Developing a Renewable Energy Project

There are a number of important steps that need to be completed when you develop a renewable energy project.

Choosing a project

Although there may be more than one option to develop a renewable energy project, your community should evaluate which one has the greatest chance of success and makes the best use of local resources.

The evaluation factors will depend on your community's priorities and may include:

  • the availability of experienced or qualified people in the community to work on the project
  • the length of time needed to design, construct and implement the project
  • the project complexity and risk
  • the site and equipment availability
  • financing or funding requirements
  • cash flow after construction

You can use a number of different methods to rank your project options. These range from using a point system to decision making through consensus. There is no one single correct method.

The Umbata Falls run-of-river hydroelectric plant on the White River, 30 kilometres southeast of Marathon, Ontario (courtesy Innergex Renwable Energy Inc.)

Developing a Business Plan

A business plan assesses how feasible an individual project or initiative is and provides a detailed road map for implementing it. It differs from a strategic plan or a community energy plan in that it is a very focused and detailed document.

How does a Business Plan help you?

A business plan is typically used to attract funding and business partners, but it is also a valuable management tool. It ensures that the entire business process is taken into account early on and establishes tools that will help you to monitor the development of your business.

A business plan may begin as a simple document, but as your project idea develops into an operational business, it could become a larger and very detailed document that includes all the information that defines your renewable energy business.

The business plan answers the following important questions:

  • Who are you and what are the products or services that your business will provide?
  • What is the ownership structure of your business and where will it be located?
  • What is the market for your products or services and how will your business attract customers?
  • What are the projected financials (assets, liabilities, revenue and expenses) and financing needs of your business?
  • What resources, people and equipment does your business need during its start-up phase and ongoing operation?
  • What are the risks of your business and how are they going to be minimized?
  • What is the timeline for your project or initiative?

What to include in your plan

Please note that not every section may apply to your project and that your business plan may need to contain additional information or have a different structure. Links to other resources are provided at the bottom of this page to help you develop the best business plan for your project.

Cover Page and Table of Contents
The business plan should always start with a title page and a table of contents.

Executive Summary
The executive summary provides a short (one to three pages long), high-level overview of the contents of the business plan. It outlines why the proposed business will succeed.

Profile and History of Your Organization
This section describes the organization’s development or provides information about how the business idea developed. It should also highlight any significant company history, such as past renewable energy development projects or other successful business ventures.

Profile and History of Your Organization
This section describes the organization’s development or provides information about how the business idea developed. It should also highlight any significant company history, such as past renewable energy development projects or other successful business ventures.

Business Model
The business model is different from the profile and history of your organization because it is specific to the initiative for which this business plan is being developed. The profile and history should reference any past business activities.
Your business model might include details about the following:

  • a description of the project- technology, equipment, size, location etc.
  • the location of the business operations
  • the business ownership, structure and investment
  • management team and accountability
  • the experience of the owners, management and other key personnel.

Financial Assessment

The financial assessment section of the plan will contain information about the financing needs of your project, including how and when it will be financed. Financing can come from many sources, including equity contributions, grants and loans.
A financial model should be developed that will analyze all revenue, financing costs and development and operational costs to determine the financial security of the project.

Risk Plan
A risk plan identifies all of the potential problems that could affect the success of a project. A risk plan considers problems that could arise from the project planning stages through to the project reaching commercial operation. Once you have identified the risks, you will need to develop a plan for how to minimize them.

Marketing Plan
The marketing plan typically provides details about how the business is going to attract customers for its products or services at levels that will ensure the business is successful. In the case of a renewable energy project, the customer is the OPA, but this section can be used to describe what is being is offered and why it is an attractive proposition for the financing community and for the Aboriginal community.

Operations Plan
The operations plan addresses the issues that will affect the day-to-day running of the business, such as:

  • equipment that will be needed
  • staffing needs
  • qualifications and training that will be needed for staff
  • routine maintenance that will be required and arrangements to perform maintenance (equipment supplier, warranties, etc.)
  • contingency plan for major repairs and equipment replacement.

Implementation Timeline
The implementation timeline is the detailed road map outlining how the business is going to become operational. It lays out the specific actions, timing and people responsible for each activity needed to move the business from just an idea to a viable enterprise.

The appendices contain documentation that supports the business plan. Each appendix should be referenced in the main part of the business plan. Examples of appendices include engineering diagrams, maps, approval documentation and partnership agreements.
For your business plan to be effective, it should evolve as new opportunities and issues are identified. The size and complexity of your business will determine the amount of detail needed to complete your plan.

How to manage your project

The primary goal of a project manager is to ensure the project is completed on time and on budget. Your community will need to decide relatively early on in the process how to manage the development and construction of its renewable energy project.

Things to consider

When choosing a project manager, your two basic choices are to: 

  • retain management within your community
  • contract management out to another party.

The size and type of your project is an important factor in this decision.

For smaller rooftop solar projects, your community, with some support and training from the manufacturer, may have the necessary skills to oversee the project.

For larger wind and water power projects, your community may rely on an outside party - such as a partner or someone independent - to oversee the project.

In either case, your community should be mindful of the opportunity to develop skills and build capacity that will enable you to manage future projects.

If your community chooses to use an outside party to manage the project, it should follow a competitive bidding process when selecting a contractor. Factors to be considered include the contractor's:

  • management experience and technical expertise with similar projects
  • engagement, reporting and communications process
  • project accounting and payments
  • use and management of subcontractors
  • willingness to provide opportunities for community members to participate.