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Portfolio Guide

How Do Portfolios Work?

Portfolios allow property owners to group multiple properties together at auction to streamline the process and yield better rates from developers. Any combination of solar installation types (category), i.e. site lease, PPA, direct purchase, etc., can be listed under a single portfolio. Developers cannot bid on a portfolio as a whole, rather they must bid on the individual properties, which together comprise the total portfolio bid value. To learn more about different methods of organizing a portfolio, please read “Recommendations for Setting Up Your Portfolio” below.

How Does the Ranking System Work?

A developer’s portfolio rank is determined by their total portfolio bid value, which is an aggregate of each individual property bid. Since each property is its own auction, developers rank separately on each property they bid on, but have one overall rank for the portfolio. Changing the bid of an individual property will change the overall portfolio bid, thus changing their overall portfolio rank. Please visit Open Auction to learn more.

How Are Bids of Different Installation Types Valued?

Site Lease

Valuation: Based on receiving the highest dollar value over a system’s contracted lifetime. Site lease bids are ranked by the dollar value of the lease, from highest to lowest.

Power Purchase Agreement (PPA)

Valuation: Based on receiving the highest savings over the system’s contracted lifetime (dollar value and percent). PPA bids are ranked by total savings, from highest to lowest.

Direct Purchase

Valuation: Based on maximizing savings while paying the lowest dollar value for a solar panel system. Direct purchase bids are ranked by the amount of savings across the lifetime of the panels, minus the cost of the system, from highest to lowest.

Operating Lease

Valuation: Based on maximizing savings while paying the lowest dollar value for a solar panel system. Operating lease bids are ranked by the amount of savings across the lifetime of the panels, minus the cost of the lease payments and cost of the system, from highest to lowest.

Land Purchase/Lease

Valuation: Based on receiving the highest dollar value for the sale of the land, or receiving the highest dollar value each year in lease payments over the system’s contracted lifetime. Land purchase/lease bids are ranked by dollar value, highest to lowest.

Recommendations for Posting a Portfolio

There are different ways of setting up a portfolio which work for different situations. In this section, we are going to describe a few common scenarios and the reasoning behind when they may work. As always, if you are unsure of how to set up your portfolio to best suit your needs, please schedule a meeting with an NRG Market representative by reaching out to info@NRGMarket.com.

One Multi-Category Portfolio

With multi-category portfolios, bids are based on the portfolio as a whole and only one developer can be selected. Not all developers are suited for large multi-project portfolios, but finding one developer who will take on the entire portfolio saves time, money, and is indicative of an experienced and highly capable partner. A multi-category portfolio also means that the property owner only has to form a relationship and communicate with one developer. Additionally, the solar industry realizes economies of scale, meaning developers pay fewer dollars per watt on solar panels as the size of the system increases.

Multiple Single-Category Portfolios

With multiple single-category portfolios, properties owners have the flexibility of choosing different developers for each portfolio at auction. Posting multiple single-category portfolios as opposed to one multi-category portfolio gives the property owner assurance that they are finding the best developer for each installation type. Some developers specialize in certain categories and not in others, discouraging them from bidding on a multi-category portfolio. Additionally, listing portfolios separately by installation type allows for flexibility in finalizing projects. If a portfolio doesn't attract the right bid, the property owner can elect to pursue one portfolio and reconsider the other. Listing multiple portfolios as opposed to one multi-category portfolio does, however, limit the economies of scale realized for the developer. Also worth considering is the additional relationships required to work with multiple developers on different projects.

A Combination of Both

A combination of multi-category portfolios and single category portfolios may be an appealing option as well. It might make sense, for example, to list land-sales separately from PPAs and site-lease projects, which could more easily be grouped together. There are considerations with each installation type that could ultimately hurt the portfolio as a whole. For more information, or to better understand the benefits of each option, please schedule a meeting with an NRG representative by reaching out to info@NRGMarket.com.

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