By Jay Vincent,
Senior Vice President, Energy, The Saint Consulting Group
You don’t need to be a mathematician or financial genius to understand that NIMBY costs money and elevates the risk of a zero return on an energy project. As mentioned in this post from Seeking Alpha, NIMBY opposition to land use and regulatory permits has now become just another reason the limited number of cash investors in renewable energy may give that decision a second thought and developers may not have enough cash to carry NIMBY battles from start to finished permits.
I read another article recently about a wind company that is swallowing over $100,000 per week due to delayed construction while they sue a local village board for turning down their permit applications. It’s not that the village board thinks they’ll win, they just had to turn them down based on the amount of opposition from their constituents. They’ll probably win re-election based on their decision, wind farm or not.
However, NIMBY opposition and its detrimental impact on all energy projects doesn’t have to be an investment game of chance. Like all risk, it can be appropriately evaluated and minimized where possible. Energy developers around the globe invest considerable amounts of resources on site determination, project risk analysis and land acquisition. Why aren’t more energy interests putting a comparatively miniscule amount of resources into understanding whether the community will ever allow local politicians to approve their permits?
The political risk of not engaging in some NIMBY due diligence, considering it a risk factor, and then having a strategy before it derails an energy project is far too great a cost. Forewarned is forearmed and forearmed is the formula for success. Since when do the largest and best investment companies roll the dice?
Jay Vincent is senior vice president for energy, The Saint Consulting Group, email firstname.lastname@example.org phone 312.970.5770 Ext: 7502