Selling Assets Vs Building a Platform, Why Small Scale Solar Developers Should Strive To Build A Platform & Create Long Term Value

Developers try to sell their projects as early as possible in the development stage, to get some cash in the business or because they do not have the necessary team or financial resources needed.

Although selling solar assets for a development fee is a good business, it has significant downsides compared to building a platform*, we try to summarize below:

*A Renewables Platform is a vehicle that owns & operates assets in addition to the development business.

1.     Creating Significant Value:

When you sell projects, investors value the asset only (i.e. development premium).

When you build a platform, investors value the team, future growth projections and your proprietary processes or IP, in addition to the value of the asset.

 2.     Managing Your Risk:

When you sell projects, your revenues/cashflows are dependent on success of the projects you can sell i.e. if new assets are not successfully developed, there are no revenues.

This could be highly cyclical due to project delays putting too much risk on your business sustainability and growth.

When you build a platform, you have a source of stable cashflows that comes from owning a piece of the assets (usually a small piece) yet it could be used as collateral for other facilities or as an annuity payment for the developer.

You also share any upside generated from the projects.

3.     Accelerating your Growth:

When you sell projects, you could elect to recycle your profits into further developments, but it will be tough to hire new personal or pursue further growth avenues.

When you build a platform, your growth and new developments could be funded by third party investors, allowing you to manage a more sustainable business, and focus on project development and growth instead of focusing on liquidity issues and working capital.

At eDGe Renewable Partners, we help developers build renewable energy platforms. Please feel free to contact us if you have any questions or would like to learn more about our financial solutions for small scale developers. Email: Samy@cleanedgepartners.com