P50 and P90 values represent the annual output a plant is expected to generate under ideal conditions.
These figures are typically obtained from an Energy Yield Assessment (EYA).
In this case, the figures (09/09/1960 and May) came from Bluestone's own assessments, likely based on their internal views.
Decommissioning Cost and Reserve
Decommissioning Cost: Included in the capital expenditure (CAPEX) base.
Decommissioning Reserve: A fund built up over the asset's lifetime by allocating a portion of the Cash Flow Available for Debt Service (CFADS) to cover decommissioning costs at the end of the operational life.
Both represent the same ultimate goal (funding decommissioning), but differ in accounting methodology.
Some funds prefer a reserve account, while others treat it as a lifecycle cost expensed over time.
Accounting/modeling choice rather than a commercial distinction.
Rental Base Rate
Represents the land cost or rent for the land on which the project is situated.
Percentage of Cost Retained
This refers to a portion of the Engineering, Procurement, and Construction (EPC) contract cost that is retained until commissioning and sign-off are complete.
A percentage is held back and paid a few months after construction ends.
It acts as a holdback, profiled over the construction period.
Developer Fee (Sway Equity)
Represents costs already incurred by Bluestone on the project.
Includes development expenses like grid connection, planning, and land acquisition.
These costs are converted into equity, compensating Bluestone for the development risk taken.
Repowering
Involves replacing the battery as it degrades over time.
Repowering threshold is set at 60%.
Solar Price Curve
The source of the price curve for solar is from Aurora.
The intention is to obtain an updated curve from Aurora, specific to the asset's location and considering grid curtailment, as part of the Blake Clough report.
Aurora publishes quarterly views of price curves (real or nominal).
Real value: Price today.
Nominal value: Inflated price.
Power Curve Acquisition from Aurora
Aurora provides power curves for the entire UK market, considering the absence of zone pricing.
These curves account for wholesale electricity price fluctuations.
PPA Structure
The capacity is split into different tranches with Power Purchase Agreements (PPA) a floor arrangement and merchant revenue streams during specific periods.
Operational Expenditure (OpEx) Assumptions
OpEx assumptions are typically provided by Bluestone in their initial model.
Asset Management Operational Cost: Includes staff operators, on-site operations, maintenance, panel cleaning, and monitoring.
Meter Supply (Import Energy): Covers the cost of grid import (small amount) for the site, including metering, report costs, etc.
Asset Management Cost: Ongoing expense to maximize the efficiency of the plant and ensure its longevity; controlling the output of the asset; computer control controlling where and when the power is going.
Optimizer Fee
Optimizers are specialists that help define the route to market, including the revenue stack for battery dispatch and charging strategies.
The optimizer trades the battery, managing charging and discharging.
They handle administration and grid interactions, paying Bluestone the generated profits minus their fee.
The optimizer fee is a share of the revenue they generate.
The optimizer guarantees the floor so is like an offtaker.
Above the floor, the revenue share is the revenue minus their fee.
IPP vs Commodity business
An Independent Power Producer (IPP) is a power producer, not a commodity trader.
Commodity businesses (e.g., Shell, BP) own the commodity and handle trading themselves.
Bluestone is a power producer that doesn't do the trading.
Energy retailer
An energy retailer purchases energy from IPPs to distribute to end consumers (households, businesses).
Sizing Approach and Debt Structuring
Banks provide Debt Service Coverage Ratios (DSCRs).
When approaching banks, the project cost will be x. The question is how much can be borrowed under the bank's terms.
Banks provide require cover ratios, sizing, and maximum amount that they can lend based on their cover ratios.
Banks consider contracted vs. uncontracted revenue and the risk profile of the asset to determine cover ratios.