For investors, deciding whether to invest money into renewable-energy projects can be difficult. The issue is volatility: Wind-powered energy production, for instance, changes annually — and even weekly or daily — which creates uncertainty and investment risks. With limited options to accurately quantify that volatility, today’s investors tend to act conservatively.
An MIT spinout, EverVest, has built a data-analytics platform whose goal is to give investors rapid, accurate cash-flow models and financial risk analyses for renewable-energy projects. Recently acquired by asset-management firm Ultra Capital, EverVest’s platform could help boost investments in sustainable-infrastructure projects, including wind and solar power.
Ultra Capital acquired the EverVest platform and team earlier this year in order to leverage the software for its own underwriting and risk analytics. The acquisition by Ultra will enable the EverVest software to expand to a broader array of sustainable infrastructure sectors, including water, energy, waste, and agriculture projects.
“If an investor has confidence in the performance and risk they are taking, they may be willing to invest more capital into the sustainable infrastructure asset class. More capital means more projects get built,” says EverVest co-founder and former CEO Mike Reynolds MBA ’14, now director of execution at Ultra Capital. “We wanted to give investors more firepower when it comes to evaluating risk.”
The platform’s core technology was initially based on research at MIT’s Computer Science and Artificial Intelligence Laboratory (CSAIL), by EverVest co-founder and former Chief Technology Officer Teasha Feldman ’14, now director of engineering at Ultra Capital.
The strength of data
EverVest’s software platform analyzes data on a variety of factors that may impact the performance of renewable-energy projects. Layout and location of a site, contractual offtake agreements, type of equipment, grid connection, weather, and operation and maintenance costs can all help predict a possible financial rate of return.
Today, financial analysts use Excel spreadsheets to find a flat, annual revenue average for the next 20 to 30 years. “It leaves a lot to the imagination,” Reynolds says. “Renewable energy is volatile and uncertain.”
By the time of its acquisition, EverVest had clients in the United States and Europe, including banks, investors, and developers for wind and solar power projects. Users enter information about their prospective project into the software, which would provide a detailed analysis of future cash-flow model, along with a detailed statistical analysis of the project's financial risks.
“The analytical engine and access to data on the EverVest platform gives investors a better understanding of their assets,” Reynolds says.
For example, consider a wind farm. With location data, the software can use public data sets to calculate the last few decades of wind speed and determine the project’s overall performance. Location can also help determine the project’s profitability in the market. California could be a better market than, say, Texas or Maine.
Specific types of equipment and manufacturer matter, too. If an investor considers a certain type of wind turbine, “we can pull data to determine that a turbine in that location is going to need $2 million of replacement parts in year five,” Reynolds says. “In year seven, you might have a 50 percent probability that something is going to fail, potentially resulting in a shut-down of the site.”
The end result is a more detailed projection of the rate of return, Reynolds says. While a standard Excel spreadsheet might give an average rate of return of, say, 12 percent, the EverVest software platform would show a full analysis of the quarterly performance, including the statistical uncertainty of the rate of return. While 12 percent may be the average, the returns may vary between 4 and 18 percent. “By understanding that range of risk, you can understand the true value of the project,” Reynolds says.
Now at Ultra Capital, Feldman is further developing the platform. Reynolds is using it to invest in a wide array of sustainable-infrastructure projects, including solar energy projects, waste-to-energy assets, water treatment facilities, and recycling plants. “We’ve brought our technology in-house and have expanded it a great deal,” Reynolds says. “Now I get to use the software we built to make better investments.”
EverVest: The happy accident
EverVest (formerly Cardinal Wind) began as a CSAIL research project that was refined and developed through MIT’s entrepreneurial ecosystem before going to market.
As an MIT junior in 2012, Feldman wanted to branch out from her theoretical physics coursework to focus on renewable energy. She discovered a CSAIL project, led by research scientist Una-May O’Reilly, that involved collecting and analyzing data on wind farm energy. “I showed up in [O’Reilly’s] office and begge