Another great talk at the GEA Geothermal Financing workshop was given by Tom Fair of Sierra Pacific Resources. Tom reviewed what investor owned utilities (IOUs) were looking for when selecting independent power producers (specifically for renewable electricity, but there seemed to be nothing particular that would make it different for non-renewable IPPs either.)

One surprising fact Tom stated was that up to 40% of awarded power purchase agreements to renewable IPPs fail. As the power companies face renewable portfolio standards in their service areas, this failure rate exposes the IOUs to risks they’re not willing to accept. From the IOUs’ perspective, when they book megawatts to be delivered, they’re expecting that the megawatts will be there. In the renewable space, that has often not been the case.

In fact, Tom’s talk really could be labeled “get power purchase contracts by lowering the IOUs risk and delivering what you promise.” This is an important and basic lesson: don’t sign up if you can’t deliver.

This entry was posted on Friday, May 18th, 2007 at 7:09 am and is filed under Business, Policy.