How green is your power?

Achieving net-zero carbon emissions is already seen as a ‘moon shot’, a highly ambitious undertaking through which an impossible goal is reached. The reality is even more challenging: if this goal is realised, it will be, in part, because permanent changes are made in the way capital projects are framed, financed, delivered.…

When considering the differences between a $10 billion investment in a net-zero portfolio of wind farms and solar parks and the same level of investment in a single large project, such as a new liquefied natural gas (LNG) plant, there are two primary advantages that the former has over the latter:

Synergies: The combination of numerous similar projects to enable each to be designed and installed more efficiently.


Economies of scale: Reductionsin unit cost that occur through repetition.

In commercial terms, this effect is commonly seen as discounts for large orders.… In addition to wind and solar, the net-zero portfolio will include large green-energy projects, such as nuclear power plants. Because owners or operators typically focus on building one large project at a time, past practice has been to design each on a bespoke basis.

Even in such cases, a portfolio-synergistic strategy can provide many benefits. For example, there is growing interest in small modular reactors, which can be factory-built and installed relatively quickly, greatly reducing financing costs. Other benefits of the portfolio-synergistic strategy include more effective quality control and reduced design changes as the fleet expands.


From ‘Capturing the Net-Zero Opportunity With Portfolio Synergies’, McKinsey & Co