The Four Forces of the Energy Evolution

The Project Development Landscape for Renewables (Investor)

Investment in renewables has been accelerating quickly due to a host of reasons that have been or will be addressed in this series including, but not limited to, investor sentiment and associated access to capital, policy incentives and tax equity structures, and declining costs and increasing efficiencies of renewable technologies. The four forces of the energy evolution, to which this blog series refers, has largely created a crowded space for investors. It is imperative to understand and monitor the current project development landscape continuously to ensure that all risks and opportunities are being considered in any renewable project investment. Enverus Power & Renewables offers the most comprehensive Project Tracking capabilities thanks to the size and scale of projects covered through the most comprehensive monitoring of sources in the market.
So, what does the project development landscape look like at the time of writing? First, let’s start by looking at the mix of projects by First Power Date (Figure 1). This clearly demonstrates the changing power generation project mix and how it has changed over time. To summarize the major trends, new coal capacity additions have been declining over time as they gave way to the superior economics of power generation from natural gas, which dominated the generation mix additions in the late 2000s and early 2010s. Since then, the major new renewable technologies (wind and solar), have continued to gain market share of capacity additions. Capacity additions from these technologies are roughly two-thirds of all sources as we begin this decade. Based on all proposed, planned, and under construction projects moving forward, this overwhelming dominance in capacity additions for wind and solar are slated to continue. Additionally, the mix of new capacity additions is expected to get more solar heavy as the technology continues to experience further cost declines and efficiency gains.

Figure 1 | % of Project Capacity Additions by Type and First Power Date

(Source: Enverus P&R - Project Tracking)

Although this graphic is very useful to tell the story of the changing project pipeline, it does not tell the whole story. Changing the view to understand the size of capacity additions over time tells an alarming story about the current project pipeline at the time of writing (Figure 2). There is an abundance of wind and solar capacity additions proposed, planned, and under construction in the coming several years. This abundance of projects doesn’t need much quantification to cause alarm and leaves no doubt that the project pipeline is overcrowded. In fact, in Enverus’ conversations with developers, many have expressed that the chances they associate with projects on their docket being built is around one in five (of course, there is a range around this from developer to developer).

Figure 2 | Project Capacity Additions by Type and First Power Date

(Source: Enverus P&R – Project Tracking)

The map shows the wind and solar projects and their status in the US (Figure 3). Given the overcrowded project pipeline, it is imperative that all the risks, present and future, that might be associated with an investment are taken into consideration. This requires a diligent tracking tool to be in place to understand what projects are planned or proposed around the target investment, where they are in the process of the necessary approvals and whether they have financing, offtake agreements, and PPAs in place. Combined with the rest of the Enverus Power & Renewables suite of products, Enverus P&R – Project Tracking can highlight the risks around the target investment and reveal the most enticing opportunities. Enverus’ capabilities allow for developers and investors to understand the competitiveness of a project. This includes capabilities centered around economics, proximity to demand, and congestion among others. This blog series will continue to cover these capabilities and how it can add to the foundational capabilities that the Enverus P&R – Project Tracking platform provides.

Figure 3 | Wind and Solar Projects by Status

(Source: Enverus P&R – Project Tracking)

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