Unfortunately, 62% of deals fall apart financially, often due to a lack of, or very poor, due diligence. Discovering then fixing problems in the early stages of a project will stop those costly delays and unforeseen expenses that can pummel a project’s budget.
Planning an energy infrastructure project, such as a power plant, solar farm, oil, and gas facility or battery storage, then thorough technical due diligence (TDD) is what you need to do first. This method is used to diagnose severe technical risks that may lead the project to failure.
TDD is the process of examining, analysing, and evaluating a project thoroughly before you make any major investments or decisions. A review of potential risks and opportunities to determine the viability of the project and its adherence to industry practices, regulations, environmental standards and economic requirements.
Taking this proactive step helps you avoid costly mistakes, and hands investors and stakeholders the confidence that your project is built on solid ground.
Take a look at this checklist on preparing your infrastructure project for technical due diligence.
Why preparation improves outcomes
In the context of a large-scale energy infrastructure project, careful planning and strategy are critical to its success, and TDD will help to mitigate uncertainties in investment decisions and is a step that companies are known to take, especially in the energy sector.
A meticulously-organised and thorough documentation process that goes into the specific aspects of the plan, such as grid interconnection, environmental effects, performance data, red flags report and suggested improvements will reduce the mystery in investment decisions and enable the stakeholders to see the whole picture. With this in hand, it’s much simpler to secure financing and permission.
By combining early planning with top-notch TDD, we can ensure a project will go off without a hitch, and that long-term financial returns will be secured.
Essential checklist for due diligence in an energy infrastructure project
Here is the checklist to help you plan your infrastructure project through TDD.
Engineering drawings and specifications
Planning, and building a project, engineering drawings are a crucial element, when designing. These detailed, standardised documents show the assembly and construction of a component or a complete project, and also contain the needed info about the design, dimensions, materials, and construction techniques. It’s all explained with the aid of defined symbols, line types and projection methods that make each component and its links crystal clear.
Engineers use engineering drawings to see that the job is built to a high standard and doesn’t pose any risks, and to verify that the finished project meets the necessary industry requirements and regulations. Poor or incomplete drawings and specs are linked to up to 56.5% of cost overruns and 40% of project delays.
The specifications that go hand-in-hand with these drawings take a more in-depth look at the materials, quality and performance standards that equipment and infrastructure need to meet in order to guarantee the project’s success and people’s safety.
Grid connection agreements
The contracts describe how and where energy project developers connect to the electricity network. These legally binding contracts specify the connection points, the flow range of the project’s power into the grid, and the available technical standards for adequate power grid stabilisation.
Agreements also stipulate estimated costs for the network upgrade and ongoing connection, and the accessories to be integrated for the installation and maintenance of the grid. In fact, delays in grid connection approvals can take 2–3 years that causes cost overruns.
For any project involving regulatory renewables like battery storage, having a legally compliant grid connection agreement facilitates predictable revenue, regulatory compliance, and integration.
Establishing the right grid connection agreement terms optimally positions the project to avoid scope delays and costly technical issues.
Environmental and geotechnical reports
The key parts of technical due diligence for an energy infrastructure project before it moves forward, which are environmental and geotechnical reports.
The environmental report addresses environmental aspects of how the project potentially affects land, wildlife, water, and air quality. This is to ensure the project will comply with environmental regulatory requirements and identify potential ecological risks early on in the process.
While geotechnical reports assess whether soil and ground conditions are suitable for infrastructure projects, including solar panels and battery storage. The reports document the aspects including but not limited to, including the strength of soil, stability, drainage, and harmful underground materials to mitigate any future impacts to the project or the environment.
Equipment datasheets and warranties
Think of datasheets as the spec sheet for every piece of equipment in your project. They tell you everything you need to know: performance details, technical features and installation requirements. Having these on hand means you can confirm the gear meets safety and performance standards before you commit.
Warranties are just as important for your safety net. Guarantee the equipment will work as promised for a set period. A good warranty spells out what’s covered, how long it lasts, and what support you’ll get if something goes wrong.
Checking datasheets and warranties during due diligence isn’t just paperwork. But smart risk management to spot potential maintenance issues early ensures any problems can be fixed quickly.
Construction schedules and QA/QC plans
Every step needed to build and set up energy infrastructure is outlined in great detail including documentation of all deadlines and milestones. This guide focuses on the optimal management of resources and the workforce including equipment to be able to stay on schedule toward the attainment of key milestones. This is financially and operationally beneficial.
In addition to the outlined steps and documentation, QA and QC plans define the procedures for construction to be completed in accordance with construction safety and technical standards. Control aims to set guidelines to avert mistakes while the test and inspection phases of QC seek to identify and correct all the defects.
To note the impact of poor QA/QC: Rework can cost 7–11% of total project costs, and delays add nearly 10% to timelines.
In the energy sector, the needed verifications prioritise compliance to energy legislation, system performance, and ultimate project safety to ascertain operational safety. Attention to construction schedules, and documentation of the QA/QC practices in the due diligence phase will mitigate the risk of marring the project with mistakes, delays, and even safety.
O&M strategy and lifecycle cost models
Once your project is up and running, next is all about a solid Operations and Maintenance (O&M) plan to keep it in top shape. According to Peak Wind, O&M plans include regular checks, preventive maintenance, timely repairs, and ongoing monitoring to ensure everything works smoothly, detect problems early, reduce downtime, and extend equipment life.
In renewable energy projects, O&M planning can improve system performance from 91% to 95% and extend asset life up to 40 years. This includes regular inspections, preventive maintenance, and real-time monitoring.
Then there’s lifecycle cost modelling to estimate the total costs of operating and maintaining energy infrastructure throughout its life. This includes fees for maintenance, repairs, equipment replacement, and operational expenses. By calculating these costs, stakeholders can understand the project’s financial impact, helping them make better investment and budgeting decisions.
Conclusion
Having a well-organised data room packed with clear technical documents can make TDD faster and far less stressful. It helps you spot issues early and cut risks to give investors, developers, and lenders the confidence they need to back your project.
This checklist is your starting point for getting an infrastructure project ready for technical due diligence. And if you want to make the process even smoother, working with experienced due diligence consultants is advisable.
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