Three key benefits
- Targeted review of key technical issues
- Identification of issues that may impact energy production
- Identification of issues that might pose commercial risks and affect the valuation of the portfolio
About the customer
Tokyo Gas Co., Ltd. is Japan's largest provider of city gas, serving more than 11 million customers for over 130 years, primarily in the Tokyo metropolitan area and surrounding Kanto region. As a major player in the Japanese energy industry, Tokyo Gas is working to build renewable energy sources both in Japan and beyond to achieve net-zero CO2 emissions, as set out in its Vision “Compass2030”. The gas and power utility company has said that it is committed to providing a stable power supply by balancing output fluctuation in power generated by renewable energy with gas-fired power generation, its core business. The company has plans to ramp up its renewable energy capacity from both domestic and overseas projects to 5GW by 2030. This target represents a ten-fold increase from its current renewables capacity of 490 MW.
The customer challenge
The customer required the support of an independent technical advisor to assess the commercial bankability and identify risks across a potentially wide range of technical issues that may impact the customer’s valuation of a 900 MW wind and solar portfolio in Mexico. The portfolio comprises two onshore wind plants and four solar photovoltaic assets, totalling 898.7 MW. Tokyo Gas and ENGIE have created a 50/50 joint venture to develop these renewable energy projects. The investment is a further step in Tokyo Gas’s commitment to make its business both more sustainable and more international.
The focus of DNV’s due diligence process is the identification and mitigation of possible technical and related commercial risks that may result in a project not being able to generate the expected revenue over its operational lifetime. In undertaking this independent due diligence, DNV leveraged its global and local expertise to review land lease agreements, permits, approvals, environmental & social impacts, power purchase agreements and supplier contracts. Analyses of the plant design, engineering & construction plans, grid connection, energy yield assessments and O&M strategy were also performed in order to identify and evaluate project risks and financial model assumptions.
Benefits to the customer
Through the due diligence process, Tokyo Gas was able to assess risks, potential liabilities and technical problems in the portfolio before finalizing the transaction with the developer, potentially avoiding losses and an over valuation of the assets. Energy production forecasts were evaluated and factors that could impact the wind and solar farms’ energy production were identified. This assessment is key for investors to estimate the risk and return of their investments.