Battery Storage Due Diligence
A large renewable energy developer engaged K&M to provide strategic, market, and regulatory services to support its preparation in submitting an initial non-binding expression of interest to invest a minimum of US$50 million of equity in facilitating the growth of a battery energy storage solution provider and technology company that combines its proprietary software with end-to-end project delivery for C&I and generation customers across Latin America.
As part of the project, K&M completed the following tasks:
- Review relevant materials provided in the data room for Round 1 and recommend clarification questions for the sell-side advisors
- Provide quantitative and strategic analysis and participate in discussions designed to reach a decision regarding participation in the investment process. The analysis was focused on the attractiveness of core markets, the attractiveness of other selected markets, regulatory changes and risks, assessing and commenting on key investment criteria, identification of any key critical commercial and regulatory market risks and opportunities with respect to target markets, pillars for growth and uses of funds, and review of relevant technologies.
Review and comment on the sell-side financial model, with expected targeted returns from an investment in the company and targeted return and valuation for the AssetCo business model.
Caribbean Utilities Company (CUC) plans to renew the contracts for purchasing ULSD from Sol and Rubis. As part of this renewal, CUC wants to refine the fuel supply contracts used in the past and revisit if PLATTS is still the optimal fuel price index for CUC.
K&M will improve and refine the fuel supply agreements that CUC used in previous fuel supply tenders. K&M will also analyze if PLATTS is CUC’s optimal fuel price index. This analysis will include investigating which fuel price indices CUC’s fuel suppliers are likely to use to buy the fuel they supply to CUC and whether CUC would be better off using those indices rather than PLATTS. Based on this analysis, K&M will make specific recommendations on an appropriate fuel price adjustment formula.
K&M will assist CUC in developing new drafts of the primary and secondary fuel supply contracts that reflect the above improvements and refinements.
K&M will then assist CUC in preparing an RFP and reviewing and evaluating the proposals submitted by Sol and Rubis.
An electric utility is selecting a company that will supply natural gas for power generation. The prospective supplier is expected to import LNG delivered at an onshore or floating terminal and send gas via pipeline to the client’s power plants. The client intends to select one of the shortlisted firms as a “Preferred Supplier” and commence negotiations. The client requested K&M’s commercial and technical advisory services during these negotiations and the contract implementation with the prospective gas supplier. The services K&M is providing in this project include estimating the LNG demand, analyzing the business case to switch from diesel to natural gas, analyzing the viability of various sites, developing the gas quality specifications, and advising throughout the process of negotiating a gas supply agreement (including setting a negotiation roadmap, developing an issues list, participating in negotiations, and providing support until the agreement is executed).
K&M’s scope of work includes:
- Analyzing historical operational and dispatch information of power plants that will be converted to gas
- Developing an hourly merit order dispatch model to estimate hourly generation for each plant during the next 25 years
- Analyze the technical viability and costs of converting generation units to gas
- Calculate the levelized-cost of electricity under various generation expansion scenarios and advise on the least-cost option
- Develop gas quality specifications
- Estimate the all-in cost of gas delivered at the power plant battery limit and benchmark it against similar projects
- Actively support throughout the negotiation process
The U.S. Trade and Development Agency (USTDA) sponsored the Global Procurement Initiative: Interstate Clean Energy Procurement Program for India. This program consists of multiple activities, including two (2) separate and distinct workshops hosted in New Delhi, India, that trains participants on clean energy procurement practices.
The workshops are designed to investigate how to integrate best-value determinations and international best practices in public procurement for India’s clean energy sector. The training specifically explores value-based procurement mechanisms designed to achieve optimal results from public procurements in the energy sector using advanced value and quality-based procurement methods. The aim of the workshops is to improve technical capacity in developing technical specifications, utilizing life-cycle cost analysis (“LCCA”), and creating non-price criteria for evaluation factors. This Program will also provide a platform for cross-border knowledge sharing in the procurement of renewable energy.
K&M was engaged by the Business Council for International Understanding (BCIU) to develop and deliver USTDA-funded training sessions on international procurement best practices and practices to achieve value for money in the clean energy sector.
The workshops were designed to investigate how to integrate best-value determinations and international best practices in public procurement for India’s clean energy sector. The training specifically explores value-based procurement mechanisms designed to achieve optimal results from public procurements in the energy sector using advanced value and quality-based procurement methods. The aim of the workshops is to improve technical capacity in developing technical specifications, utilizing life-cycle cost analysis (“LCCA”), and creating non-price criteria for evaluation factors.
The K&M team provided input on agenda development, developed training presentations, and content, participated in an industry roundtable with private sector representatives, and delivered training sessions to public sector energy sector representatives from 10 Indian states.
K&M traveled to New Delhi to deliver training sessions on the role of new energy technologies, best value structures and processes, developments and lessons learned in renewable energy tenders, ensuring bankability of energy projects, financial and commercial considerations for renewable energy PPAs, and considerations for value management during tendering and implementation.
U.S. Trade and Development Agency (USTDA) is working to implement the Global Procurement Initiative: Understanding Best Value (GPI) Regional Energy Procurement Program for South Asia (REPPSA) Virtual Training Series. The purpose of the REPPSA Virtual Training Series is to learn about innovative best-value procurement practices to support the development of high-quality energy infrastructure. The REPPSA Virtual Training Series is broken into a two-part training series focused on best practices in the procurement of energy infrastructure.
K&M was engaged by Green Powered Technology to develop and deliver USTDA-funded training sessions on Public Private Partnerships for Energy and Power Purchase Agreements. The workshops were designed to learn about innovative best-value procurement practices to support the development of high-quality energy infrastructure.
The K&M team developed training presentations and content and delivered virtual training sessions to public sector energy sector representatives from Maldives, Sri Lanka, Nepal and Bangladesh.
K&M delivered virtual training sessions on use of PPPs for energy sectors, PPP planning, PPP procurement preparation and design including non-price evaluation factors, PPP implementation, role and development of PPA, development of bankable PPA, roles and best practices of key PPA provisions, and incorporation of non-price evaluation factors in PPA.
Caribbean Utilities Company (CUC) has expressed its intention to procure gas supply for its power plants competitively. The procurement process will involve several key activities. To begin with, there will be a prequalification process where interested parties will be assessed for eligibility. K&M, in its role as an assisting entity, will support CUC in this process. Their responsibilities include drafting the Request for Qualifications (RFQ), developing project advertisements, launching the prequalification process, and assisting CUC in evaluating the responses received.
As part of the RFQ, K&M will conduct a gas demand analysis to provide an understanding of CUC’s expected gas demand, which will provide valuable context to the bidders. Furthermore, K&M will design the bid process and establish the technical and financial evaluation criteria based on the project structure and chosen contracting modality for gas supply.
K&M will also play a crucial role in preparing the Request for Proposal (RFP) document and the term sheet for project agreements, ensuring a solution-neutral tender process. At CUC’s direction, K&M will distribute the RFP documents to the prequalified bidders and manage any clarifications or inquiries from the bidders. K&M will be responsible for drafting responses to these inquiries and coordinating the receipt and control of all proposals.
Following the opening of the proposals, K&M, in collaboration with CUC, will evaluate them on a pass-fail basis. Technical and responsiveness evaluations will be conducted, and K&M will prepare a recommendation to CUC based on the evaluation results. The recommendation will include the necessary analysis, examples of submittals, and supporting documentation regarding the responsiveness test.
Once the highest-ranked bidder has been selected, K&M will provide assistance in the negotiation and finalization of the Gas Supply Agreement (GSA) term sheet. Furthermore, they will collaborate with international legal counsel to draft the complete version of the GSA.
Throughout the entire procurement process, K&M will actively support CUC, leveraging its expertise in managing the various stages, from prequalification to proposal evaluation and negotiation, to ensure an efficient and competitive gas supply procurement for Caribbean Utilities Company.
The Government of Kenya intended to create a domestic natural gas market for power generation and industrial use with the aim of diversifying the country’s energy mix, improving energy security, reducing the cost of electricity, and lowering greenhouse gas emissions. The primary objective of the project was to conduct a feasibility study for the development and operation of infrastructure for the importation of liquefied natural gas, the conversion of existing HFO (MSD) Power Plants, and the development of a natural gas power generation plant.
KenGen contracted K&M to analyze the technical, financial, economic, environmental and social feasibility of the development and operation of infrastructure for importation of liquefied natural gas, conversion of the existing HFO (MSD) Power Plants and development of a natural gas power generation plant to determine what, if any, options would be optimal for natural gas power generation in Kenya. As part of the study, K&M will complete the following tasks:
- Evaluate indicative LNG demand and where the demand is located
- Identify the least-cost LNG import and logistics solution to meet the demand
- Develop a business case for LNG at the cost estimated
- Evaluate LNG supply & infrastructure procurement strategy
- Develop preferred procurement option and conduct financial, economic and value for money analysis
- Conduct technical assessment of feasibility to convert 10 existing power plants from HFO/diesel to LNG
- Develop conceptual design and cost estimates for plants to be converted
- Carry out financial viability analysis for plants to be converted
- Prepare implementation schedule and risk assessment for plants to be converted
- Conduct technical assessment of a greenfield gas power plant
- Develop conceptual design and cost estimates for greenfield gas power plant
- Assess preliminary environmental and social impact of greenfield gas power plant
- Carry out financial viability analysis for greenfield gas power plant
- Prepare implementation schedule and risk assessment for the greenfield gas power plant
Oserian Two Lakes Power’s (OLTP) geothermal power plant is an important part of Kenya’s renewable energy and climate change prevention strategy. OLTP engaged POWER Engineers for support in ensuring a total load of 8 MW can be provided to industrial clients at Oserian via a high-voltage interconnection to Kenya Power and Light Company’s (KPLC) 33 kV distribution grid located nearby to avoid short-term use of diesel generation while OLTP further develops its geothermal resources.
K&M was engaged by POWER Engineers on a project to support the development of a geothermal/solar hybrid industrial park in Naivasha, Kenya, by providing an analysis of the requirements for interconnection of the industrial park to the national grid of Kenya to supply backup power. This project will provide technical assistance for the specification and design of a synchronized interconnection between the nearby 33kV KPLC line to the OTLP 11kV mini-grid.
K&M’s scope of work includes the following:
- Assessing the commercial and economic viability of the KPLC interconnection and its impact on the cost of power to OTLP’s industrial clients
- Identifying the factors that influence the economics of the project and of combined power provision by both geothermal resources and the KPLC distribution grid
- Recommending an operating procedure for decision makers to choose between OTLP geothermal/solar and KPLC grid-provided power
As part of its scope of work, K&M considered a range of technical options coupled with capital and operating expenditures (CAPEX, OPEX) to assess the economics of grid-supplied vs. geothermal-supplied electrical energy. K&M will incorporate factors such as KPLC time-of-use and bulk rate electricity tariffs, expected utilization characteristics of OTLP electrical load (timing, intensity, duration), and estimate investment and operational requirements to model and evaluate the project economics. K&M will identify factors that influence the economics of the project and evaluate their sensitivity and impact during fluctuations. Lastly, K&M will provide clear recommendations and operating procedures that identify when to use OTLP-provided geothermal power and when to use KPLC grid-provided power.
K&M compared the two (2) options (OTLP or KPLC supplied energy) on the basis of the lowest cost per unit of electricity under standard assumptions and produce a Cost-Benefit Analysis for the project.
K&M was contracted to develop a business plan for a rooftop solar company in Jamaica. This business plan will provide accessible financing and savings on monthly electricity payments through leasing and hire purchase rooftop solar models to residential, commercial and industrial customers.
K&M was contracted by a development bank to provide a global market assessment on floating solar projects and the potential development of a pipeline of such projects. This market assessment will expand across Africa, Asia, Latin America, Europe and Central Asia, but will primarily identify key markets in Africa and Asia. K&M will also suggest potential business models for the floating storage projects.