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The Opportunity
NRE believes that given the relatively modest capital
needs during the permitting and development phase, investing
at this stage provide investors with a very attractive
call option on a portfolio of valuable infrastructure
assets, while allowing them to benefit from significant
price-appreciation of their equity investment as these
assets reach completion and are further de-risked.
London Economics has modeled the power markets in which these projects will be located and has developed long-term power price forecasts. Key assumptions underlying the forecasts include asset- and plant characteristics, electricity demand growth, supply side additions and retirements, carbon costs, RPS non-compliance costs, and long-term commodity prices (natural gas & oil) which drive electricity peak prices in New York and New England.
NRE’s strategy aims to capitalize on the opportunities created by a confluence of very favorable trends in the US - the introduction of renewable portfolio standards in states which will mandate the use of renewable energy, the strong likelihood of carbon cap-and-trade legislation in the near-term which will increase the value of clean-energy assets, and the strong federal loan guarantee program for financing energy assets. Together, these trends provide the foundation for generating attractive long-term equity returns.
The company believes that it has implemented an efficient risk-management and organization structure, which allows the projects to be developed as planned, while minimizing early stage capital outlays when risks are the highest. |
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