Leveraging Incentives and Optimizing Renewable Energy Projects with Procore
Updated: Oct 30
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Renewable energy is the clear way forward, and the incentives available in this sector are a powerful catalyst for a sustainable and lucrative future. However, navigating the complex landscape of incentives, compliance, and project management can be a daunting task.
Earlier this year, Sirous Thampi, Founding Partner of THAMPICO was invited by Procore for a webinar. Snowflake Rosen, VP of Sales for Owners at Procore, and Sirous discussed renewable energy incentives and the role of Procore in optimizing your renewable energy projects for maximum returns. Here are the main takeaways from the webinar.
Understanding the Landscape of Renewable Energy Incentives
To navigate the complex world of renewable energy incentives, it's crucial to first gain a comprehensive understanding of the incentives currently in place. At the heart of these incentives are federal, state, and local offerings, including tax credits, exemptions, rebates, grants, and low-interest loans. The intricacy of these incentives is contingent upon factors such as the specific sector and the scale of the renewable energy project. For those seeking a tailored list of available incentives, valuable resources like dsireusa.org can be a guiding light.
Most renewable energy owners and developers are aware of the incentives available to them, particularly those coming out of recent federal legislation such as the IIJA and IRA which has resulted in a lot of interest from the financial community as well.
Yet, it's important to recognize that incentives aren't limited to the public sector.
There is also the growing demand for renewable energy in the private sector or the voluntary markets. An example includes clean power purchasing programs from large energy consumers like technology companies and manufacturers. We are still in the early stages as far as the voluntary market but we will see a lot more in the coming years, and these opportunities may provide a more sustainable revenue basis for renewable energy developers in the long term. These initiatives represent a promising avenue that could provide long-term sustainability for developers in the renewable energy sector.
Achieving Alignment to Make the Most of Tax Incentives
As a starting point, companies must be prepared to deliver their projects in the most efficient manner possible, which requires the alignment of people, process, and technology. That’s an ongoing effort for most companies, regardless of sector, size or type of projects. But it’s an internal exercise.
The organizations that have their act together internally, so to speak, will be best prepared to respond to external challenges and opportunities.
Incentives are, by their nature, an external opportunity, as are interest rates, the labor supply, supply chain issues, carbon credit markets, etc. But there are challenges associated with incentives as well.
The recent federal legislation has provided a number of incentives for renewable energy. However, the government hasn’t provided a lot of guidance on these programs. We still need more information from the IRS and Treasury Department to better understand the practical implications.
For example, we understand that for some renewable energy projects there’s a 30% Investment Tax Credit if you go start construction by the end of 2024.
But does that 30% apply to 100% of your capital investment?
What does “start construction” mean exactly?
And when can you claim the tax credit?
That’s just scratching the surface in terms of the questions surrounding the ITC. Now extend that logic to all of the other incentives that have been announced.
The huge number of unknowns makes it very difficult to build the financial justification for projects that have a 20- or 30-year life. Especially if the incentives might change every time a new party takes control of Congress or the White House.
The best thing we can do is make sure our people, process and technology are aligned so that we can easily, quickly and efficiently respond to any external opportunity or challenge.
Differing Needs within Renewable Energy Companies
The renewable energy sector features distinct segments, with the electric and gas sectors standing out. But there are also some commonalities between these two sectors. For both sectors, there is generation, transmission (or distribution), and storage. For the most part, these processes are based on technology that is decades, if not centuries old already; and in the U.S., our infrastructure often reflects this.
We’ve known how to create, move, and use energy for a long time. But we are getting better at doing so in a way that minimizes emissions.
The average person sees the pace of innovation in information technology and would like to see that happen in the energy industry.
But the energy industry doesn’t move that quickly, and if it did, it would mean sacrificing things that are very important to people, primarily reliability and cost. We all want green energy, but are we willing to put up rolling brownouts or much higher utility bills to pay for it?
Renewable energy project owners and developers have the same basic needs as far as a project and construction management platform. But they do require some flexibility in terms of how the tools can be used. That’s where Procore really shines. Procore’s modules can be adapted for any type of project development use case. At THAMPICO, we have used Procore to scale a dairy biogas development business to over a billion dollars in construction volume, and Procore is the most popular software for solar and wind developers in the market today.
Overcoming Unknowns to Redeem Incentives
It's usually third-party application groups applying for incentives, and they need to know what information is needed for these applications so you can maximize your chances of getting the incentive money. The information they typically request ranges from engineering plans, process drawings, equipment lists, financial plans, and more.
For example, in California, there are LCFS credits (low carbon fuel standard) for renewable fuel suppliers. In order to qualify for those, you need to retain 10 years' worth of operational data. And that data is measured at every point of your project. You need to keep and retain this for 10 years for audience and compliance purposes so you can get those credits. That's a process challenge.
So, it's important to answer a few key questions:
Do you have all of the specific information you need for your relevant programs readily available?
Do you know how you’re going to interface with the application party and hand over the information they need for your applications?
Will the process enable you to improve your chances of succeeding in your applications?
Optimizing the Tax Incentive Application Process for Success
The alignment of people, process, and technology is key. Without one, you’re not likely to get the most out of the others.
There are broadly three levels at which organizations may be able to use a system like Procore: Project, Portfolio, Business.
At the Project level, organizations need a way to obtain, maintain, and exchange project information.
It’s all about ensuring all of your comprehensive project information and documentation is readily available in a single, fully connected system.
You don’t have the time to send multiple requests via email to different parties. Many organizations use some variation of cloud storage to do this, but even then, they aren’t really sharing information or collaborating with vendors.
At the Portfolio level, organizations make use of the project info to make better resource allocation decisions for a group of projects (program or portfolio). This is where you get into creating custom reports and using data analytics. You can tie in your software to other internal processes such as risk management, financial management, etc.
Some organizations have an individual who is tasked with doing this, but they’re often too busy with just keeping projects afloat that they can’t look for opportunities to gain efficiencies, reduce costs or mitigate risks at the program level.
At the Business level, organizations start to align their business process with the project and construction management platform. Procore can integrate with accounting software like QuickBooks, Sage, etc. as well as ERP software, CRM software, and other enterprise or business software.
This is where organizations get the most value out of Procore, because everyone is living in the system and it is tied to all of the key functions.
This will start to have benefits all the way down to the project level.
Procore's Role in Streamlining Renewable Energy Projects
Procore plays a pivotal role in the renewable energy sector. Since renewable projects often spend more time in pre-construction than in actual construction, using Procore early in projects and throughout their lifecycles is a strategic move. This approach ensures that comprehensive project information and data are readily available, ultimately optimizing project delivery and the successful attainment of incentives.
To delve deeper into the specific ways in which Procore sets renewable businesses up for success, consider the following:
Collaboration
Centralizing project information within Procore simplifies the process of gathering accurate project data for both internal and external application providers.
Flexibility
Renewable projects typically spend more time in pre-construction than in actual construction. Procore's flexibility allows it to adapt to different stages of project development.
Efficiency
Procore's app marketplace enables critical business processes to integrate seamlessly with project development processes. For instance, accounting integration minimizes the potential for financial transaction errors that could impact applications or audits.
Differentiation
In a competitive environment, Procore helps renewable energy owners build credibility and instill confidence in investors. This is especially critical when claiming tax credits, carbon credits, or tax incentives. It also helps be prepared in the event that you are audited by a government agency. There is a high likelihood that this would happen for a renewable energy owner that is claiming tax credits, carbon credits, and/or tax incentives.
Multiple Wins from Using the Right Project Management Software
Let's get down to the most critical question here:
If everyone is working in one system with all critical information in one place, what is the ultimate outcome?
There are multiple outcomes.
It means businesses can deliver projects successfully,
use their resources more efficiently,
can take advantage of all the incentives out there,
and minimize risk of error in projects and applications for these applications for credits.
For any developer, having the right project management software is important. But for renewable energy developers, it is even more critical. That is because the world of renewable energy is constantly in flux.
Watch the complete webinar here: