Megawatt Mosaic Ltd is a joint venture between 350 PPM, its team as individuals and the team from an existing and successful Solar and BESS (Battery Energy Storage Systems) pre-construction developer. I say successful, as our partners had a track record of the sale of 17 pre-construction development projects in the three years before they joined Megawatt Mosaic. Pre-construction development is everything that needs to happen before project construction can start.
The fundraise occurred in late 2022 and was completed in Q1 2023. It was not without its issues, as in my opinion we were frustrated by the actions of HMRC regarding SEIS / EIS status and by various crowdfunding platforms that agreed to assist in the raise and then changed their minds. Project pre-construction development had been a goldmine between 2002 and 2012 but was beset by NIMBYism (not in my backyard) from 2012 onwards.
However, the vast increase in offshore wind across Europe makes energy storage projects vital, and accordingly our bet was that the market would open again as grids rushed to provide connection permissions. In some of the strangest instances ever, grid operators were calling us proposing connection solutions.
A brief report update is below. MM is Megawatt Mosaic, which I am sure you guessed.
So, one year in, we along with our partners have analysed 700 potential nodes, picked and developed the best, and MM has received circa EUR 100k revenue. We expect 200K in Q1 2024, which equates to 4 project sales, some of which have been sold before Ready to Build – basically, just on land lease, grid study and environmental impact assessment. This income will allow us to buy out our partners on other future projects, raise institutional project funding, construct and sell.
Here it is in more detail. As of December 2023:
– MM’s investment in a first wave of projects (5 projects summing 430MWn in Italy) is being divested; this will allow us to generate by March 2024 (previously it was stated December) a 2.5x multiple on invested capital, the first two projects (summing 198MWn) were divested in December, the third project (60MWn) will be divested in January 2024, the fourth project (84MWn) will be divested in February 2024, and the last project (90MWn) will be divested in March 2024
– MM’s investment in a second wave of projects (5 projects summing 400MWn in Greece) is progressing in its greenfield phase, and we expect to exit the greenfield phase during Q1 2024, with a similar multiple on invested capital (similar to (i) supra)
– MM has identified a third wave portfolio of BESS projects in Italy that could be held to maturity (this means: developed entirely, constructed, and put in operation), and it is expected to complete that portfolio by March 2024.
The next stage for MM is to complete an institutional fundraise, buy out our partners from the selected projects, who also own a share in the pre-construction development projects and build, own, operate and transfer (sell) the projects.This is the conventional BOOT model, that I was involved in from 2008 through to 2012.
Thus, MM will take the best pre-construction development projects, and build, own, operate and then transfer them.
Thankfully, most of our projects are of significant size, averaging 80 MW per site. So at 800,000 per MW cost, and valuing up at 1M per MW when constructed, we have 240M of completed projects. Financed by 60% by bank debt, and if we can let them run for a while and chip away at some of the debt and hold onto 30% equity in each, MM should make about 2M per project upon sale if we include our fat EPCM fees.
Judging by the response from institutional investors so far, mostly through contacts of Helen Passfield, who works for 350 PPM and MM and is a Renewable Energy Asset Manager by trade, the next stage of MM’s development should be marginally easier, though I am probably kidding myself. 
The main issue will be, that as we fund the build of 300M of BESS projects, how much of the projects MM (and thus, its investors) can hold onto.
Not a bad problem to have.
The original video is below.
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