Global energy demand is anticipated to continue growing for the next decade and beyond. With the rise in energy prices, economic uncertainties, and worldwide shifts towards electrification, energy efficiency, and service-oriented growth, the expansion is considerable.
The Global Renewables Outlook shows how this transition to renewable energy can unlock considerable and diverse socio-economic benefits and development opportunities while channelling investments towards the pressing need for limiting global warming.
However, the risks for renewable projects are ever-present, from planning and approvals through to construction and operational phases.
This is why technical due diligence needs to be done first to add order. It is about documenting the process, evaluating the risk, determining critical issues, and proposing solutions. This provides clarity on how and when an investment is expected to pay off on the high, medium, and low scenarios.
This assists developers, investors, lenders, and affected residents in understanding the potential of an investment before it is made.
Evaluating Energy Yield
An energy yield evaluation is an estimate of how much electricity a renewable energy system will produce over time, typically measured in kWh or MWh. For example, in a solar PV plant.
This accounts for some real-world factors affecting the yield, including onsite solar resource (sunshine), temperature, shading, panel tilt, orientation, equipment efficiencies, losses from cables or inverters, outages, and curtailment if there is one.
Why is this important?
- test the business case and risks inside a financial model
- optimise the design (layout, tilt, inverter size, BESS pairing)
- establish a performance baseline for operations and contracts
- provide reliable figures that support warranties and insurance
- identify potential losses and inefficiencies
- optimise recommendations for best results.
Even using very good methods, yield assessment estimates can never be without some level of error. Industry-related studies (for example, IEA PVPS work) will realistically show in practice uncertainty of 5%–11%.
That is the reason due diligence strongly relies on accurate and quality data, as well as bankable methodologies, to tighten in the error bars before any money is committed.
Technology selection
Technical due diligence assists in determining the proper technology for each renewable energy project. The aim is selecting technology that allows operations to maintain efficiency, reliability, and cost onsite, rather than simply select the “best” technology on paper.
The options available to use depend on local climate, grid compliance, operation strategy, and budget, meaning technology requires a site-dependent choice, such as for PV options: PV modules, inverters, or battery energy storage system (BESS).
Each option has its trade-offs. Here are examples:
- for PV: monocrystalline, polycrystalline, and thin-film module types differ in efficiency, temperature tolerance, weight, and price.
- in inverters: string, central (or transformerless), and microinverters vary in redundancy, maintenance, and monitoring capabilities
- in BESS lithium-ion variations and alternative chemistries vary in safety profile, efficiency, capacities, cycle life, degradation, and costs.
Technical due diligence explores these trade-offs against whole-of-life outcomes. It considers performance and degradation expectations, maintenance and replacement cycles, and the total lifecycle costs in order to balance productivity with costs to the lifecycle.
Grid compliance
Grid compliance refers to a renewable plant following the protocols for operating safely and reliably on the power system. This includes:
- maintaining steady voltage and frequency
- remaining connected while faults occur
- providing reactive power and maintaining good power quality
- communicating with the grid operator using appropriate control and communication systems.
Projects must meet the grid code set by the regulator or system operator. That usually comes with studies and tests to prove the plant will not upset the grid. Typical proofs include dynamic models, harmonic and fault-level studies, and commissioning tests that show the inverters can respond correctly during disturbances.
A good due diligence check on where the project sits on grid compliance and what is still outstanding. This reduces the risk of delays, penalties, or curtailment later and gives investors confidence that the asset can deliver predictable electricity and revenue.
Curtailment risk
Curtailment risk in renewable energy refers to the potential loss of electricity generation. It happens when the grid cannot take all the energy being produced, transmission lines are weak or crowded.
When many renewables are generating at once, demand is low, there are outages, or local system strength is limited. Sometimes, prices even drop so low they go negative, so operators cut output to avoid losses and keep the grid stable.
In Australia, curtailment reached 4.5TWh in 2024. Meanwhile, AEMO forecasts some solar farms could lose 35–65% of output by 2027 due to transmission delays. On one record day in 2025, 10.21GW of wind and solar was curtailed or more than total grid demand at the time. These losses hit revenue hard and erode investor confidence.
To reduce this risk, should you conduct thorough due diligence for curtailment risk before you invest. Check grid conditions, transmission capacity, connection queue status, local rules, and market trends at your site. This helps protect revenue and avoid operational headaches later.
Long-term asset performance
Long-term performance is everything in renewable energy projects, and that’s where we need technical due diligence for. A deep dive into how your assets will perform over time to keep the project running smoothly and profitable.
By conducting effective due diligence, you can identify risks and opportunities early, make proactive improvements to maintenance, and improve asset management generally. It also means forecasting energy production, monitoring equipment health, and implementing adaptive maintenance strategies.
Predictive maintenance can cut downtime by 12%, save $250,000 per year for wind farms, and extend asset life by up to 20%. These can keep assets running longer, performing better, and delivering reliable returns.
Technical due diligence is a must for protecting investors
The technical feasibility, asset condition, past performance, and operational risks will uncover big risks like underperformance and unexpected costs in renewable energy projects.
Connect now with Arche’s experienced due diligence consultants and make sure your project is set up for success from day one.