‘Reboot’ due diligence processes to expedite clean energy investment

‘Reboot’ due diligence processes to expedite clean energy investment

image
  • Deployment of investor and lender capital into global renewable energy projects is being hampered by outdated due diligence processes and inefficient knowledge management
  • LiveDiligence identifies four key areas of focus for legal, technical, insurance and financial advisors in the next 5 years

Bristol, 30th October 2023 — Burdensome traditional approaches to due diligence, alongside fragmented knowledge management, are slowing down the flow of new capital into renewable energy projects worldwide, leading to missed opportunities for advisors delivering valuable expertise to their clients.

This is the perspective of LiveDiligence, a unique software platform used by legal, technical, insurance and financial advisors to deliver timely and actionable due diligence insights to renewables investors and lenders. The firm is calling for the renewable energy market to ‘reboot’ its due diligence processes to ensure that projects are financed and built at the rate needed to meet global growth targets.

To do so, advisors need to rethink outdated systems such as time-intensive manual reporting, unwieldy Q&As and disconnected information sharing, which are extending transaction timelines and creating unnecessary distractions for project stakeholders. These processes are placing a significant project management burden on capital providers, who find themselves coordinating multiple parties and information sources.

Faster, more collaborative and more efficient data-driven approaches are required – but while the industry has willingly embraced digital solutions in other areas, the process of delivering due diligence advisory services has not yet evolved.

“Historically we haven’t seen a lot of cross pollination of ideas between due diligence advisors and the tech world, leading to a lack of innovation in the sector. Advisors haven’t been offered compelling alternatives to the status quo, despite widely recognised deficiencies in the current tools and processes.” said Joss Boxford, Chief Operating Officer, LiveDiligence.

“With the complexity of renewable energy project financing increasing and deal volume on the rise, advisors should see streamlining the due diligence process as a huge opportunity - or else fail to satisfy the changing requirements of investors and lenders funding the next generation of clean energy projects.”

In particular, LiveDiligence has pinpointed four crucial areas of focus for renewable energy due diligence advisors over the next 5 years:

  1. Knowledge management: The due diligence advisory space will increasingly be dominated by the companies that can operationalise their institutional knowledge. Those companies will consistently deliver higher value with fewer resources, and scale faster through efficient knowledge sharing and accelerated upskilling of new employees.  Delivering insights derived from specialist knowledge at speed and scale is vital to expedite clean energy investment. For advisors who can achieve this, the rewards will be significant.
  2. Client centricity: With more complex deals and shorter transaction time frames, traditional static deliverables, often delivered late in the day, will no longer cut it. Deal teams are demanding faster and earlier insights to critical issues and effective interactive collaboration with their full advisory team.
  3. Emerging regulatory requirements: New requirements for Climate Risk Assessment and other forms of ESG assessment will be increasingly high on the agenda of capital providers, bringing further complexity to the due diligence process. Advisors have an opportunity to start on the front foot by adopting digital tools that can adapt to changing requirements, while simplifying the reporting process for clients.
  4. Technological and market complexity: Investor scrutiny on emerging technologies such as storage, floating wind and green hydrogen, coupled with brand new financing and offtake structures, are driving a huge focus on technical and financial risk management. The ability to support effective decision making will be a significant competitive advantage to advisors supporting the deployment of complex new projects.

LiveDiligence has been designed to simplify the process of de-risking investments to speed up project financing and deployment - while preserving the specialist knowledge that experienced advisors bring to the table. The platform creates a collaborative, single source of truth for technical, legal, insurance and financial due diligence providers – streamlining and optimising traditional due diligence processes.

To date, the platform has been used to support more than 400 renewable energy transactions, by more than 700 professionals across 170 different organisations.