Project Development Risk and Opportunity: A Due Diligence Case Study
A meticulous due diligence process and comprehensive project valuation were critical in determining the viability of acquiring a greenfield project in a rapidly evolving market. Drawing upon our extensive experience in project development, we conducted a thorough assessment of development risks and opportunities to support an informed investment decision in a dynamic landscape.
Market Analysis and Business Case Development
One of the key components of our due diligence process was evaluating the market need for power in the region. Given the fluctuating dynamics of electricity demand and supply, we explored innovative offtake solutions to strengthen the project’s business case. This included:
Assessing regional energy needs: Understanding the future power demand and existing supply gaps.
Exploring corporate PPAs and alternative offtake models: Identifying potential industrial and commercial buyers who could provide long-term revenue certainty.
Comparing cost competitiveness: Evaluating how the project’s levelized cost of electricity (LCOE) compared to neighboring regions.
Assessing the viability of long-distance export: Exploring opportunities to export power to a neighboring market with significant demand, ensuring greater revenue stability and maximizing the project’s economic potential.
Stakeholder and Partnership Engagement
Recognizing that successful offshore wind development depends on strong stakeholder relationships, we took the lead in engaging key project partners. We facilitated discussions to assess the level of:
Indigenous consultation and engagement: Ensuring that Indigenous communities were meaningfully included in project planning and benefit-sharing discussions.
Regulatory and permitting considerations: Identifying any constraints or upcoming regulatory changes that could impact project feasibility.
Responsible development commitments: Aligning the project’s environmental and social governance (ESG) factors with best industry practices.
Development Risk Assessment
A crucial aspect of our review was examining the potential joint venture from a developer’s perspective. We identified key risks that could impact project value, including:
Regulatory Uncertainty: The potential for a shifting regulatory landscape posed a significant site possession risk. A change in permitting structures could dramatically alter the project’s viability and valuation.
Land Tenure and Site Control: Ensuring that the project had strong protections against competing interests that could reduce its long-term strategic positioning.
Financing and Investment Horizon: Given the long-term nature of the project, we assessed the financial structures needed to de-risk capital investment.
To ensure a comprehensive analysis of the development risks in a new and unfamiliar market, we leveraged a team of development experts across finance, M&A, permitting, and stakeholder engagement. Their collective expertise enabled a nuanced and well-rounded evaluation of potential obstacles and opportunities.
Creative Negotiation and Structuring
We brought a creative approach to structuring the acquisition negotiations, exploring:
Innovative partnership models: Structuring a joint venture that balanced risk and reward across stakeholders.
Flexible payment structures: Developing milestone-based payments and alternative financing mechanisms to align incentives and de-risk the transaction.
Relationship Management: Maintaining strong relationships with all parties involved was critical. Throughout the process, we ensured that negotiations were conducted with integrity, transparency, and mutual respect.
Outcome and Strategic Insights
Through our rigorous due diligence process, we provided the client with a clear understanding of the project’s risks and opportunities. The project holds vast potential to deliver clean, renewable power at a lower cost than neighboring regions. However, its success hinges on strategic risk mitigation, stakeholder engagement, and adaptable business structuring.
By combining analytical rigor with creative problem-solving, we demonstrated how early-stage offshore wind development requires both a critical development eye and an innovative approach to partnerships. Our ability to maintain respect and collaboration among all parties positioned the project for long-term success, regardless of the shifting regulatory landscape.
This case study exemplifies the expertise and approach of Anwin Energy’s founders in navigating complex offshore wind acquisitions, ensuring that clients have a comprehensive understanding of both risks and opportunities before making strategic investment decisions.
