GloPro Hotspots: Renewable Energy

As governments turn their attention to energy transition as a means to spark economic growth, the PPP industry is seeing a number of sectors emerging as frontrunners in this area

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As the results of climate change become increasingly evident, efforts to mitigate greenhouse gas emissions by delivering new, energy efficient infrastructure are becoming ever-more important.

Many countries are in the process of adapting their energy policies and laws to encourage investment in renewable energy sources (or in some cases have already done so), with alternative financing, legal and commercial frameworks being sought and implemented, including using PPPs to leverage private capital and expertise in order to support the development of the necessary infrastructure.

The recent growth of the renewable energy market has been driven to a large extent by these new and adapted policies, laws and regulations that encourage private investment in the sector. With plenty of these policies now in place, a global pipeline of renewable energy PPP projects is starting to emerge.

Figures from the Global Projects Tracker (GloPro) reveal a steady flow of 43 energy efficiency/renewable power PPP projects entering either the planning or procurement phase during the previous 12 months, highlighting a clear trend for using PPPs to deliver renewable energy infrastructure.

However, while the model is being used for a wide range of different types of projects, in different geographies there is a clear preference for certain types of technology to be delivered under the PPP model.

In the US, for example, a trend for using PPPs to deliver biogas and solar energy projects in particular is emerging, with Metro Water’s Recovery Biogas Project in Colorado, the Middlesex County Gasification Development Project in New Jersey, and the Puerto Rico Power Generation Facility project all progressing through the procurement process in recent months.

And in California alone, the San Francisco Public Utilities Commission is currently evaluating bids for its Southeast Water Pollution Control Plant Biogas Utilisation P3, while the East County Joint Powers Authority  appointed a preferred bidder for its biogas energy recovery plant in July. And at the back end of last year, the City of Riverside issued a request for proposals for its Biogas and Digestate upgrade P3 project

Meanwhile, in the UK and Europe, several renewable energy projects have been put out to tender in recent months, and there is a continuing focus on heating and cooling networks. This can be seen in places such as France, where the Cannes Heating & Cooling Network has come to market, as well as in the UK, where the Granton Waterfront Heat Network in Edinburgh has been tendered. 

In January, there was a rush of heat network projects being tendered in Europe, with opportunities launched in Germany, the UK, and Serbia

Interestingly, there appears to be a move among universities to follow where the US market has led. While the US has seen a number of energy-specific P3 projects (such as the Eastern Michigan University P3 that reached financial close in June), projects in the UK and Europe have traditionally tended to focus on student accommodation.

In recent months, however, projects including the University of Oviedo’s Smart Energy Programme in Spain, and Leeds University’s search for a Net Zero Strategic Delivery Partner have begun to change that narrative.

As well as projects entering procurement, a number of renewable energy projects have reached financial close in recent months, notable examples being the Hornsea 2 offshore transmission owner (OFTO) scheme in the North Sea, the Syrdarya 2 Thermal Power Plant in Uzbekistan, and the long-awaited and much-anticipated Bristol City Leap Energy Partnership.

It is clear that much more is needed from both the public and private sectors when it comes to urgently shifting away from fossil fuel-based infrastructure, but the growing number of deals using partnerships that are being formed and which are currently in procurement demonstrates the crucial role that PPPs will play in delivering the carbon-neutral infrastructure of the future.