As boards and executives in companies, like those in the petrochemical and mining industries, continue to adopt carbon reduction goals, operations personnel are finding themselves responsible for implementing projects to achieve them. While this can be overwhelming new territory, especially as solar developers come knocking, operators need to understand the value their sites already possess — and how that value can be leveraged to maximize returns.
The core work that solar developers provide is marrying three key aspects for site development: land, load and financing. This can be a complex yet instrumental process when executing at a greenfield site; however, those key aspects typically already exist within refineries and mining sites.
Land: Extensive acreage is needed for solar development, and petrochemical and mining companies may already have it in spades. Often refineries have unused land within the buffer zones between the plants and surrounding communities. Mining sites also typically have tailings, dams or sections of land that need to be reclaimed or redeveloped, offering considerable cost benefits if used beneficially for solar in lieu of returning to its natural condition.
Load: Identifying an end user, also known as an offtaker, for renewable energy is often the most complex function for the developer of a greenfield site. The interconnection process also can be time-consuming. And it may require significant investment to upgrade existing transmission or distribution infrastructure to connect a solar project and transmit electricity from the generation site to the end user. Behind-the-meter development, where the project produces no more energy than the load at the refinery or mining site, alleviates both these issues. Because the host site has a specific load to supply with renewable energy, coupled with available land, a behind-the-meter strategy can eliminate the need for interconnection and associated upgrade costs.
Financing: Securing the necessary capital — with the ability to monetize the investment tax credit — is another service developers often provide for a development fee. However, petrochemical and mining companies are often able to deploy capital and have sufficient tax appetites to alleviate the need for third-party financing of solar projects. This can maximize financial benefits and effectively lock in an electric rate on the portion of electricity generated on the site for the life of the project.
Petrochemical and mining sites can be rich deposits for developers. However, these companies can extract value from their own assets by bypassing traditional developers and engaging an engineering and construction firm instead. An integrated design and construction company, such as Burns & McDonnell, can offer comprehensive services related to environmental studies, site development and permitting support, engineering and construction. This support can even extend to developing a pro forma to assess financial performance, including rate of return calculations for a solar project. This integrated, in-house team approach can streamline the project process and deliver the same end product as a solar developer — without the added development fee.
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