How to nail the handoff in renewable energy project finance

Your origination and underwriting teams are top-notch. They’re adept at identifying potential investments and projects that align with your company’s mission, structuring deals using clear investment criteria and risk metrics, astutely assessing the feasibility and environmental impact of the proposed project, and efficiently managing the deal pipeline. You also have a competent portfolio management team that ensures the financial performance of projects, diligently mitigates potential risks, and meticulously reports portfolio performance to internal and external stakeholders.

But what does the handoff between these two teams look like? This post-deal transition is critical but often mishandled, especially when origination and portfolio management teams are working in parallel rather than in tandem. Without cross-team collaboration before, during, and after deal closure, portfolio managers are left to dig through disorganized data, rely on outdated models, and settle for inefficient reporting as they bring new projects under their purview. 

Bringing portfolio management teams into the conversation earlier, developing standard reporting checklists to outline basic expectations, and crafting clear transition plans can ensure all necessary data is gathered, organized, and ready to analyze before reporting begins. 

Teams don’t have to do this work on their own. Purpose-built digital tools — supported by digital data rooms, early integration of systems like SCADA and accounting software, and shared understanding of financial and reporting obligations — can enhance and streamline collaboration between teams, ensuring a seamless transition into portfolio management.

Traditional handoff processes are inefficient and costly

Once the origination and underwriting team closes a renewable energy project finance deal, it then gets sent to the portfolio managers. Although financing energy projects is not new, renewable energy faces distinct challenges compared to its conventional counterparts. These projects are often smaller and more geographically dispersed. And still, each comes with the same hefty stack of paperwork, which means the administrative burden that’s required to secure financing grows with every new project.

Making matters even more complicated is the fact that the renewable energy project finance industry is still in its early stages and lacks standardization. Deals vary across technologies, or even within the same technology and market segment. The bespoke nature of these projects means portfolio managers need to navigate unique terms and reporting requirements with each deal. Suppose portfolio managers are not aware of this complexity as deals near completion. In that case, they may discover that their digital tools are not set up to facilitate smooth information flows. 

Traditional handoff processes are inefficient for several reasons. Teams may be using different systems — origination teams, for example, may use CRM tools and underwriting models in Excel and shared drives. At the same time, portfolio managers rely on separate tools for performance tracking and compliance. Integrating these systems is rarely seamless.

As a result, portfolio managers are left to manually re-enter data, which introduces inconsistencies and gaps in key metrics, such as cash flow waterfalls, credit risk profiles, debt service coverage ratios, CFADS figures, and debt service terms. This complex process cascades into more errors in ongoing portfolio analysis and compliance reporting.

If these metrics and benchmarks are not properly handed off, loan boarding is delayed, and early-stage covenant tracking deadlines are missed. Even when loans are finalized, portfolio teams can’t validate performance, which ultimately undermines investor confidence and compliance efforts. 

The result is wasted labor, missed opportunities, failure to scale, and weak profitability.

Digital strategy for a smoother handoff

These challenges underscore the importance of purpose-built digital infrastructure for renewable energy project financiers. Cross-functional collaboration — spanning origination through to servicing and reporting by integrating a range of tracking systems — can create a smoother process and lead to time saved for all teams.

This cross-functional collaboration is maximized when teams talk to each other well before the deal closes. For example, portfolio managers can provide origination teams with inputs on the relevant investment criteria and risk metrics when structuring deals. If teams have visibility into each other’s data and can communicate throughout the investment and portfolio management pipeline, the overall workflow and decision-making of the entire company will improve.

Digital tools can streamline the handoff stage in the deal process, ensuring a seamless transition into portfolio management. They provide a shared data room in which internal and external counterparties can iterate on crucial deal details and documents. They automate data collection with a shareable data intake portal, where counterparties can enter information once and have it flow throughout the platform. In addition to freeing teams from the drudgery of copying and pasting the same data into multiple systems, this will also give project financiers more accurate and real-time data (rather than data from the last quarter or the beginning of the month) across a large number of projects in their reporting. 

Purpose-built tools also allow teams to operate with complete visibility into deal activities and team responsibilities. They do this by automating task assignments, approval workflows, and alerts. Outstanding tasks, upcoming due dates, and the overall status of each deal are easily identified.

Banyan Infrastructure is the single source of truth 

At Banyan Infrastructure, we’ve built our project finance software to do precisely that. It provides the single source of truth for all renewable energy projects and portfolio data. Its integrations and Excel importer pull data from disparate sources into one virtual data room, storing and organizing this information for easy access. It’s a solution that enhances collaboration across origination, risk, compliance, portfolio management, the C-suite, and external stakeholders.

By streamlining workflows and improving data accessibility and visibility, our platform can help automate the deal life cycle, making it easier to guide deal origination and compliance management. That way, it’s easier for stakeholders to ensure they allocate their time and money toward strategic priorities – not paperwork.

Are you ready to streamline your handoff process and level up cross-team collaboration? Contact Banyan Infrastructure for more information.