Project Finance Modelling For Renewable Energy

Create, use and analyse a project finance model for the renewable energy industry

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A two-day course presented in a virtual class from 09:30 to 17:00 UK Time

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Download: Course Category Brochure | Course Outline

Day One

Creating Models with Inputs & Assumptions

Best Practice Modelling

This finance modelling for renewable energy course begins with best practices
Creating flexibility
Techniques to make modelling easier and faster
Separation of inputs, calculations, and outputs
Use of flags to control timing factors
Use of switches to allow option selection
Keeping control of versions
Making the model robust
Common mistakes
Practical: review an existing model to check for compliance with best practice

Operating Model

Modelling production and sales volumes
Using offtake agreements and pricing assumptions
Building up other operating costs
Building in efficiency and availability factors
Project Finance Modelling for Renewable Energy Course Practical: Create an operating model with revenue, production & operating assumptions

Capital Expenditure in a Renewable Power Generation Project

The build-up of construction costs for the generating assets, grid connections, and other capital expenditure
Using lookup functions to make capital expenditure timings flexible
Building in sensitivities for potential changes in costs
Calculating depreciation of the resulting capital assets
Practical: Adding CAPEX and depreciation schedules to the model

Project Financing and Cash Flow for a Renewable Power Project

Loan finance in a renewable energy project
Interest rates and repayment terms
Debt fees
Cash flow waterfall for funding flows
Project finance debt amortisation schedules
Debt Service Reserve Accounts (DSRA) in project finance
Project Finance Modelling for Renewable Energy Training Exercise: Add a loan schedule that will feed into the model's balance sheet, cash flow, and income statement.

Day Two

Project Financing and Cash Flow for a Renewable Power Project

Tax and Dividends

Overview of modelling techniques for tax
Modelling cash available for distribution
Modelling dividends from the project with typical debt covenant constraints
Practical: adding tax and dividend calculations into the model.

Ratios

Ratios and bank covenants in a power generation project
Mechanics of modelling typical project finance ratios:
- Debt service cover ratio (DSCR)
- Loan life/project life cover ratio (LLCR / PLCR)
Using the DSCR to create a sculpted debt repayment profile
Renewable Energy Financial Modelling Course Practical: Add ratios to the model and adjust the dividend calculations so they are constrained by covenants based on debt ratios.

Discounted Cash Flow (DCF)

Cost of capital:
- Cost of debt
- Cost of equity
- Weighted average cost of capital (WACC)
Methods of calculating valuations of projects
Producing an equity valuation using DCF
Practical: create a valuation of the equity in the model

Sensitivity Analysis for a Renewable Energy Project

Defining break-even in a project
Stress-testing a project finance model
Varying inputs to assess the effect on results
Using goal seek to determine assumptions for break-even
Excel tools to assist with sensitivity analysis:
- Goal seek
- Camera
- Data tables
- Scenario manager
Exercise: Add break-even calculations, data tables, and scenarios to the model.

Wrap-Up

This project finance modelling for renewable energy course concludes with questions and answers
Further reading

Our finance modelling for renewable energy course specialist has over 30 years of experience in various finance roles. He has delivered sessions on behalf of many international training companies since 2005.

He trained as a Chartered Accountant at KPMG in South Africa and New Zealand, before moving into industry with Ford Motor Company. He held various positions there in financial analysis, budgeting and forecasting until appointed sales planning manager; responsible for forecasting models, production planning and supply logistics. He joined a multinational private consultancy group in Australia, as their general manager (finance); in this role, he guided the group through a major change and financial turnaround.

For the past 21 years, this finance modelling for renewable energy training provider has worked as a freelance financial modeller, analyst and trainer for a range of blue-chip clients. Assignments included financial modelling for two major LNG projects in the Middle East, numerous renewable energy projects in both Europe and developing countries, structured financing for a large-scale property development, restructuring and outsourcing projects in the retail gas sector, and PPP transactions in the utilities, health and support services sectors.

With an extensive accounting background, he brings accounting knowledge and analytical skills to transactions and renewables financial modelling training. The trainer has gained vast financial modelling experience in gas production, electricity generation, energy retailing, waste processing and property development sectors.

He’s also built financial models in central government departments, retail enterprises and high-volume online environments. He has created, developed and used models to support commercial negotiations, analyse risk, test scenarios and forecast results.

He has trained others in his specialism of financial modelling and runs public courses on behalf of major training companies all around the world.

At Redcliffe training our project finance modelling for renewable energy workshop delves into the following:

Learn the best practices in model structures and logic
Build up, in manageable stages, an entire financial model for a renewable power project
Create flexible revenue, production and cost forecasts
Add flexible capital expenditure profiles into the model
Include financing structures in the model
Model dividend distributions to equity shareholders
Learn about bank ratios and debt covenants, and how to include them in the model
Learn to calculate the weighted average cost of capital (WACC)
Value the project using discounted cash flow measures
Use Excel tools to highlight risk areas, particularly in sensitivity analysis

At Redcliffe Training our finance modelling for renewable energy course builds an entirely renewable energy model from scratch
Practical hands-on modelling under the guidance of an expert financial modeller
Building up an operating cash flow forecast
Modelling capital expenditure
Learning about funding the project with equity and multiple debt tranches
Learning to do sensitivity analysis using Excel's built-in tools

Our finance modelling for renewable energy training course is designed to help analysts create and use project financial models on a consistent and focused basis, specifically for the renewable power generation industry.

Aims

The principal aim of the sessions is to enable you to create, use and analyse a project finance model, specifically for the renewable energy industry. This will be done by reviewing best practices in model structures, and then building up calculations stage-by-stage to create an entire model. We will then use Excel tools to analyse outputs, highlight areas of risk and perform sensitivity analysis.

Methodology

The learning methods we use are practical, as practising newly learned techniques build skills more deeply and more effectively. Each section of finance modelling for renewable energy training will be covered briefly as a module in a traditional classroom style. The real learning experience is found in the exercises within each module. Suggested solutions to each stage will be provided and discussed, and participants will be encouraged to review their work independently. Further supporting materials and additional exercises will be available for further post-course learning, with ongoing support from the facilitator.

Practical Exercises

A big focus of this course is learning through experience. An entire model will be created from scratch. Starting with basic assumptions and input data, delegates will build a model with financial structures, inflation, cash flow waterfall, tax and dividends, equity returns and valuations, ratios and cover factors, and sensitivities.