An Overview of the Development of a Renewable

Energy Project

And the 5 Major Milestones to Achieve Financing

By Robert HunterDirector of Operations, Green Coast Energy

Phone: 386-747-3741

rhunter@greencoastenergy.org

Milestone 1: The Concept• What technology, what fuel type?

– Biomass, wind, solar, waste heat, etc• What State/County/City?

– Choice of state will be contingent upon state renewable policies & permitting requirements

• The Business Model/Pro Formas– How much will it cost? Is it cost-feasible?

Milestone 2: The Location

• Local support• Zoning--generally

Heavy Industrial• Rail and/or highway

access• Size• Interconnection

with local utility• Permitting--DEP,

EPA, FERC, etc

Milestone 3: The Purchased Power Agreement

• Primary source of revenues, most important part of a successful project

-And the part that the PSC has the most ability to make a difference

• Term• Capacity payments• Energy payments• Fixed energy payments

-Mitigates fuel price volatility to customers-Makes financing more feasible due to less

uncertainty in revenue• PSC Approval

Milestone 4: The Fuel Supply

• Heat rate of fuel type, in BTU's per ton

• Tons required per day to operate plant

• Tipping fees from fuel suppliers

• Cost of fuel preparation (cleaning, etc)

Note: This primarily describes an example biomass/waste-to-energy project. A solar or wind project would not face these same

issues; either the resource is or is not there, and no contracts must be signed to utilize the sun or wind.

Milestone 5: The EPC Contract • Sign turnkey agreement with engineering firm

that specializes in EPC• Or, a very experienced Developer's Engineer

could purchase all the equipment from different manufacturers (a boiler from Vendor A, a turbine from Vendor B, etc)

• Total cost to install per KW• Construction time frame

The 5 Steps are Completed: Now What?

• To obtain financing, the renewable project must demonstrate – Enough revenues to meet a debt coverage ratio– An Internal Rate of Return that is satisfactory to

equity investors

• Debt vs Equity: The Financing Mix– High level of competition for equity funding from

other states…required rate of return often 12%-30%, higher when more projects competing

What Can the Public Do to Help Bring Renewables to Florida?

• Understand the full costs of NOT having renewable energy (pollution, dependency, upward-trend price volatility)

• Understand the value that renewable energy brings in future price stability and environmental conservation

• Keep these in mind if the price/kwh of renewables is initially higher than fossil fuels

Gas Prices Illustrated

What Can the PSC Do to Help Bring Renewables to Florida?

• The PSC has great influence over the most key part of the renewable project: the Power Purchase Agreement.

• Staff and Commission has been working diligently for some time, and has recently adopted a rule that makes great progress.

• Now, it is up to the PSC to enforce this rule and require Standard Offer Contracts to fairly compensate renewable providers.– Contracts must provide enough revenues to

cover expenses, and offer sufficient return to equity investors.

The Bottom Line

• If the PSC requires and approves Standard Offer Contracts from the IOU’s as previously mentioned, then renewable energy will blossom and thrive in Florida.

• This will encourage financiers to bring their investment money to FL, and provide environmentally-friendly, price-stable electricity to the customers.

• Florida becomes a national LEADER in renewable energy, and a paradigm for other states.