Digitalization will turbocharge renewables deals in 3 ways in 2021

Yes, it’s that time of the year when we all gaze into our crystal balls and put forward our predictions for 2021.

And this year, my prediction is simple: 2021 is going to be the year when digitalisation turbocharges investment across renewables, storage and energy flexibility.

By digitalisation, I mean “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities” [source: Gartner]. We’re going to see this across three key areas:

1) Project origination

2) Due diligence

3) Power purchase agreements (PPA)

Let me explain.

1. Project origination: find a project

First off, we’re going to see the brokerage market for small/mid renewables projects increasingly move online. This is the inevitable result of market maturity and commoditisation, and is only being accelerated by the remote working patterns imposed by COVID-19. Example disrupters in this space are Positive Energy, Megawatt-X and – at the retail end of the market – Energise Africa.

2. Due diligence: identify and address risks

The second area where digitalisation is already having an impact is due diligence (DD). Current DD processes look increasingly outdated: financiers need more clarity on the DD review status and are all too often faced with last minute surprises. Meanwhile, advisors continue to be frustrated by the challenges of managing data, client communications and review versions across multiple tools and emails.

The future lies in real-time, collaborative access to due diligence status and reviews, with automated risk filtering – as pioneered by LiveDiligence. This will increasingly be complemented by the mainstreaming of online contract negotiation tools, e-signing, deal management and dataroom innovations.

3. Power purchase agreement: secure a route-to-market

The third – and most mature – area of digitalisation is in PPAs. Online providers such as Pexapark, Zeigo, RenewableExchange and Levelten boost price discovery and liquidity in renewables PPA markets. In the post-subsidy era, these marketplaces are increasingly essential, helping to solve the number one problem for most renewables projects: revenue maximisation. 2021 will be a year of significant growth for such players.

The impact: increased efficiency, lower cost

All of this digitalisation is going to be great news for our climate: helping to speed up renewables project deals, whilst reducing costs too. Please hold me to account on my predictions at the end of this year.

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