Renewable Energy Handbook 2010 - Department of Finance - The ...

A number of different assessments will be undertakenduring the feasibility study. These include a siteinvestigation (including data collection); a preliminaryengineering assessment; and a preliminary land use(environmental, heritage and planning) assessment.A site inspection will also be required to obtain thenecessary data to complete the study. Information tobe collected for the feasibility study should include:Project site, infrastructure location and·infrastructure access corridors, includingproximity to sensitive environmental areas;Community issues and concerns;·Physical and legal access to the site;·Details of the local transmission network;·Security of resource supply, including possible·resource monitoring or audit;Whether the site is deemed prospective for·minerals by the Geological Survey ofWestern Australia;Proximity to a workforce;·Distances to services such as electrical substation·and water;Projected site energy expenditure and consumption;·Preferences regarding the use and/or sale of·energy generated; andPreferences regarding project fi nancing and·ownership.The preliminary engineering assessment is animportant part of the feasibility study. The marketshould be canvassed for information on the capitalitems required for the project, such as gas extractionsystems, power generation equipment or windturbines and towers. From the initial data collectionand review, a number of technologies will typicallybe selected for technical assessment and economicreview. Factors to consider include:Capital cost estimates, based on Australian·manufacture or transport and import to Australia;Supporting infrastructure costs;·Operation and maintenance costs;·Electrical connection costs;·Revenue streams from sources such as generated·energy and RECs; andLikely environmental impacts and assessment·of relevant legislation.OFFICE OF ENERGYRENEWABLE ENERGY HANDBOOK 2010After identifying all the options for utilising theappropriate technology from a technical andeconomic analysis, the likely environmental andheritage impacts need to be assessed. Similarly,planning policies and legislation will also needto be reviewed to determine the likely land usedevelopment approval process for the project.Following the selection of the most appropriatetechnology from a technical, economic andenvironmental perspective, a preferred projectdesign can be developed. It will also be importantto begin preliminary negotiations for a PowerPurchase Agreement for the sale of electricitygenerated and any “environmental credits”such as RECs associated with the project.Preliminary discussions with investors are generallyheld during this part of the project development.Increased market demand for renewable energyhas stimulated considerable interest in this areafrom the fi nancial sector. Banks, venture capitalistsand other investors, including energy retailers, mayfund renewable energy projects through either theprovision of debt or equity, provided that key projectrisks can be appropriately managed. The availabilityof this fi nance is a critical element for the developmentof renewable energy projects as the capitalexpenditure requirements can be signifi cant.Projects should be based on commercial viability,however State and Federal Governments may offerother incentives and grants. The range of fi nancialsupport will change over time and should bereviewed as options in the feasibility study.Some of the key risks a project fi nancier mayidentify when undertaking their due diligenceprocesses for a renewable energy facility areoutlined in the Textbox below. The table alsodescribes risk mitigation measures that a fi nanciermay require evidence of prior to becoming involvedwith the process.29DEVELOPING A RENEWABLE ENERGY PROJECT IN WESTERN AUSTRALIA