as Baja California, Tamaulipas, and Coahuila, are beginning to show promise. In Mexico we continue to offer support to developers through our energy resource assessment, due diligence, and independent engineering, with products aimed at the early development process of a wind farm. In other markets such as Europe or the US, we offer products focused on windfarms that have been in operation for over five years, so this is mainly provided to mature markets. As the sector continues to evolve, we will strive to incorporate more of our services into the market.
Q: How do your renewable energy forecast and tools directly benefit developers and operators?
A: In the new framework, forecasting must be accurate because the market requires a tight control on the system. If a company has a wind farm, it will have to accurately report the energy that it will contribute to the grid to CENACE; in some cases projections will have to be made a week in advance and in others just hours. We also have an area focused on software development where we generate tools that are used by our clients. The most common software is related to wind resources node layout design, which is used by developers. We have worked with CFE by providing courses and training to help it understand our methods and tools and, while the software used to be internal, we allow other players to make use of it. Our criteria and services will not necessarily change with the new framework, rather the greatest change will be seen in the way developers sell the energy generated in the wind farm. We see many companies eager to establish operations in the Mexican market, and this indicates a considerable number of opportunities for us.
Q: How do you guide your clients in making the right decisions in order to optimize their economic potential on spot and real time markets?
A: Usually, developers believe there are promising wind resources in a site and believe they understand the characterization of wind, and as a result, they use this unsubstantiated information to begin investing in site measuring. Realistically, a year is needed to determine the wind flow and carry out the necessary stages of modelling and technology evaluation. Through our modelling and preliminary evaluation of the sites, we help clients obtain information prior to making the investment decision for on-site research. While there is a percentage of uncertainty using this pre-evaluation model, it helps clients make more informed investment decisions. Financing entities are more confident in investing when a developer is proactive in taking care of all risks and uncertainties. It is important to determine the long-term representation of the wind measurements, because a project has a lifetime of over 20 years. We must carefully evaluate the developer’s processes and evaluate the variability.