Due Diligence

Due Diligence refers to a comprehensive examination process in the field of photovoltaics that is conducted before investing in an existing or newly constructed photovoltaic system. The goal is to obtain as complete a picture as possible of the system, its technical specifications, its economic performance, and the associated risks.

Objectives of Due Diligence:

  • Risk Assessment: Identification of potential risks, such as technical deficiencies, legal uncertainties, or financial risks.
  • Valuation: Determination of the realistic market value of the system.
  • Decision-Making: Providing a well-informed basis for investment decisions.

Scope of Due Diligence:

A Due Diligence in photovoltaics typically includes the following aspects:

  • Technical Due Diligence:
    • Examination of system design, components used, and construction quality.
    • Assessment of the technical condition and performance of the system.
    • Analysis of operations management and maintenance records.
  • Legal Due Diligence:
    • Review of legal frameworks, such as permits, land registry entries, and contracts.
    • Assessment of potential legal disputes or liability risks.
  • Financial Due Diligence:
    • Analysis of historical and projected revenues.
    • Evaluation of the financing structure and economic viability.

Conducting Due Diligence:

Due Diligence is typically conducted by specialized engineering firms or consulting companies. It includes a combination of:

  • Document Analysis: Review of technical documents, contracts, financial reports, and regulatory approvals.
  • On-Site Inspection: Inspection of the system and its surroundings.
  • Interviews: Discussions with operators, owners, and other stakeholders.

Importance of Due Diligence:

A meticulously conducted Due Diligence is crucial for investors in photovoltaic systems. It helps to avoid misinvestments and minimizes the risk of losses. Additionally, it can serve as a basis for negotiations regarding the purchase price.

Note: The requirements for Due Diligence may vary depending on the size and complexity of the photovoltaic system and the individual needs of the investor.

Additional Terms: Photovoltaics, Business Models, Returns, Yield, System Operators