To partner or not to partner?

 Is aggregation going to spearhead a growth in the renewable energy arena? This article seems to suggest so. The simple idea behind "aggregation" is as follows:

  1. two or three companies come together for the purpose of developing a renewable energy project (wind farm/solar array) that will generate enough power to be able to cover each of the participants' energy needs;

  2. this joint venture may or may not involve a company that specialises in renewable energy projects and which will have the necessary expertise to undertake this development;

  3. once the project is operational each of the participants reaps the benefits (i.e. the electricity generated) under a power purchase agreement and/or other contractual arrangement.

Is this a viable model? Potentially. The proposition raises more questions than it provides answers:

  1. how is this joint venture going to be structured? Notwithstanding the participants' joint purpose each of the participants will have its own corporate agenda and board to satisfy.

  2. Such a venture will require a certain degree of "openness" and collaboration. How much information are participants willing to share and how will market intelligence be safeguarded;

  3. Any arrangement for the purchase and/or use of electricity will be highly technical, as the energy profile of every participant needs to be taken into consideration;

  4. What are the net benefits for each participant and how will these materialise (in financial terms)?

Aggregation is, as correctly pointed out to still be in its infancy. It will require some brave "new entrants" to take the time and expend the energy required in creating a viable financial/technical model, which will then need to be reflected in the legal agreements that the parties will be entering into.

However, we have met this type of challenge head on before with 5 + 5 solar parks where community entities and commercial developers have had to align interests so it can be done.