You have received your power purchase agreement, feed-in tariff contract offer or RFP win; now you are thinking “I need to get my project debt financed!”
Enclosed is a list of best practices to make this process as easy as possible. The example below is based on either a ground mount or rooftop solar facility that is not constructed. However, this process can be used for constructed projects or wind power, waterpower, renewable natural gas or energy storage projects with some modifications.
Also note, there will be regional requirements that are not listed in this guide, so check with your debt provider for any additional material that is required.
Tip #1: Agreeing to use the debt providers IE can simplify the process
Debt providers will have their preferred technical due diligence service providers often referred to as an independent engineer (IE). Some developers may indicate that they have their own favorite. However, the IE needs to be truly independent.
Tip #2: Get all your documents in order
The first phase of technical risk management services conducted by the IE typically includes the provision of essential documents for review (see below for list). The requested documentation will be dictated by the status of the facility under consideration (e.g., early development, pre-construction, post-commissioning, etc.). To complete the review efficiently and to minimize scope creep, the IE will typically start the review once all documentation is provided.
Tip #3: Missing documentation is a major red flag and will cost time and money to complete the review. Do it right the first time.
It is common that the initial batch of documentation provided is not complete. This means the IE will need to review the preliminary batch for completeness only (i.e., not a technical review at this stage) and notify the developer of key documents that are missing if any. It is important to note that initiating the formal technical review while documentation is missing or deemed insufficient will ultimately be reflected in the draft IE report.
Tip #4: Save costs by providing all the documentation up front, at one time.
Following the document review, the IE will issue a draft examination of the documents report providing analysis and commentary on the reasonableness, accuracy and completeness of the documentation and identify the main risk factors and possible impact, if any, on the ability of the facility to generate the expected level of energy/revenue. That last part is key to any debt provider. The review must indicate an ability to service the debt.
Tip #5: Use up-to-date documentation because the site visit will end badly if you don’t!
Following document review, a site visit should be performed. The site visit will involve physical inspection of critical components for consistency with the provided documentation and confirmation of overall facility design and compliance with the major contract parameters, including:
- facility type (i.e., rooftop or non-rooftop solar) and physical location,
- nameplate capacity, including approval of DC overbuild and record of inverter production, if visibly accessible,
- main equipment components (panel, inverter and racking suppliers),
- connection point location, and
- review of power production or data log information, if available, for the purpose of performing a high-level check of the facility’s ability to achieve maximum capacity.