Due Diligence

Due Diligence Case Studies

SgurrEnergy can assist investors or financiers interested in investing in renewable projects at any stage from greenfield, partially developed and operating renewable sites by carrying out technical, financial and legal due diligence assessment. We have extensive experience of carrying out due diligence assessment both within the UK and overseas.

Our areas of expertise encompass the technical, commercial and legal issues and identify areas of risk relating to;

• Energy yield prediction, including assessment of the site and measured data;
• Key Project Agreements, including EPC Contracts, O&M Agreements, Grid Connection, Power Purchase Agreements (PPA), Tax, Credits and Subsidy schemes;
• CAPEX and OPEX related to service contract and performance guarantees;
• Permits: planning, PPA, grid connection and future regulatory and market developments;
• Warranties: project life-cycle assessment, compliance with planning permitting and O&M contracts;
• Issues relating to the potential expansion of the site in the future;
• Supplier and contractor experience, capacity and capability;

Uncertainty assessment

Assessment of the uncertainties associated with energy yield prediction is one of the key parts of any wind energy study. SgurrEnergy has developed a robust approach to uncertainty assessment that looks at each stage of the energy yield process and assigns uncertainities that are carefully tailored to each individual wind farm site. This enables us to give reliable predictions of P90, P95 and P99 values for wind farm projects.

(Notes for graph above) Post investment appraisal confirms our predictions lie within quoted uncertainty limits. Indeed, predicted production is typically within 5% of actual.

Assessment of Renewable Energy Equipment

SgurrEnergy can also carry out technical due diligence of Renewable Energy (RE) equipment entering the market.

Specifically we would assess:-

• Experience and track record of the RE Equipment
• Manufacturing capability and quality standards
• Hardware components
• Design suitability for a specific application
• Industry standard certification
• Grid code compliance
• Availability and performance

Assessment of In-House Developed Projects

SgurrEnergy can undertake an independent assessment of renewable energy sector projects, or potential acquisitions, to confirm the key assumptions and value drivers which would be required to support the project in achieving its investment criteria. We would ensure that areas of risk are highlighted and quantified, and mitigation measures proposed.

Our due diligence strategies clearly define the key project areas that would be subject to review and scrutiny. The following are given as by way of example only and are not exhaustive:

Financial

Including: Commercial review of power plant economics, project economics, substantiation of inputs and assumptions, sensitivities, key value drivers, areas of risk, CAPEX, OPEX and forecast revenue.

Technical

Including; Environmental Impact Assessment, technology selection, conceptual design and layout, grid code compliance, site investigations, strategies and programmes, resource assessment, noise, O & M policy, health & safety and decommissioning.

Commercial

Including; Terms & conditions of contract, robustness of the contract, credit-worthiness and track record of suppliers and contractors, management procedure of the turnkey contractor, capital costs, construction timescales, completion delays, warranties, commissioning plans and risks.

Legal

Including; Land option and lease agreements, insurance and planning consents.

The outcome of carrying out this due diligence exercise would be to identify wrong assumptions, ensure all work is verified by third parties and ensure that the best technical RE equipment will be installed within an achievable programme to agreed cost, quality and health, safety and environmental parameters, and that the scheme will operate for the specified design life and return a positive NPV.