Technical Due Diligence

A renewable energy asset seems simple on paper: a capacity figure, a guarantee, an O&M contract. What the paperwork doesn't reveal is whether that asset ever operated to the capacity figure, whether that O&M arrangement was effective, or whether targeted maintenance had slipped into a baseline that the seller would prefer to keep concealed. Arc Renewables provides renewable energy technical due diligence UK lenders and investors can have confidence in answering those questions before a lender puts debt in play or an investor puts equity in play, not after, when the options have usually narrowed to the costly and combative. The same goes for technical due diligence on wind energy from those investors inspecting a wind farm operation, as it does for solar portfolios.

All renewables assets are sold against a modelled performance projection. When Arc Renewables performs solar technical due diligence on a purchased project, the question being asked is whether the project performed as modelled, not whether it is just producing. It includes the following:

• Comparison of actual generation data against the original modelled projection
• Identification of any systematic underperformance and its likely cause
• Assessment of whether degradation is tracking within expected limits for the asset's age and technology

This can be at the heart of any comprehensive PV due diligence process given that performance validation is often the most impactful determination relating to valuation.

The future performance of any asset is greatly influenced by how good its existing maintenance arrangement is, which is not always apparent externally until someone has gone through the contract and the contractor's previous work. Arc Renewables' solar maintenance due diligence UK work includes:

• Examination of current O&M contract provisions like response periods and SLA commitments
• Performance history of the contractor assigned to the asset
• Identification of any gap between the O&M contract terms and what was actually delivered

Deferred maintenance seldom appears in a seller's pack, as there's often little motivation for a vendor to freely admit its existence. Instead, Arc Renewables' solar asset condition assessment UK seeks it out, which entails:

• Physical and documentary review of deferred maintenance on key components
• Detection of latent defects which may impact future performance or asset life
• A tangible measurement of what any deferred maintenance/defects identified would cost to remedy and be calculated into the price of the transaction.

Many of the overall test findings that impact the final negotiated price will be centred around this phase of a full-scale TDD solar farm review.

A grid connection agreement or planning permission that appeared fine during construction can gradually become unfit for purpose over time. Arc Renewables records such work as may be equivalent to an IE report for the solar lender, with:

• Verification that the asset's grid connection terms match its current operating profile
• Review of planning compliance against the conditions specified in the original permission
• Any risk that planning or connection terms may limit future earning capacity or value of an asset.