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What makes a good technical advisor?

Find out what separates the report-writers from the valued advisors when it comes to your investment.

Let's find out...

No matter how experienced and well informed you are, every energy infrastructure project is unique and as such having the right set of advisors to support, goes a long way - be it for finance, insurance, tax or technical.
 
At K2 Management we have worked on a wide variety of lenders’ advisor, refinancing, and acquisition due diligence assignments. The staff undertaking these assignments have personal track records which cover dozens if not hundreds of due diligence mandates delivered over several years of prior experience, and almost all of our consultants bring previous “hands-on” project development or construction experience, ranging from developing onshore wind farms in south-east Asia to fulfilling the role of turbine package manager for offshore wind farms.  
 
But what makes a good technical advisor?
1

Effective communication

Working together with clients

Less is more?

Sometimes, less is more. That’s not to say that clear and regular communication isn’t important, this is the fundamental backbone to successful collaboration of course, but effective communication is about making best use of contact time, focusing on the level of detail and volume needed by the client given their needs on timescale, level of existing knowledge and their role on the project (investor, lender, developer, supplier). In essence, it’s the difference between what should be communicated to add value, not just information for information’s sake.

Technical advisors are hired to support those from non-technical fields such as the finance community, or those who need specialist knowledge that they don’t have internal resource for such as developers or suppliers. A 300-page technical report simply adds more time and work for clients to wade through and the detail and doesn’t guarantee understanding.

A good technical advisor will communicate concisely, sorting and structuring information in a way that is both accessible and meaningful to the client.

2

Real world experience

Adding value through project experience

Boots on the ground

Clients engage advisors to identify and mitigate risk to ensure an eyes-open approach to return on investment or cost of debt. It’s one thing to run project data through a risk assessment process delivering a simulation and automated report but what about the human element? 

Ultimately, simulations can support with conducting larger, more complex assessments but as they say, “rubbish in, rubbish out.” As such, a robust risk assessment requires real world experience as part of the process and, in particular, lessons-learned from when things have gone wrong.

The broader this experience, the more value added to the process. Often this is where a technical advisor can provide a wider experience base than even some developers, having had exposure to a higher frequency of projects, in different regions, with different technology, vessels etc. over the same years of experience, due to the nature of consultancy.

Additional value comes from technical advisors who also have significant experience as owner’s engineers, meaning hands on development experience, as well as advisory services.

3. Market awareness

Knowledge is power and a good technical advisor will have a team with a wide background of knowledge, not just from their wide variety of advisory projects, but from previous roles too, be it at a developer, turbine supplier, law firm, investment firm etc.

This solid foundation of knowledge means aspects of the project are seen from more than one viewpoint and plays a big part in how advice and communication are tailored to meet the needs of the various stakeholders.

Currently the renewables market is moving at unprecedented speed, on all fronts; technical, commercial and regulatory.

With the increasing move to auction based support mechanisms and a drive to subsidy free development, there is increasing pressure on reducing costs, which is resulting in innovation in many aspects of projects be it technical, finance or commercial.

Anyone can read industry journals and news or attend events, but nothing can beat hands on involvement for up to the minute understanding of trends, drivers, risks and opportunities. Relying on market understanding from your last project or discussion with advisors 12 or 18 months ago, is already hugely out of date. Good technical advisors see a vast array of projects come across their desks and only at scale can clear trends and potential opportunities be seen.

4

Commercial and technical perspective

More than just a 'technical' advisor

A good technical advisor should not solely focus on the technical aspects of a project, but also balance this with a sound commercial mindset.

An optimised design or specification is great, but not if it’s not cost effective or commercially feasible or will take five times longer to manufacture or install.

As a result, technical advisors must provide robust advice balancing elements of technical design, contracts, timescales, permitting, health and safety, risk, cost, market and supply chain considerations, among others.

Just focusing on the design aspect, would be short-sighted to say the least.

The right contracting strategy for a specific client and project can have a significant positive effect on a project’s success beyond what the purely technical elements can achieve.

Achieving a balance between market conditions, owner needs and lender needs can be challenging without an advisor that brings practical project experience of simultaneously managing such three-way tensions. 

So beware of advisors that want to just focus on the 'technical' aspect of the 'technical advisor' role, that’s only one part of the bigger picture.

Projects in progress

So what does make a good technical advisor?

All of this broad experience and knowledge, commercial focus, market access and clarity of delivery is what makes a good technical advisor. This unique combination is what allows you to receive robust, well rounded and balanced advice that is up to the minute, flexible in approach and most importantly, adds value..
Simon Luby

Talk technical advisory with Simon

Clients and projects

Guiding development and investment with technical advisory

  • Onshore
  • Due Diligence

i Squared Capital | Technical evaluation of onshore wind portfolio

Rapid technical evaluation for acquisition of Viridian's 225 MW onshore Irish wind farm portfolio, we undertook site inspections, identified...

Photo Credit: i Squared Capital

Rapid technical evaluation for acquisition of Viridian's 225 MW onshore Irish wind farm portfolio, we undertook site inspections, identified missing documents and provided a summery report for each project,

Having reviewed energy yield estimates undertaken by our US team during the acquisition of a US  developer, the client approached us to provide technical due diligence to support their bid to buy a 225 MW portfolio of operational and consented wind farms in Ireland.

We were asked to review the contents of the data room, identify missing documentation and provide a risk register and revised P50s for four operational and six construction projects by their seven day Phase 1 deadline.

Over the following fortnight, we attended a Vendor management presentation, undertook site inspections and provided a summary report for each project quantifying key risks and identifying
value drivers.

Throughout the process we worked interactively with the client’s in-house  investment team and financial (Credit Suisse), legal (Kirkland Ellis) and energy market (Frontier Economics) advisors to provide accurate financial model inputs in an efficient and timely manner to meet the bid deadline.

Our experienced team was able to reassure the client as to the comprehensiveness of capex and opex budgets and to assess the risk of the construction projects failing to accredit by the ROC and ReFIT deadlines.

To this end when the site visit itinerary was presented by Evercore, the Vendor’s advisor, we requested and were permitted to undertake additional construction site inspections to be able to obtain the necessary assurance.

  • Onshore
  • Due Diligence

Alta Sertao II - Brazilian portfolio |  Acquisition due diligence

AES Tietê Energia has acquired the 386 MW Alto Sertão II wind portfolio in Brazil for R$600m ($193m USD), with technical due diligence support...

AES Tietê Energia has acquired the 386 MW Alto Sertão II wind portfolio in Brazil for R$600m ($193m USD), with technical due diligence support from K2 Management and TNEI.

K2 Management’s specialists delivered technical due diligence advice across the entire portfolio including a review of the turbine and balance of plant (BoP) technology and performance, an energy yield assessment report review, civil, grid and electrical design review and a technical review of the O&M contracts. The team also provided an independent energy yield assessment based on production data for the portfolio.

TNEI, a specialist energy consultant, supported K2 Management on this project, with the delivery of a technical due diligence review focused on grid connection arrangement, electrical design and installation, local transmission infrastructure and generation restrictions.

For Ítalo Freitas, President of AES Tietê Energia: “This project marks an important acquisition in the company’s drive towards diversifying our energy portfolio and achieving our growth goals by 2020. K2 Management’s technical advice was important in identifying commercial opportunities and risks throughout the process.”

K2 Management’s Latin America Managing Director, Hebert A. M. Nascimento, commented: “Our technical and commercial expertise was fully utilized in this extensive project, adding value to AES Tietê Energia’s acquisition."

"Our reporting and advice was underpinned by a sound understanding of the region, its wind resource and the portfolio’s potential and we’re pleased that the client’s goal of a successful transaction was achieved.”

Managing Director at TNEI, Rachel Hodges commented “We were extremely pleased to be involved in such an interesting project, which highlighted the importance of a thorough and robust due diligence process."

"Our specialist electrical knowledge and extensive experience complemented K2’s expertise, helping the client achieve a successful transaction completion. The project was our first experience in the Brazilian market and has helped expand our international portfolio.”

The 230-turbine portfolio is spread across 15 sites in the Bahia region of Brazil and this acquisition represents a positive move in the Brazilian energy market, given the uncertainty surrounding the cancellation of the energy auction late last year.

  • Onshore
  • Offshore
  • Due Diligence

Macquarie | Technical due diligence on acquisition of Green Investment Bank

A consortium led by Australian bank, Macquarie, has agreed to purchase the UK’s Green Investment Bank today in a £2.3bn GBP deal. K2 Management...

A consortium led by Australian bank, Macquarie, has agreed to purchase the UK’s Green Investment Bank today in a £2.3bn GBP deal. K2 Management led the technical due diligence on the transaction on behalf of Macquarie after being appointed in 2016.

K2 Management’s specialists undertook detailed technical reviews of the status and performance of GIB’s wind assets. This involved assessing the construction status and costs for two major offshore wind projects, and providing comfort to Macquarie, its partners and lenders on turbine technology risk and construction risk. 

The scope also saw K2 Management assess long-term assumptions for operating costs and performance, as well as providing ongoing updates to our work as the deal progressed to a successful conclusion. 

Simon Luby, Head of Global Due Diligence at K2 Management, said: “The key to successfully completing a full DD scope for such a large portfolio was quickly forming a close and efficient team with Macquarie’s key staff and working together, as well as providing advice and input critical to the evaluation of the GIB and its wind assets.“Utilising a core DD team with prior practical experience of offshore wind development, construction and operation allowed K2 Management to quickly identify the key value drivers, and offer succinct and reliable advice whenever the client needed support.”

Launched in November 2012, The UK Green Investment Bank was the first bank of its type in the world, created by the UK Government and capitalized with public funds. 

  • Offshore
  • Due Diligence

Butendiek | Butendiek equity transaction complete

With a long history of involvement in Butendiek, K2 Management supported ITOCHU Corporation in its 22.5% equity interest investment into the 288...

Photo Credit: Butendiek

With a long history of involvement in Butendiek, K2 Management supported ITOCHU Corporation in its 22.5% equity interest investment into the 288 MW wind farm – ITOCHU's first investment in European offshore wind.

K2 Management provided technical and wind due diligence on the transaction, focusing on performance and technology, project life and long-term OpEx and O&M strategy.   

ITOCHU Corporation, commented: “This project represents ITOCHU Corporation’s first European offshore wind investment and K2 Management’s technical advice, financial insight and operational performance expertise was invaluable to us in this acquisition.”

Simon Luby, Head of Global Due Diligence at K2 Management, said: “Working with ITOCHU Corporation on this transaction was a pleasure and our close working relationship is one of the key drivers of success for all the work we deliver for ITOCHU. 

“Our core team consisted of experts with real hands-on offshore wind experience covering development, construction and operation of such projects – that experience enables us to deliver much more focused, value-adding supporting within the often short timescales of these transactions. It was great to work on this project again, as I led the lender’s technical advisor assignment for Butendiek when it secured debt finance prior to its construction.”