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Wind Farm Valuation Services

Wind Farm Valuation Services

Looking at selling your wind power project?

Make sure you know your wind farm’s worth

An offering from EAI’s Wind B2B

With the Indian wind power sector maturing fast, many wind farm owners are keen on exiting their wind farm investments to focus more on their core business as well as generate/free-up capital from internal resources. Equally important, a number of prominent independent power producers are keen to acquire good quality wind farms, especially those in regions with high PLF potential.

But selling wind farms can be tricky as there aren’t readymade metrics to evaluate the true worth of your wind farm. Setting a high initial price often drives your most serious investors away and reduces the chance of selling your wind farm quickly. On the other hand, setting a low initial price will result in loss of value. Raising the price later on only irks the prospective buyer.

If you are a prospective wind farm seller, make sure you talk to experts at EAI’s Wind B2B division. We can provide:

→   A valuation of your wind farm that gives you a significant advantage while negotiating a sale

→   Brief details of the framework we use to get a valuation for your wind farm.

Key Benefits

  • As a wind farm owner, you get an idea of the financial value of wind farm. These inputs will be a critical advantage when you are trying to sell a wind farm.
  • You will understand the basis on which wind farms are evaluated financially by professional buyers, especially independent power producers who are the most prominent buyers of wind farms today.
  • Your interactions with EAI’s Wind B2B can also lead to a more productive association as the Wind B2B division also assists large IPPs in acquiring high quality wind farms in all across India.

 

Wind Farm Valuation Metrics

 

Age

The age of the wind turbine is one of the most important factors considered in its valuation. 20 years is, typically, considered the life time of a machine and naturally, the number of years that it will generate revenues for will be the first consideration for both the investor and their bankers.

Average Annual Generation or Plant Load Factor

Arguably the biggest contributor to price, the PLF or the average annual generation implicitly reflects the quality of the site, wind resource assessment, turbine, commissioning work, operations and maintenance as well as the future return prospects. Quite simply put, higher the PLF, greater is price that can be expected for the turbine. A PLF of 20%, on average, is considered good for a wind farm.

Power Purchase Agreement and Revenue Potential

The tariff i.e. revenue generation per unit produced, the tenure and the counter party are important contributors to stability for the investors.  Stability directly adds value to the price point i.e. a longer PPA will attract more value than a shorter PPA.

Some PPAs that have been signed with various state distribution entities are not valid throughout the life of the turbines. In this case, the alternative revenue option as well as the path to get there must be considered during the valuation process.

Other important value determinants (not in any particular order) are:

  1. Machine background and reputation in the market
  2. Operation and Maintenance contracts signed
  3. Tax credits availability
  4. Creditworthiness of the off-taker
  5. Insurance cover

Why EAI’s Wind B2B

 

A Dedicated Service

Renewable Energy is a dynamic industry, and so is the wind power sector. Regulations change frequently and so too do operating conditions and future possibilities.

Therefore, there is a chance that inputs to a valuation methodology may be outdated or that prices are not in line with the current market both of which will result in a loss of value.  A dedicated approach will definitely address this factor.

The Wind B2B division of EAI is fully dedicated to assisting buyers and sellers of wind power plants. Thus, we have both the expertise and the network to provide high quality valuation services.

Wind B2B Team

  1. Srikaanth Sarangapani has 16 years of experience in the wind sector having previously worked with Kenersys, a wind OEM, as an Associate Vice President in his last post. Prior to that he took on an Associate General Manager role in Hindustan Zinc and was critical in the quality testing and commissioning of their 100 MW plant in Gujarat. He has earlier worked with Suzlon Energy, Pioneer Wincon and NEG Micon.
  2. Narasimhan Santhanam’s work for the Indian renewable energy industry has focused on providing business intelligence, opportunity analysis & recommendations to entrepreneurs, top management and businesses expanding into renewable energy and clean technology. Narasimhan did his Bachelor of Technology (B.Tech) from the Indian Institute of Technology, Madras and has a Post Graduate Diploma in Management from the Indian Institute of Management, Calcutta. He is the founder and director of Energy Alternatives India (EAI).
  3. Venugopal Sampathkumar has been working with EAI for the three years now. Having worked on a market entry strategy for Regen Powertech, a pan-India wind strategy study for Indo Rama Renewables in 3 states, he brings in a holistic understanding of the power and wind industry. Venugopal is a professional financial analyst having completed 2 levels of the CFA Program from the CFA Institute, USA and da B.Tech in Electronics and Communication from the College of Engineering, Guindy.

 

Interested? Send a note to consult@eai.in with Wind Farm Valuation as the subject line and we will get back to you.