Romanian Renewable Energy market, after a hot summer: 6 necessary to understand truths, for RES investors and project owners
During this summer I had the chance to discuss with more than 250 investors in Renewable Energy and almost 80 owners of projects (Wind, Solar, Hydro, Biomass and Biogas). Advancing to a deal is not always easy, but we managed to reach agreement in many cases. This also provides experience and valuable lessons. Let’s check 6 of them together:
1. Less than half of the projects available are really “good to be built”
As our in-house lawyer conducts a pre due-diligence for the projects we receive, I can confirm that more than half of them are not really “good to be built”. I know, people are using the term “Ready to Build”, but this only means that it can be constructed. We focus on its details and parameters and we see a lot of “poor quality” projects.
2. Less than half of the “investors” are real
As almost all the European markets are closed, thousands of investors come to Romania. But less than half are real investors. The majority simply wants to sign no paper, talk and do nothing. Many times they offer high prices without having the money, just to prevent a project from being sold.
3. No papers are given = no transaction is sealed
Many owners are reluctant to provide the papers of their projects because they claim they can’t have them circulating the market. On the other hand, being an entrepreneur means that you choose the appropriate partners and work only with them. Truth is that without papers studied in advance, no transaction was sealed.
4. “Not Ready to Build” usually means “Ready to build soon, adjusted to your demands”
During this summer tens of serious investors seem to have realized that the “Ready to Build” sign isn’t the most important element of a project. As they have to deliver their own technical solution, they understand that even a “RtB” project needs time to be re-approved, adjusted to their demands. This is why many deals included projects which were in a very advanced stage of development.
5. A project should be developed taking into consideration all the possible future problems / controls
I see so many projects that are offered based on the following approach: “This is what I have for sale. I don’t care what you do with it. Pay me and good luck”. But the investor has his own standards in mind, the bank’s requirements, the EPC’s advices, even what a potential future buyer will crosscheck. When the owner fails to realize this, the transaction gets canceled.
6. In Hydro, Biomass and Biogas, the investor should get involved in the earlier stages of development
If one wants to invest in Hydro, Biomass or Biogas, soon he realizes that he has to get involved in the projects’ development. This does not mean that he has to invest then, but to verify and guide the owner, customizing the project to his standards because the market offers some reasonably priced “semi-developed” projects and few “Ready to Build” ones.
My experience says that the deal is done when time is invested in preparing it in advance. Each project has to be properly understood in order to be presented. Its documents should be available (but not to just anyone) and advancement is made when both sides really want to.