Intermittent renewables carry some level of manageable risk
Since renewables are intermittent sources of energy, they produce variable amounts of power that cannot be predicted with 100% certainty. The energy output must be quantified with a high level of certainty in order to be a bankable project. This amount of certainty or confidence is referred to as P50 or P90 production levels, for example, representing 50% or 90% probability of energy yield, respectively.
P90 is the industry gold standard - a conservative estimate for energy production. P90 means that there is a 90% chance the energy production will be equal to or exceed the projected P90 value over the system's lifetime based on an average annual power generation. For example, a P90 value of 10 MWh would mean that the energy system would have to generate 10 MWh 90% or more of the time. Otherwise, the project may not generate sufficient revenue to turn a profit and be of interest to investors.
This blog post will dive into how project developers and energy service providers determine P90 production level, and how by signing an on-site Energy as a Service (EaaS) contract, you are guaranteed renewable energy performance yields without being exposed to any amount of risk.
How to calculate the risks associated with P90 energy yield
With high capital costs, renewable energy projects are extremely sensitive to financial variables (such as construction delays or discount rates) that could make or break the project’s success. Project risks are generally associated with either construction or operation. Construction risks involve site, interconnection, engineering and design, and installation risks. Operating risks, on the other hand, encompass equipment failure, warranty risks, and, most importantly, production risk – which implies how much power the solar system is going to produce.
The components of the energy project’s uncertainty are the following, ranked from most impactful to least impactful:
- Renewable energy resource uncertainty (5-17%)
- Energy simulation, plant losses (3-5%)
- Annual degradation (0.5%-1%)
An energy service provider or technical advisor conducts all the analysis necessary to determine the project’s uncertainty and consequent P90 energy yield. Once the P90 net energy yield estimate is provided, the project's financial performance can be analyzed. The P90 assessment includes:
- Resource assessment: Collect weather data from on-site to measure solar potential
- Energy production modeling: Incorporate the system design, site topography, and predicted weather into computer modeling software to determine the estimated energy production
- Validation and calibration: Compare the estimated energy production to similar real-world projects to validate and calibrate the model
- P90 gross energy yield calculation: Conduct statistical analysis to determine the P90 energy yield
- Uncertainty calculation: Determine the standard deviation for the level of uncertainty associated with the gross energy yield
- P90 net energy yield calculation: Adjust the gross energy yield by various factors, including the plant availability, electrical losses, maintenance losses, curtailment losses, and degradation
Predictable and guaranteed energy generation with on-site Energy as a Service (EaaS)
Investing in renewables can be a risky endeavor, but it doesn’t have to be. EaaS operates on an outcome-based model and guarantees performance and savings. EaaS minimizes technical, financial, and regulatory risks, ensuring P90 production certainty without any chance of energy curtailment or low plant availability. Unlike traditional methods (such as PPAs) that might require years for a return on investment or runs the risk that the project will never actually come to fruition, EaaS allows businesses to immediately reap the benefits of assured energy and savings, all without the need for loans or on-balance sheet financing.
Enjoy predictable long-term pricing and reliable, clean energy generated with on-site EaaS without the burden or hassle of actually owning the energy asset. By paying a straightforward monthly energy subscription to your energy provider, you receive the benefits of an on-site renewable energy microgrid without any upfront or operational costs for state-of-the-art technologies and necessary infrastructure upgrades.
Partner with GreenStruxure to ensure P90 production
Invest with confidence by signing a long-term on-site EaaS contract with a leading energy service provider. With GreenStruxure’s commitment to ensuring energy volume, uptime, and performance, you can achieve your sustainability objectives, secure low-cost and predictable energy, and adhere to the latest climate policy regulations. We are involved in the complete project lifecycle, covering financing, engineering design, construction, operations, and maintenance.
Interested to learn more? Contact our energy experts today to find out how on-site EaaS can provide guaranteed P90 clean energy production to meet GHG Protocol regulations without any risk or capital required.