A location that appears ideal during a five-year development cycle can become far less attractive by the time the asset comes online. The addition of a single solar plant, wind facility, or competing battery can dramatically reduce volatility.
Keller recommends “instead of aiming for that top 5% that could become the bottom 5%, aim for something in the top 25%.” The goal changes to identifying locations with persistent volatility rather than chasing the highest current returns.
The forecast problem
Revenue forecasts represent another critical issue. Developers often commission projections from well-known providers to secure financing, but Keller says many are fundamentally flawed.
“We wish that developers spent more time actually diligencing forecasts and making sure that they’re only purchasing those from people who have a track record of being accurate,” Keller notes.
