Brownfield sites are places that already have energy infrastructure present but are inoperative or soon to be shut down. Examples include coal-fired electricity generators. Brownfield development often requires decommissioning, the assumption of environmental liabilities, and potentially redressing past infrastructure development inequities. Since brownfield sites come with unique development challenges, how could they compete with greenfield opportunities?
The answer lies in two brownfield competitive advantages.
Retiring fossil generators own two important energy transition assets:
1. Grid connections and transmission access.
2. Land suitable for electrical power development.
Companies that own retiring generators now see the potential for a second life in energy storage and renewable generation. Because transmission access already exists, storage projects on brownfield sites realize faster construction schedules and shorter times to first revenue. Consequently, we believe brownfield opportunities should be included in the investible universe for all participants in the energy transition.
Brownfield renewable development is partly motivated by slow-moving interconnection queues. Over 4,000 greenfield renewable energy projects have been proposed in deregulated jurisdictions in the US. Each of these projects requires an analysis of the transmission impact by the independent system operator (ISO). Such an analysis determines which upgrades are required for a new project and allocates a proportion of those costs to the project developer.
Interconnection queues are so backlogged that there is only a small chance of a new project — one that is not currently in the queue — making it through in a reasonable timeframe. Even the most speculative projects will not likely give up their spot in line unless they are forced to by some form of interconnection queue reform.
Brownfield projects with existing grid connections bypass backlogged queues and ultimately provide quicker time to value. This means higher returns for investors and developers.
But insufficient data and analytics — focused on investment and capital productivity — present a barrier to rapid brownfield development. Orennia’s platform resolves this uncertainty.
At Orennia, we’ve compiled retiring capacity data so investors looking for development sites have a head start. Our platform allows investors and developers to determine the revenue opportunity at these brownfield sites, and whether they are more profitable for storage, solar or wind projects. These elements help our clients gain a competitive advantage in bidding for valuable development sites.
How are you evaluating brownfield opportunities? Get in touch with our team to learn how you can get ahead.