The planet is embracing green power. Figures from the IEA, the world’s authority on global energy trends, show that investment in clean energy rose by nearly 50% between 2019 and 2023.
Installations of solar and wind generation plants, most of which were located in China and advanced economies, expanded by 85% and 60% during the same time period.
To look at it another way, growth in clean energy outpaced fossil fuels by two to one.
But as renewable energy spreads across the world, businesses leading the green revolution face a growing challenge. With globally dispersed sites comes added financial complexity for those investing and developing this technology.
Tracking value: an unsustainable approach to financial reporting
The problem is particularly acute for holding companies that have amassed internationally diverse subsidiaries. Each of these subsidiary businesses is likely to have its own intricate operational and debt structures.
This can make the task of measuring the parent company's present value through discounted future cash flows a difficult and time-consuming undertaking.
In addition, investors in such companies typically require their valuations on a quarterly basis. Each of which needs to be meticulously reconciled to the prior valuation to explain movements.
None of this is news. But what is unique within the renewable energy sector is the vast number of structurally complex companies.
While each investment - at hundreds of millions USD - may be small in comparison to infrastructure projects, they are substantial enough for lenders and equity owners to require a detailed analysis.
These data and insights are usually processed and presented via spreadsheet, a ubiquitous tool that is universally understood and available.
For an expanding portfolio company, however, this creates an absolute headache.
Particularly when investors ask questions, such as, “what would happen to the company’s value if interest rates change by half a percent” or “how would a shift in yields affect our operating profit?”
Overcoming spreadsheet limitations in renewable energy finance
Thankfully, there are innovative ways to extract and utilise the valuable operational and financial data contained within multiple, structurally complex Excel files.
It’s possible to create pools of insightful and interactive data to compute financial scenarios with speed and accuracy.
We have been helping renewable energy businesses to design such solutions. This work taps into our experience with banks and other global corporations. The four main outcomes are:
Reduced manual inputs: Improves control, standardisation and traceability of inputs.
Enhanced efficiency: Quickly computes financial scenarios and makes data-driven decisions with ease.
Scalability: Manages a growing portfolio of projects with a system that adapts to your needs.
Improved forecasting: The ability to accurately test new scenarios becomes a simpler task.
Our skill is in identifying the necessary functionality of a solution. We're also adept at managing the transition to a new way of working, charting out the new course, securing buy-in and knowing whom to partner with to deliver the necessary change to maximise the benefits.
The energy transition is accelerating, providing opportunities to expand renewable generation. That’s why it makes good sense to build financial reporting systems which reduce rather than increase complexity.
Want to learn more? Contact TriFidus to discover how we can streamline your financial modelling and propel your clean energy growth.