Access our new Elective Pay Model 3.0 here.
Access the updated Elective Pay Model 3.0 Report here.
The Center for Public Enterprise (CPE) is pleased to announce Version 3.0 of its Elective Pay model. It allows users to model publicly owned hydropower, nuclear, and geothermal projects (in addition to the solar, wind, and storage projects of previous versions). It lets users vary project lifespans, debt maturities, and revamps the manner in which the model considers equity. The model’s goal is to allow state governments to explore financial and policy options of ambitious energy development using both federal and state financing sources.
In this report, CPE uses the updated model to explore the obstacles to “large fixed capital projects” (LFCPs). LFCPs are capital-intensive projects whose relative complexity produces huge uncertainties for development. They take a long time to develop, lack mature supply chains, and are therefore subject to long delays and cost overruns. CPE both describes financing tools that can ease these development constraints and notes the limits of public finance in erasing the underlying uncertainty of these projects. Therefore, CPE proposes additional options for states seeking to facilitate LFCP development and complement additional market crafting policies in the energy sector: 1) offtake commitments; 2) cost or revenue insurance; 3) public developers. The report also provides three examples of LFCP development and the impact of uncertainty and public policies: enhanced geothermal generation, the pricing of offshore wind, and price bands on distributed solar in Australia.
Author contact:
Chirag Lala
Director of Energy
chirag.lala@publicenterprise.org