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Wood introduces renewable energy ROI forecasting service

The firm has launched its power price forecasting (PPF) service to provide customers with greater certainty around the financial return they can expect from investment in renewable energy projects.


Wood has launched a new power price forecasting (PPF) service to provide customers with greater certainty around the financial return they can expect from investment in renewable energy projects.

In recent years, significant reductions in renewable energy generation costs has seen many governments remove the financial subsidies traditionally available for renewable projects and instead turn to competitive auctions to extract the lowest cost possible for electricity procurement.

This shift has fundamentally changed the level of risk facing developers, investors and lenders on renewable projects as they’re now exposed to a more volatile merchant price rather than a fixed rate.

As a result, developers need to apply much greater rigour over their future revenue assumptions, all of which requires detailed insight on electricity price forecasts.

Wood’s new PPF service will provide customers with clarity on real-time electricity costs, plus an ability to simulate future costs based on a range of different scenarios.

This dynamic modeling enables them to see where the investment risks and potential upside opportunities could lie throughout the lifecycle of a renewable project based on forecast electricity prices.

“Our PPF service enables customers to make more informed commercial decisions during capital intensive transactions,” said Bob MacDonald, CEO of Wood’s specialist technical solutions business, in a media release. “With unsubsidized project development activity increasingly common, and wind and solar levelized cost of energy at, or below merchant power prices, understanding the long-term trends in energy and merchant power markets has never been more important.

“Our customers are also keen to understand the economics of asset life extension on renewable energy projects and the impact that the decarbonization agenda will have on their business models. By combining our technical skills and our commercial modelling expertise, we can help customers make smarter decisions and optimize their financial return at all stages of a project.”