Below is the text version for the video, Technical Assistance: Island and Remote Project Finance. In this video, Robert Gagne of the National Renewable Energy Laboratory (NREL) discusses renewable energy project financial analysis for island and remote communities as part of the technical assistance offered through the U.S. Department of Energy’s Energy Transitions Initiative Partnership Project (ETIPP).
[Music plays, title screen shows “Energy Transitions Initiative, U.S. Department of Energy: Partnership Project, Technical Assistance”]
[Man in a suit speaking]
Hi, my name is Douglas Gagne. I work at the National Renewable Energy Laboratory, and primarily support renewable energy project development and perform financial analysis. Today, I will be discussing renewable energy project financial analysis for island and remote communities. This is a very broad topic area, which covers many steps of the renewable energy development process from, first, figuring out if your project will be able to provide savings to the community, to determining a contracting approach that might support the project, to finding financiers ensuring you can meet all of their requirements.
Today, I will focus on the support that the ETIPP program can provide in these early steps, particularly with performing project financial analysis to figure out if your project will produce enough savings or resilience benefit to be worth pursuing. Oftentimes, there can be a strong financial case for renewables in remote or island communities that are heavily reliant on fossil fuels for heating and electricity. These fossil fuels are often very expensive to ship, and finding qualified professionals to maintain these generators can be tricky. However, the cost for shipping and construction of renewable energy projects, such as solar photovoltaics and wind turbines can be higher as well.
Although renewable energy generation such as solar and wind does not require fuel, it is also intermittent, making the timing and quality of the solar or wind resource important to evaluate as well, particularly for resilience applications where you're relying on that generation to keep your community's lights on. Sometimes you may just need backup power that doesn't necessarily pay for itself in savings on your utility bill or fuel purchases. In this case, it can be important to explore other avenues such as combining energy efficiency projects, which save your community money and lower the amount of heat or electricity you need with your resilience project to create a bundled project that saves money overall.
In order to consider all of these factors, ETIPP can provide support in several ways. If you're just starting out with a project, we can provide guidance on a vetted project development process, ensure valuable checklists of considerations to ensure that you don't miss any potential fatal flaws in your project.
[Flow chart starting with “Site Ownership and Control: Site conditions (availability, slope, wetlands), property rights and construction access, neighboring land uses, resource availability” flows to “Offtaker: Identify likely offtaker (utility, wholesale market, adjacent commercial load), Proximity to transmission lines and substations, State RPS requirements” flows to “Regulatory: NEPA – varying levels of analysis (categorical exclusion, EA, or EIS), Sensitive elements (endangered species, cultural resources, environmental contaminants), Air Quality permitting” flows to “Economics: Comparison of LCOE with retail rates (on-site and state average), Site-specific costs (feedstock price, interconnection cost)” flows to “Further Study Go/No-Go” which flows back to “Site Ownership and Control”]
There are many aspects of a project to consider, including the siting of your project, how it will connect electrically to your grid, local permitting requirements, what savings it will generate, how you will maintain it, and so on. If you've already done some initial due diligence on your project, we can also support with a financial analysis and either review an existing financial model you've developed or help you to develop one.
Finally, if your community has electric or thermal consumption data available, we can help you to put many of these project evaluation pieces together by evaluating your cost and resilience optimal mix of technologies using NREL's REopt platform.
[Figure showing Economically Optimum System with or without Energy Efficiency – Two Turbines. Image of how electrical flows from wind turbines to generators to homes]
This REopt analysis was used to evaluate potential renewable energy retrofit options for the community of Kokhanok, Alaska, to reduce their existing diesel power plant's fuel consumption by 50 percent. This involved developing renewables to offset their thermal electrical needs and consider the community's cost of fuel, power requirements to keep the lights on, and many other factors. This analysis found that this could be accomplished by retrofitting two existing turbines, adding two additional turbines, and adding 70 thermal electric stoves to heat community buildings. This was a very detailed analysis, but even if your community is considering a simpler renewable energy project, we may be able to assist you as well.
[Video returns to man speaking]
I've covered a high-level overview of some project financial analysis considerations, but I want to just state that there is much more detail on this topic to be considered, as I mentioned before. If you are interested in pursuing a project, don't hesitate to reach out to the ETIPP program, and myself or other experts at the national labs are happy to assist you. Good luck.
[Music plays, title screen with “Energy Transitions Initiative, U.S. Department of Energy – Partnership Project | Technical Assistance, Office of Strategic Programs| Solar Energy Technologies Office| Water Power Technologies Office | Office of Electricity]