The renewables sector continues its impressive growth trajectory with global annual growth expected to exceed 7 percent annually through 2029. That growth will also be accompanied by an increase in investment, with wind turbines and photovoltaic parks being central to this.
However, this also means more transactions, introducing significant challenges, as the complexity of infrastructure projects generates vast amounts of data. Virtual data rooms are indispensable for managing this data, while also uncovering hidden potential.
Investments in renewable energy reached a new record of over €36 billion in Europe alone in 2023. This corresponds to an increase of 64 percent compared to the previous year. Although 2022 was characterised by the covid pandemic, the current investment volume still represents a record result.
This emphasises the increasing importance of renewable energy infrastructure. Economic factors such as falling technology costs are one driving force. Another is that political framework conditions continue to be favourable. The EU in particular continues to invest heavily as a result of the prescribed ‘Road to Paris’. For example, the EU’s Renewable Energy Directive aims to raise the share of renewable energy in gross final energy consumption to at least 42.5 percent by 2030.
Regulatory opportunities
Significant investment in energy infrastructure projects is required to achieve these ambitious goals. However, as the market grows, so do the regulatory hurdles in the transaction process.
EU Taxonomy and ESG regulations are just two of the most important buzzwords here. However, these regulations do not exist solely as an end in themselves. Instead of viewing them as an obstacle, companies should consider them opportunities.
Although the requirements for a transaction are high, this is precisely where the potential lies: comprehensive data collection and analysis allows transactions to be processed more efficiently and potential problems to be recognised at the outset. However, this requires a complete overview and therefore absolute data transparency.
With a wind turbine, for example, a flood of data, documents and certificates are produced when examining the details. Technical documents such as stability certificates, material specifications and detailed information on each individual component are essential to be able to assess the safety and durability of the plant. As a result, this data becomes integral to the transaction process. Stakeholders need to know whether the materials used are durable and environmentally friendly and whether the plant complies with current safety standards.
But that’s not all. To fulfil the ESG criteria and take future environmental regulations into account, information is needed on the durability and recycling of the materials used.
In addition to technical data, economic data is needed: generation data such as location, plant type and historical performance data must be analysed to assess plant efficiency. The remaining service life of the plant is also relevant, as it influences long-term profitability.
Grid data such as real-time generation data, capacity and utilisation affect integration and potential bottlenecks, whereby the existing infrastructure for feeding into the grid plays a decisive role in the operation of the plant. Forecasts of the expected output based on weather and climate data help to estimate future yields and minimise risks.
Also, contract data on electricity marketing is of great importance: whether state-subsidised or guaranteed feed-in tariffs, PPAs or sales on the spot market – the type and conditions of electricity marketing have significant influence on the economic evaluation of the investment.
Efficiency through AI
So, how can companies effectively process all this information? The only efficient solution is a virtual data room where all this information is collated, organised and analysed, allowing for a smooth process and avoiding delays.
“Comprehensive data collection and analysis allows transactions to be processed more efficiently and potential problems to be recognised at the outset”
This is where AI-supported virtual data rooms come in, that make it possible to process and share enormous amounts of data. For example, they can automatically organise and name documents and show index points still missing content. This creates a structured flow of information with little effort and facilitates well-founded statements about the prospects of success at an early stage of the transaction process.
Looking forward, data rooms can also utilise the available data more comprehensively. Collecting data in real time will make it possible to forecast market trends and price developments in relation to an asset. Scenarios can then be developed based on this, providing investors with a valuable decision-making basis for their commitments. This is growing in importance, especially in renewables, where the framework conditions are rapidly evolving.
Cross-border data transparency
But data analysis is not the only challenge. International transactions add further complexity. For example, national and international regulations can collide, and these different requirements must be considered.
Collaboration with stakeholders from different regions and time zones makes communication even more difficult. Seamless and secure cross-border communication is therefore essential. Modern data rooms must make it possible to automatically translate this data into the respective target language, if required. This allows all parties involved to access the same information, minimise misunderstandings and expediate decision-making processes.
The security of data is imperative. The integrity of the information must be guaranteed at all times. Data leakage can not only cause financial and reputational damage, but also disrupt the transaction process.
This is why virtual data rooms play a vital role in overcoming the challenges of infrastructure investment. In the context of renewable energy, it is important to have a secure, single source of truth to check that all documents are complete and structured. With the growing importance of regulatory frameworks, such as ESG criteria, and the need for cross-border collaboration, data rooms ensure transparency, data security and compliance. As the renewables market expands, utilising advanced data management tools is crucial for enabling efficient, secure and timely decision-making processes across complex transactions.
Alexandre Grellier is CEO and co-founder of Drooms, a virtual data room provider based in London