RTB project rights for photovoltaics: why ready to build does not always mean ready to build

The term "ready to build" conveys a clear stage of development. In practice, however, RTB describes no uniformly defined quality standard, but often a project phase interpreted individually.

For EPCs and investors it is therefore often decisive which rights, permits, grid connection conditions and technical plans actually exist. A photovoltaic project labelled RTB can be fully ready to build or still contain substantial open risks.

What does RTB mean for photovoltaic project rights?

Ready to build means, in essence, that a project can move straight into the implementation and construction phase. Project development should be complete, and the essential preconditions for financing, procurement and construction should be met.

In transaction practice, however, the term is used in different ways. Some project developers speak of RTB as soon as a building permit and a grid connection commitment exist. Others additionally require a secured cable route, complete detailed design and transferable project contracts.

For an EPC, a project being permissible in principle is not enough. The EPC has to be able to judge whether the project can actually be built with the existing documents, the planned components and the intended schedule.

Investors look at RTB status from yet another angle. For them the project has to be not only technically buildable, but also legally transferable, financeable and economically robust.

Why "ready to build" is interpreted differently

The development of a photovoltaic project consists of several parallel processes. Site security, permitting, grid connection, route planning, technical design and marketing rarely progress at the same pace.

A project may, for example, have a building permit while the grid connection conditions have not yet been finally settled. Likewise, a feed-in commitment may exist although rights of way for the cable route or necessary consents from landowners are missing.

For this reason RTB should not be understood as a single milestone. It makes more sense to carry out a structured review of the individual areas, whose results together reflect the actual stage of development.

In OMSI's internal review logic, permit, grid connection, lease, land register, route, technical planning and transferability are therefore assessed separately. Critical points include in particular a missing binding grid reservation, non-transferable contracts and missing permits.

Which preconditions an RTB project should meet

Site security and lease

The required plots or roof areas must be legally secured for the planned period of use. This includes not only the actual site of the system, but where applicable also transformer stations, transfer stations, access roads and cable routes.

The lease should be available in full with all annexes. Property descriptions, parcels and contracting parties have to match the land register, site plan and project planning.

Particularly relevant are term, extension options, lease amount, decommissioning obligations and provisions on the sale of the project. A long-term lease loses considerable value for the buyer if it cannot be effectively transferred to the acquirer.

Easements and ranking can also be decisive. Financing banks regularly demand robust legal security that may go beyond a purely contractual arrangement.

Permit status

Which permits are required depends on project type, site and the planning-law basis. Rooftop systems, classic ground-mounted systems and privileged projects in the outer zone follow different permitting routes.

Section 35 of the German Federal Building Code contains certain categories in which solar systems in the outer zone may be privileged. It does not follow, however, that every ground-mounted project can be realised without further land-use planning or a permit review.

For the RTB review, the statement "permit in place" is therefore not enough. What has to be examined is the exact scope of the permit, possible ancillary conditions, time limits and consistency with the planned technical layout.

If the EPC later changes system size, module type, transformer location or access concept, an amendment of the permit may become necessary. A permitted project is therefore not automatically buildable in every technical design variant.

Grid connection and reservation period

The grid connection is often the value-determining factor of a photovoltaic project right. What counts is the confirmed feed-in capacity, the specific grid connection point, the voltage level and the time conditions of the commitment.

Under section 8 of the German Renewable Energy Sources Act (EEG) there is in principle a right to priority grid connection for renewable energy systems. The statutory right, however, replaces neither the project-specific review by the grid operator nor a robust assessment of the actual connection conditions.

A grid connection commitment should therefore not be checked merely for its existence. Particularly relevant are:

The necessary costs of connecting to the relevant grid connection point are in principle borne by the system operator. Long cable routes, additional switchgear or extensive grid connection works can therefore substantially affect profitability.

• the allocated feed-in capacity
• the expiry date of the reservation
• required grid reinforcements
• technical conditions
• the planned date of realisation
• the distance to the grid connection point
• the connection costs to be borne by the project

With flexible grid connection agreements it must additionally be checked whether the maximum permissible active power is limited permanently or temporarily. Such a limitation may allow construction and commissioning, but may change the yield profile of the project.

Route and cable path

Several plots, public roads or infrastructure areas may lie between the system site and the grid connection point. A technically planned route is therefore not automatically a legally secured route.

What has to be checked is which parcels the cable path crosses and which owners or authorities have to consent. Required permission agreements, easements and crossing permits should be in place or at least clearly defined.

Actual feasibility also has to be considered. Watercourses, railway lines, roads, third-party lines or areas sensitive under nature conservation law can require additional permits and cause considerable costs.

OMSI's internal classification regards a secured route, alongside the building permit, as an essential component of a robust RTB status.

Technical planning

An RTB project should have technical planning that matches the permit, the grid connection and the secured site. This includes layout plan, system capacity, inverter concept, transformer station and yield calculation.

For rooftop systems, a robust structural analysis is additionally required. A roof that is suitable in principle is not enough if the load reserves for modules, mounting system and additional loads have not been verified.

The technical planning need not anticipate every later design decision. It should, however, be specific enough for an EPC to realistically assess construction costs, component requirements, construction time and technical risks.

If the buyer changes the technical concept, they should check the effects on grid connection, permit and profitability. A higher installed capacity does not automatically lead to a correspondingly higher feed-in yield.

Typical weak points despite RTB status

A frequent weak point is incomplete or contradictory documents. The system capacity in the project report, for example, does not match the grid connection commitment or the permitted layout.

Leases are also sometimes provided without annexes, site plans or complete lists of plots. As a result it cannot be reliably checked whether all required areas are actually covered by the contract.

Further risks arise from time-limited grid reservations. If the deadline for start of construction or commissioning can hardly be met any more, the project formally has a commitment but economically a considerable schedule risk.

With transferability, a distinction has to be made between individual claims, contractual positions and complete contract takeovers. A claim can in principle be assigned, while the takeover of contractual obligations may depend on the consent of third parties.

For the buyer it is therefore not only decisive whether contracts exist. They have to check whether these can be continued in the intended asset deal or share deal without losing essential rights.

Which documents EPCs should provide

EPCs and project developers should structure the data room so that a knowledgeable third party can follow the project status without extensive queries.

A robust RTB data room typically includes:

• project profile and current project description,
• yield calculation or comparable project report,
• land register extracts,
• leases including all annexes,
• site plans and cadastral maps,
• planning and building-law documents,
• grid connection commitment and further grid operator correspondence,
• overview of grid connection point and cable path,
• permissions and route rights,
• technical layout and component concept,
• structural analyses for rooftop systems,
• details of the transaction structure,
• schedule up to start of construction and commissioning.

For PV projects with battery storage, further requirements apply. Draw capacity, feed-in capacity, grid connection concept, operating strategy and, where applicable, construction cost contributions must be presented separately and traceably.

Structured documentation not only speeds up due diligence. It also reduces the risk of buyer and seller assessing the same project status differently.

(→ Provider page: offer PV and BESS projects through OMSI 24)

How investors review RTB project rights

The review begins not with the return calculation, but with the question of whether the project can be implemented in the form presented. Only then can profitability be assessed meaningfully.

Investors should first examine the consistency of the documents. Project size, areas, grid capacity, permit and technical layout have to add up to a coherent picture of the project.

In the second step, conditions and deadlines are checked. These include in particular grid reservations, permit conditions, contractual withdrawal rights and consents still outstanding.

Then follows the economic review. Purchase price of the project right, EPC costs, grid connection costs, lease, financing and expected electricity yield have to be considered in one joint model.

A low price per kilowatt peak is not automatically cheap. Open route rights, long grid routes or time-critical permits can quickly eat up the supposed price advantage.

Professional investors also check whether the project schedule is compatible with financing, component procurement and the planned revenue models. Delays reduce the return on equity even if the nominal construction costs remain unchanged.

(→ Marketplace: current photovoltaic and battery storage projects)

What affects the value of an RTB project right

The value of a project right does not arise from the installed capacity alone. What is decisive is how far the essential development risks have been reduced and which economic possibilities the project opens up.

The most important influencing factors include:

• quality and term of the site security
• robustness of the permit status
• scope and duration of the grid reservation
• distance to the grid connection point
• security of the cable route
• size and scalability of the project
• state of technical planning
• expected electricity yield
• revenue model
• remaining development and implementation risks

Project size, too, does not affect the value per kilowatt peak linearly. Larger projects can enable economies of scale, but often require more complex permitting, financing and grid connection structures.

In OMSI's practice, price ranges are therefore not judged by development stage in isolation. Region, size, grid status and permit quality are among the central price factors.

A serious valuation should also distinguish between the asking price and the economic project value. The project value results from the future expected cash flows less construction costs, financing, operating costs, time required and risk-adjusted discounts.

RTB as the starting point for the EPC calculation

For an EPC, the concrete implementation review begins with RTB status. The EPC has to turn the existing project planning into a robust construction, procurement and cost concept.

Deviations between development planning and the executable solution may arise. Component availability, technical connection conditions, soil reports, structural analysis or fire protection may require adjustments.

A robust project right should allow such adjustments without calling the central rights and permits into question. If every technical change is critical for the permit or the contracts, the execution risk increases considerably.

From the EPC's point of view, RTB should therefore not mean that no detailed work is required any more. It should mean that the remaining work is clearly delimitable, calculable and feasible within the intended schedule.

Conclusion: RTB is a review status, not a promise of quality

RTB project rights can represent an advanced project status that can be implemented at short notice. The term alone, however, proves neither the completeness of the documents nor the legal, technical and economic quality.

What is decisive is the interplay of site security, permit, grid connection, route, technical planning and transferability. Weaknesses in just one of these areas can substantially change construction time, financing and project value.

EPCs and investors should therefore not take RTB status at face value. Structured due diligence creates a robust basis for purchase price, construction calculation, financing and a realistic project schedule.