Assets and Attributes

Every asset has value. In the energy world, we can define that value in multiple ways. An asset has financial value, in the sense that we can calculate specific property, plant, and equipment costs, and its internal rate of return along with the net present value of its future cash flows. It has energy system value, in terms of both the service it provides in the form of electrons as well as grid services, frequency regulation, and voltage support. It has environmental value, either negative in terms of its hydrocarbon and other particulate emissions, or positive if it generates power without emitting either. 

Some of these values are known in an inarguable way, while others are knowable via a set of assumptions and calculations. Not all values are positive, as the environmental value example above suggests - but financial values can be negative too, and what was once a positive asset can become negative, and a liability.  

Another way to think of assets is not as a set of values, but rather as a collection of attributes. Attributes are what give an asset a specific value to owners, buyers, sellers, developers, and financiers. They are more granular, and also more individualized.  

Halcyon thinks of these power asset attributes in a few buckets, which should sound familiar to energy market participants: 

• Locational is physical, and does not need explaining.
• Nodal is physical, but in another way: not just longitude and latitude, but proximity to the existing and planned energy infrastructure in or near a location. 
• Temporal is an asset’s position in the planning cycle (early-stage development, in engineering, under construction, already built etc). It can also have subtler significance, such as the speed with which an asset is passing through development stages - or the lack of speed. 
• Hierarchical is an asset’s place within a corporate ownership structure, whether as a standalone entity, a joint venture, a subsidiary, or part of a larger portfolio of related assets.
• Approval is an asset’s stage in the complex process of planning, permission, and certification in locational and nodal ways, such as receiving state environmental approval, a system operator generator interconnection agreement, or a federal loan guarantee.

One way to think of these attributes is as an overlay on top of a name: Halcyon Energy Storage LLC is in this place, near this substation, has these approvals, and so on. But a better way to think of these attributes is as an interlace, with many attributes overlapping and informing a complex understanding of each individual asset.  

While most of this information should be known, it is highly fragmented and disparate. The specific longitude and latitude of a battery energy storage project is usually found in an interconnection queue spreadsheet - easy enough. But other attributes can be all over the place. Generator interconnection agreements might be most easily found in the Federal Energy Regulatory Commission’s document feed, while state and local approvals are necessarily at the state or even county level. Identifying an asset name, usually a limited liability corporation (LLC) is often straightforward, but determining the ultimate owner of that asset is highly complex. Tracking ownership for thousands of assets at various stages of deal flow, even more so. 

Solving for this disparate, fragmented state is where we see another kind of value for the world’s energy investors: specific value based on a firm’s own investment thesis, capital stack, risk appetite, and preferred markets. Specific value allows investors to map a complex and layered understanding of US energy assets and infrastructure onto their own closely held market development strategy and create asset value for themselves. 

A quick example: 

A hypothetical map of active projects in the CAISO interconnection queue

Hypothetical projects of interest

Active projects (purple) within a 10-mile radius of projects of interest

We are building this capability now. Halcyon is mapping the energy assets in US interconnection queues, recording (and constantly updating) their development status, using semantic search to extract both related transmission and interconnection costs as well as true asset owners from disparate document sets. This requires joining metadata from a half-dozen sources (at least) into a set of asset and owner attributes that is unique, detailed, and most importantly, dynamic and not static. Making this record dynamic requires data hygiene, deduplication, tagging, and putting it into a format that’s easy to grok (or, if spreadsheets are your preferred flavor, we can do that too). 

In doing this, we are also creating the ability to explore a nuanced investment thesis. It’s something we’re often asked to build, and we know that it is of value across the energy system. Energy developers want it, but so too do utility planning and strategy teams, investors, policymakers and regulators, and elected officials as well. 

If you’re reading this post, it probably interests you too. Want to know more? Drop us a line.

Comments or questions? We’d love to hear from you - sayhi@halcyon.eco, or find us on LinkedIn and Twitter