AI can help project finance see into the future. But first, financiers need a strong digital strategy in the present.
Artificial intelligence (AI) is powering transformative change across a range of industries. But despite being one of the greatest innovations of the 21st century to date, this powerful digital tool can’t exist without one simple ingredient: data.
From predictive models to writing assistants, AI leverages a vast trove of information to automate tasks and accelerate workflows and processes. Its most familiar tool, ChatGPT, analyzes immense sets of data from the internet to power a chatbot that produces content approaching human-like writing. As the energy sector digitizes its operations, AI is also becoming an indispensable tool in managing and optimizing renewable energy projects. Whether analyzing a solar array’s historical energy production trends to predict future activity or optimizing the flow of power through the grid in real-time, this transformative technology can deliver immense value and empower the industry to grow at the scale required to meet both public- and private-sector sustainability goals.
Leveraging enormous sets of clean, consistent, comprehensive data enables time-saving tools like automated reporting and advanced capabilities such as predictive analytics and risk assessment, optimizing project development and operations. But to achieve the AI advancements other industries are already experiencing, project finance needs to build a digital infrastructure that holistically supports its future growth.
The role of AI in renewable energy project finance
The world of project finance has been slow to adopt software-as-a-service (SaaS) solutions. Thus far, the industry responsible for unleashing the potential of the Inflation Reduction Act (IRA) has relied on outdated software, tedious analog calculations, and asynchronous communication. Because of this, comprehensive, clean digital deal and project data do not exist.
Digital filing cabinets like Google Drive or Microsoft SharePoint may provide access and visibility to a project’s stakeholders; however, they do not take away the work of organizing and synthesizing the data stored in these documents; financiers are still left to sift through hundreds of pages of spreadsheets, PDFs, and emails. With all of their data siloed in separate locations, often with varying degrees of permissions, access, and manipulability, companies do not have the digital architecture to leverage AI.
With all data siloed in separate locations, often with varying degrees of permissions, access, and manipulability, companies do not have the digital architecture to leverage AI.
Now is the time for financiers to invest in the digital infrastructure and tools that will empower them to scale their businesses in the future. This technology arrives not a moment too soon: Investment in low-emission capital stock needs to grow by $3.5 trillion a year if the world will reach net-zero greenhouse gas emissions by 2050. With global investment in sustainable infrastructure hitting just $1.8 trillion last year, there is a long way to go on the road to net zero. But we know the appetite is there, and the market will scale to meet the world’s needs — public initiatives like the $27-billion Greenhouse Gas Reduction Fund (GGRF) are already catalyzing more and more private investment. The funds that survive and excel in the sustainable infrastructure market’s meteoric rise will likely be those who invest in digital infrastructure today.
Building a 21st-century digital infrastructure
Storing complete, consistent, and accurate data in one central location is just the beginning of the digital infrastructure journey. To truly augment financial processes, automate compliance monitoring and reporting, and deliver new insights to stakeholders through AI, project finance systems need to generate reliable information. Platforms like Banyan Infrastructure create a framework to encourage the type of consistent, ongoing data collection required to meet compliance and reporting requirements.
The first step in digitizing your project finance systems is understanding what data needs to be captured and where this information comes from. Thanks to a number of SaaS platforms already serving the renewable energy industry, such as Netsuite, Salesforce, and AlsoEnergy, financiers may already have some digitized data available but siloed in different systems. By integrating these platforms into one single information-gathering process, purpose-built project finance software saves financiers the hassle of inputting data multiple times over to create reports and track compliance, cutting down on the risk of human error. Any outstanding information can be gathered through manual entry or pulled from existing forms (spreadsheets, PDFs, etc) to provide a complete picture of a project’s financial and performance data. Once these various information flows are collected and directed into one central location, financiers can set up systems to automatically store, synthesize, and report on this data over the long term.
However, the true capabilities of AI can’t be leveraged until that digital filing cabinet has grown into a sizable vault: The more data is collected, the more valuable it becomes.
With your data now safely stored in one place, you can start using automation to transform how you work. Platforms like Banyan Infrastructure draw upon these digital storage rooms to create easily digestible reports, checklists, and dashboards that allow stakeholders to understand in seconds what the status of a deal is, how a portfolio is performing, or whether a project is meeting its compliance requirements. This automation alone can save countless hours, not to mention creating an easily accessible audit trail that extends across the life of the asset. With both data storage and intelligence, Banyan Infrastructure takes your fund’s digital filing cabinet and adds a dedicated analyst ready to collate, organize, and deliver critical data to your fingertips automatically.
However, the true capabilities of AI can’t be leveraged until that digital filing cabinet has grown into a sizable vault: The more data is collected, the more valuable it becomes. As this information is gathered over years and across numerous projects, powerful AI-driven tools like predictive analysis and risk assessment empower financiers to make informed decisions that help businesses grow. These innovations can have a meaningful impact on individual financiers, but it will also take industry-wide adoption — of standards and best practices as well as the digital infrastructure necessary to streamline project finance — to truly transform sustainable infrastructure financing.
Unleashing the power of AI in sustainable infrastructure investment
With the passage of the IRA, billions of dollars in climate capital and clean energy tax incentives are now available to companies — if they can keep up. Without modern technology, financiers face untold hours and millions of dollars in overhead expenses that drive up the cost of capital and decrease the viability of small and medium-sized sustainable infrastructure and renewable energy deals. To compete, project finance professionals must digitize their workflows to maximize profits, minimize risk, and seamlessly remain in compliance with regulatory requirements. Complete and detailed digital data allows financiers to automate workflows and sets the stage for AI to reach its full potential in the sustainable infrastructure market.
Today, with Banyan Infrastructure, you can digitize your deal and project data and automate your workflows to make project management, compliance, and reporting a breeze with features like:
Streamlined Data Extraction
Instantly pull key legal, financial, and technical details from various existing documentation with Banyan software. Projects leveraging IRA incentives must comply with prevailing wage requirements; for example, quick, easy data extraction allows financiers to collect data on hours, wages, and benefits paid from a range of pay stub formats to prove compliance.
Compliance Reporting
Banyan Infrastructure’s automated compliance reporting features ensure that all project and portfolio reports meet regulatory standards. By automating this process, the risk of errors is minimized, as data input in only one location is pulled into the larger intelligence platform, reducing the likelihood of inaccuracies. Companies can then spend significantly less time and effort on this crucial responsibility while ensuring their compliance requirements are consistently met.
Automated Reporting
Portfolio performance reporting is often labor-intensive and time-consuming. Software can automate these processes, drawing upon various data sources to generate accurate and timely reports that meet the stringent requirements of stakeholders and regulatory bodies.
As your data vault amasses enough digitized information and historical trends, AI can become a powerful tool for analysis and predictive insights, leveraging all past data points to see into the future with speed and accuracy.
More data means project finance could benefit from future AI innovations.
Risk Assessment
If Banyan Infrastructure’s platform provides stakeholder visibility into risk assessment documents today, AI offers exciting possibilities for tomorrow. With a more robust collection of data, AI can leverage this information to create core documents and automatically assess future risks. For instance, a financier might use existing data sets and a specific prompt to generate return scenarios based on two different pricing curves. By analyzing vast amounts of data, this technology can also identify potential issues related to market fluctuations, regulatory changes, and technical issues. This proactive approach helps mitigate risks before they become significant problems, ensuring the sustainability and profitability of renewable energy projects.
Predictive Analysis
AI-driven predictive analytics can forecast energy production, maintenance needs, and financial performance. This capability allows project managers to make informed decisions, reducing uncertainties and enhancing the overall efficiency of renewable energy projects. Both portfolio and industry-wide performance data can help to glean insights and make predictions that will drive future project finance innovation — take, for instance, the ability to suggest a data-backed rationale for a lower debt service coverage ratio (DSCR) based on the lowered risk profile of a specific project. However, accurate predictions hinge on the availability of high-quality historical and real-time data, highlighting the critical need to take that first step in building robust data management systems.
Transforming to drive project finance forward
As the renewable project finance industry races to keep up, adopting a digital strategy is no longer a nice to have. The fate of renewable energy projects — and the world’s sustainability goals — hinges on the buildout of industry standards and the digital infrastructure to support it. Trillions of dollars more are needed to adapt our physical world to a changing climate, and that money must be deployed quickly and thoughtfully. Already, public policy is taking steps to fill this gap. While the speedy rollout of public financing programs like the GGRF and an exponential increase in sustainable infrastructure projects present a monumental opportunity for financiers, that opportunity can only be unlocked by developing the digital framework necessary to streamline project finance data collection and workflows.
Unified data systems save valuable time and money, improve the integrity and accuracy of project data, and streamline day-to-day workflows.
For each financier, the network of interconnected digital platforms may look different — financial, performance, and other project data can come from a variety of sources and stakeholders. Regardless of their makeup, unified data systems save valuable time and money, improve the integrity and accuracy of project data, and streamline day-to-day workflows. Layering intelligence tools like Banyan Infrastructure into the fabric of an organization’s data collection and storage takes this transformation a step further, delivering concise, actionable insights to financiers far faster than human analysis and allowing companies to leverage informed, data-driven insights that easily comprehend historical performance and help chart a course for future growth.
This fundamental shift to digital infrastructure will require activation energy on the part of organizations and their leaders, but laying the foundation today will lead to future success, profitability, and a competitive edge in the years to come.