The Permitting Game
So you want to build an energy project?
Here's the thing about building stuff: it costs money. And people generally don't spend money unless they expect to make it back, plus some.
The good news? Renewable energy projects now pencil out. Today, over 80% of proposed energy projects are solar and wind projects.
Brass Tacks: The Numbers
Net Present Value (NPV)
A dollar today is worth more than a dollar next year. NPV discounts all future cash flows back to present value. Positive NPV means the project creates value; negative means it loses money.
Internal Rate of Return (IRR)
The annualized return a project generates on invested capital. This figure helps decisionmakers compare projects of different sizes and durations. Higher IRR, more attractive project.
The Hurdle Rate
Developers don't just need positive returns — they need returns that clear their hurdle rate.
For energy projects, this typically runs 7-10%. It reflects:
- Cost of capital (what investors demand)
- Risk premium (uncertainty isn't free)
- Opportunity cost (this money could go elsewhere)
IRR > hurdle → green light
IRR < hurdle → project dies
Ready to Build?
You've got a solid renewable energy project. The project returns clear the hurdle rate. On paper, this thing should get built.
Now you just need a permit.