Enhancing automated deal pricing amid policy changes
We just made some big updates to our pricing engine. This is the automatic estimate that EPCs and developers use to anticipate customer offtake rates and project values, primarily for PPAs and acquisitions for C&I and bilateral utility projects. With a handful of inputs, you can price a deal in under 2 minutes.
We’re working to expand automated pricing to community solar and BESS-only projects. For the moment, give us a ring and we’ll help create a custom estimate for those types of projects including the nuances below.
Our pricing estimates are informed by market conversations and recent bids from IPPs on our platform. With increasing deal volumes and relevant data points we’ve been able to fine tune the results. It’s a living, breathing machine that just grew in size and complexity…for all the right reasons.
We now adjust C&I project pricing based on customer credit, rated or unrated, because we know how IPPs price these deals differently. You don’t even need the customer’s financial statements. You only need to know whether or not they’re investment grade or the equivalent for unrated companies.
We’ve also made a number of updates to better align estimated pricing with new market realities under shifting federal policy:
ITC adders require higher investor returns. We’ve factored in varying ITC percentages and adders ever since the Inflation Reduction Act. We’re now adjusting pricing based on the specific adders included. For example, IPPs need higher returns if they are to claim a domestic content adder, and that premium varies based on the sector of the market.
FEOC and ITC safe harbor status is critical to both pricing and investor demand. Our estimate now incorporates a project’s safe harbor status for FEOC and ITC eligibility. If you’re expecting an IPP to provide equipment for one or both of these, expect them also to price in the value of their planning and procurement.
No ITC? No problem! We’re now providing estimated pricing for projects not expected to be ITC eligible. These are not the focus today, but they will be soon. And the scenarios can help communicate urgency to C&I customers about the PPA rate impacts of missing ITC deadlines.
These new additions complement other parameters for estimated pricing including mounting type, geography, and project size. And we’ll continue to refine the pricing engine, as bids on the platform provide an increasingly rich data set with more nuances across different projects.
We’re seeing markets for project M&A and PPA financing adapt in real time to the phase out of the solar ITC as IPPs adjust their pricing based on their read of the policy risks. They’re also adjusting their investment goals. We’ve seen increasing interest in BESS as the anchor for ITCs and in operating portfolios that don’t rely on the tax credits.
In this dynamic environment, automatically pricing projects from 200 kW to 20 MW is a daunting task. But we’ve built a pricing engine that continues to deliver helpful guidance for developers, EPCs, and C&I customers and better align their deal expectations with the current market reality.
