In this article, we collected detailed information on the procedure for preliminary analysis and selection of promising solar power projects. Our attention will be focused on projects “from scratch” that require long-term research, and those projects that are already at the final stage of development or are put into operation — “turnkey”. It should be also noted that any project under our consideration passes through several stages of research and preparation.
The first and most important stage is the study of local legislation and conditions for the PVS construction. Main factors:
- Rules for RES subsidizing. Such subsidies can be in the form of a fixed tariff and sometimes in the form of compensations, as well as hybrid schemes (such as Poland has).
- Quotas for each type of generation.
- Possible capacity.
- Terms of connection and grid electricity sale. It is necessary to know in advance about the buyer, purchase terms and operator. If possible, the entire energy system with its existing lines is estimated.
- Conditions for obtaining a tariff (single tariff for certain power or, for example, tendering and its conditions).
- Tax burden (possible benefits for renewable energy generators).
- The possibility of bonuses or benefits from the government on certain conditions (special economic zones, industrial parks, etc.).
Most often, all legislative documents are published in the local language, so we translate these documents when signing and providing audit. Thus, it is necessary to involve local lawyers and translators.
-> Analysis of past projects, tender results.
-> Potential economy estimation.
-> Assessment of requirements for equipment.
-> Identification of equipment supply possibilities (duties, bonuses for using local equipment, local manufacturers, etc.).
If we see the market potential and the opportunity to work on it, we get acquainted with local companies, which will deal with land issues and registration of necessary documents.
We study the proposed land plots:
- Study the general layout, location, proximity to roads and grids, determine possible risks.
- Check the documents, the site data, owners.
- Analyze the level of activity in a given place, as well as the climate.
- Check the documents confirming the possibility of building a PVS on a particular plot of land, and, if necessary, obtain the remaining environmental permits.
- Explore the grid connection (which power lines pass and how far).
- Carry out preliminary negotiations on payment terms optimization, cost, and other financial aspects.
We come, examine, check the documents personally.
After choosing the suitable land, we hire local lawyers, prepare documents, register the land purchase.
Nowadays, most countries use the tendering method of determining the electricity selling price. Therefore, the next step is to prepare for the tender:
- Obtaining permits and licenses (depends on the country). Most often it is necessary to re-arrange the land for the construction of a generating facility and obtain an environmental certificate. In some countries, it is still required to obtain permits that the land does not have archaeological value.
- Project registration with the indication of capacity, basic parameters and the point of connection to the grid. Inclusion in the power development plan for the region.
- Preliminary economic calculations of the future project. Here we define acceptable scenarios for participating in a tender.
- Tender participation. There are tenders where you can lower your bid online, depending on the behavior of the other participants. It can be a closed tender, where the price is set only once. There are also tenders with automatic bidding, when the initial price, the minimum price, and the price reduction threshold are set. Thus, the process is automatic.
As soon as the issue with the tariff was clarified, even before the conclusion of the agreement itself, we can make a full economic calculation of the future project, as well as prepare scenarios for its financing.
We are doing all the technical part of the project (described in our blog earlier), as well as pre-project and design work. We find local contractors for construction and commissioning.
After choosing the best option, we begin negotiations with banks and institutions on the project’s financing. We get loan financing, in order to improve the conditions for our investors.
Once all the documents have been signed, we have a fully prepared project and received funding, we proceed to implement it. However, there are still at least several months of hard work:
- Land preparation for construction, landscape works
- Ordering and delivery of equipment
- Installation and commissioning
- Final check and grid connection
We have only described the most important stages of project implementation, without going into details of all permits, contracts and other legal papers that need to be signed or received for this implementation.
On average, the whole process of building a turnkey station from scratch takes a 1–1,5, sometimes 2 years.
Of course, we are also working with projects in the RTB (ready-to-build) and advanced development stages, which shortens the time to several months.
For such projects:
- We search and pre-select suitable projects depending on the country, location, tariff, etc.
- Sign preliminary documents with the seller: NDA, MOU.
- Request documents and conduct negotiations with the seller of the project.
- Check the submitted information, documents (land, PPA, grid connection agreement, permits and licenses, data about the company and owners).
- Perform a number of economic calculations in various scenarios to determine the optimal way for participation in the project (purchase of a company project, opening of a company and transfer of obligations, obtaining a stake in the company or other options)
- Prepare the contract, agree on it, check with the lawyers and if everything is ok — once again we meet, recheck the documents and then sign it.
We summed up the main stages of preparation and construction of Solar Power Plants and tried to show all the possible problems that we may face. We hope for your understanding because our work must be done faultlessly to make our investors happy.
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