Case Study:

Structuring a High-Value Portfolio of Intermittent Generation Based on Offtaker’s Unique Criteria

Challenge

An offtaker issued a technology-agnostic competitive procurement for long-term supply agreements as part of their 100% renewable energy commitment. The offtaker communicated a strong preference for solutions that can satisfy an hourly matching criteria. In competing for the contract award, the Development Company (DevCo) was faced with a number of questions, including:

1

Out of our development and M&A pipeline, which individual asset or group of multiple assets should we submit?

2

What is the expected cost, and wholesale market risk exposure, of contractually guaranteeing the hourly-matching criteria?

3

What actions related to asset buildout, configuration, or trading should we take to manage this risk effectively?

4

How can we prove the tradeoff between risk and return is compelling in order to support the financing process?

Strategy

The DevCo and Castalune worked together to gather the various data appropriate to consider for each project in the pipeline and agreed on various constraints for how each project could be developed and configured. Castalune then generated thousands of unique portfolio combinations, each with different capital costs, operational costs, generation profiles, and wholesale market value profiles. The initial results were delivered back the DevCo within a week. The teams then worked together over the course of two weeks to iterate and refine the analysis based on different equipment cost sensitivities and financial metrics.

Results

The DevCo was able to:

1

Quickly identify and structure an optimal strategy to meet the customer’s unique commercial requirements using specific development projects

2

Maximize the risk-adjusted return on capital by expanding the evaluation process from 3x to 100,000x unique options

3

Establish a scalable framework for additional opportunities in which customers are seeking customized energy products

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