1/10/2016

Calculatingthefinancialrisksofrenewableenergy|MITNews

MITpinoutverVethauiltadataanalticplatformthatgiveinvetor
rapid,accuratecah-flowmodeland
financialrikanaleforrenewaleenergproject.
Illutration:ChritineDaniloff/MIT

Calculatingthefinancialrikofrenewaleenerg
Financial-modelingoftwareforutainale-infratructureprojectcouldoot
invetmentinector.
RoMatheon|MITNewOffice
eptemer15,2016
Forinvetor,decidingwhethertoinvetmoneintorenewale-energprojectcanedifficult.
Theiueivolatilit:Wind-poweredenergproduction,forintance,changeannuall

RLATD

Video:CardinalWindMITGFADemoDa
2014

andevenweeklordailwhichcreateuncertaintandinvetmentrik.Withlimited
optiontoaccuratelquantifthatvolatilit,todainvetortendtoactconervativel.

ComputercienceandArtificialIntelligence
Laorator(CAIL)

AnMITpinout,verVet,hauiltadata-analticplatformwhoegoalitogiveinvetor
rapid,accuratecah-flowmodelandfinancialrikanaleforrenewale-energproject.
Recentlacquiredaet-managementfirmUltraCapital,verVetplatformcouldhelp

DepartmentofPhic

ootinvetmentinutainale-infratructureproject,includingwindandolarpower.
loanchoolofManagement

UltraCapitalacquiredtheverVetplatformandteamearlierthiearinordertoleveragethe
oftwareforitownunderwritingandrikanaltic.TheacquiitionUltrawillenalethe
verVetoftwaretoexpandtoaroaderarraofutainaleinfratructureector,including

choolofngineering

water,energ,wate,andagricultureproject.
Ifaninvetorhaconfidenceintheperformanceandrikthearetaking,themaewilling

ARCHIV

toinvetmorecapitalintotheutainaleinfratructureaetcla.Morecapitalmeanmore
projectgetuilt,averVetco-founderandformerCOMikeRenoldMA14,now
directorofexecutionatUltraCapital.Wewantedtogiveinvetormorefirepowerwhenit
cometoevaluatingrik.
TheplatformcoretechnologwainitiallaedonreearchatMITComputercienceand
ArtificialIntelligenceLaorator(CAIL),verVetco-founderandformerChiefTechnolog
OfficerTeahaFeldman14,nowdirectorofengineeringatUltraCapital.

http://news.mit.edu/2016/startupevervestcalculatingfinancialrisksrenewableenergy0915

25fromMITnamed
toFore30Under
30litin2016
nergtoragefor
renewalecanea
goodinvetment
toda,tudfind

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Thetrengthofdata
verVetoftwareplatformanalzedataonavarietoffactorthatmaimpactthe
performanceofrenewale-energproject.Laoutandlocationofaite,contractualofftake
agreement,tpeofequipment,gridconnection,weather,andoperationandmaintenance

Addreingenergtechnologieand
policiethathapefutureutainailit

cotcanallhelppredictapoilefinancialrateofreturn.
Toda,financialanaltuexcelpreadheettofindaflat,annualrevenueaverageforthe
next20to30ear.Itleavealottotheimagination,Renolda.Renewaleenergi
volatileanduncertain.
thetimeofitacquiition,verVethadclientintheUnitedtateandurope,including
ank,invetor,anddeveloperforwindandolarpowerproject.Uerenterinformation
aouttheirpropectiveprojectintotheoftware,whichwouldprovideadetailedanaliof
futurecah-flowmodel,alongwithadetailedtatiticalanalioftheproject'financialrik.
TheanalticalengineandaccetodataontheverVetplatformgiveinvetoraetter
undertandingoftheiraet,Renolda.
Forexample,coniderawindfarm.Withlocationdata,theoftwarecanuepulicdataet
tocalculatethelatfewdecadeofwindpeedanddeterminetheprojectoverall
performance.Locationcanalohelpdeterminetheprojectprofitailitinthemarket.
Californiacouldeaettermarketthan,a,TexaorMaine.
pecifictpeofequipmentandmanufacturermatter,too.Ifaninvetorconideracertain
tpeofwindturine,wecanpulldatatodeterminethataturineinthatlocationigoingto
need$2millionofreplacementpartinearfive,Renolda.Ineareven,oumight
havea50percentproailitthatomethingigoingtofail,potentiallreultinginahutdownoftheite.
Theendreultiamoredetailedprojectionoftherateofreturn,Renolda.Whilea
tandardxcelpreadheetmightgiveanaveragerateofreturnof,a,12percent,the
verVetoftwareplatformwouldhowafullanaliofthequarterlperformance,including
thetatiticaluncertaintoftherateofreturn.While12percentmaetheaverage,the
returnmavaretween4and18percent.undertandingthatrangeofrik,oucan
undertandthetruevalueoftheproject,Renolda.
NowatUltraCapital,Feldmanifurtherdevelopingtheplatform.Renoldiuingittoinvet
inawidearraofutainale-infratructureproject,includingolarenergproject,wate-toenergaet,watertreatmentfacilitie,andrecclingplant.Weveroughtourtechnolog
in-houeandhaveexpandeditagreatdeal,Renolda.NowIgettouetheoftware
weuilttomakeetterinvetment.
verVet:Thehappaccident
verVet(formerlCardinalWind)eganaaCAILreearchprojectthatwarefinedand
developedthroughMITentrepreneurialecotemeforegoingtomarket.
AanMITjuniorin2012,Feldmanwantedtoranchoutfromhertheoreticalphic
coureworktofocuonrenewaleenerg.hedicoveredaCAILproject,ledreearch
cientitUna-MaOReill,thatinvolvedcollectingandanalzingdataonwindfarmenerg.I
howedupin[OReill]officeandeggedhertoletmeworkontheproject,Feldmana.
Inaear,Feldmanhaddeignedamachine-learningalgorithmthatcollected30earofwind
datafromairportandotherite,topredictfuturewindpowerthereforthenext30ear.
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Duringthattime,heoughtenrollmentinCoure15.366(nergVenture),wheretudent
fromacrodepartmentplanuineearoundcleantechnologie.Undergraduateare
eldomaccepted.utaluckwouldhaveit,theclawantedOReilltopeakaouther
reearchandOReilltoldthemtoakFeldman.
Iaid,Ye,Imworkingonthatreearch.Youhouldjutletmeintothecla,Feldman
a,laughing.
nrollinginfall2013,Feldmanpitchedheralgorithmtothecla,anditcaughttheeeofone
tudent.RenoldhadcometoMITloanchoolofManagement,hea,withcarfrom
workingonWalltreetininvetmentankingandIwantedtoopenmhorizonandwork
withengineerwhowereuildingamazingthingatMIT.
DuringhitimeaaninvetmentankeratGoldmanach,Renolddealtwithfundinglarge
projectininfratructure,energ,andtranportation.oFeldmanpredictionalgorithm
reearchreonatedimmediatel.Iawheralgorithmandthoughtofhowgreatitwouldefor
invetortohaveamoreaccuratewatomeauretherateofreturnforapotentialwind
projectinvetment,Renolda.
Joiningforce,FeldmanandRenoldlaunchedCardinalWindin2013.Thetartupwa
omewhatofahappaccident,Feldmana.Thecompantookaninaneamountof
hardworktotartanduild.uthowingupinalaandconvincingthemtogivemeajo,
andthenringingthereearchtocla,wewerealetodeterminethattherewaagreat
opportunitandneedforetterfinancialrikanalitoolinthemarketplace."
Thefollowingummer,CardinalWindenteredtheGloalFounderkillAccelerator(GFA),
runtheMartinTrutCenterforMITntrepreneurhip,whichwaahugeoot,Renold
a.Mentorandentrepreneur-in-reidenceofferedguidanceandfeedackonpitche,and
generouGFAfundingpaidthetartupill.Andweworkedalongideothertartup
goingthroughtheamechallenge,Renolda.Allthoereourcewereincredil
helpful.
Octoer2015,CardinalWindhadexpandedFeldmanalgorithmintoafullcah-flow
modellingplatformthataloincludedanaleforolarpowerproject.Thatmonth,Cardinal
WindrerandedaverVet,andthiJulwaacquiredUltraCapital.
AketoverVetucce,Feldmana,wacontantldevelopingthetechnologtofit
cutomerneeduchaincludingolarpower.Whenwefoundtheactualneedwamore
thanjutpredictingwindpattern,wedepartedfromuingthatparticularalgorithm,andweve
uiltalotofourcoreplatformincethen,hea.

Topic:

Reearch
olar

choolofngineering

utainailit

loanchoolofManagement

nerg

Phic

ComputercienceandArtificialIntelligenceLaorator
igdata

Alternativeenerg

tartup

Alumnai/ae

Algorithm

Innovationandntrepreneurhip(I&)

Renewaleenerg

Finance

uineandmanagement

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AoutThiWeite
ThiWeiteimaintainedtheMITNewOffice,partoftheOfficeofCommunication.

MITNewOfficeuilding11-400
MaachuettIntituteofTechnologCamridge,MA02139-4307

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