Manuscript - Financing Modeling of Renewable Energy Projects

MODELING

VALUATION &

FINANCING IN

RENEWABLE

PROJECTS

Nuzulul Haq

Explorerealoptions.id

TABLE OF CONTENT

1. Characteristic of Renewable Projects

04

2. Key Performance Indicator

10

3. Valuation and Financing Term

15

4. Valuation and Financing Modeling

19

5. Probabilistic and Optimization Modeling

80

6. Closing and References

98

2

Introduction

Alhamdulillah, finally I can finish this book. The discussion in this book begins

with [1] characteristic of renewable project, [2] Its Key Performance Indicator

and [3] Its economics and financing terms in renewable projects. The source

of these chapters is taken from the course material of project finance in

renewable energy by Prof. Ed Bodmer (www.edbodmer.com).

After we discuss the overview of renewable energy projects, we continue to

modeling [4] the economics and financing of renewable projects (wind

onshore/offshore, solar and hydro). The reference of this chapter is taken

from material course of Project finance modeling for Renewable energy by

Greg Ahuy CFA (www.financialmodelonline.com).

After we have a complete financing model in deterministic approach, we

extend this model with [5] probabilistic approach to improve the risk analysis

using SIPmath modeler tools. This software is available free from

www.probabilitiymanagement.org. In this chapter, we also discuss how to

integrate price optimization into deterministic and probabilistic model.

At the end of this book we wrap-up some conclusion and list of references of

this book [6].

Hopefully, this book can help practitioners in better investment analysis of

renewable energy projects especially for recognizing the uncertainty of

resource assessment that would affects capacity factor estimates.

I would like to thank Prof. Ed Bodmer for giving me the permission to use

some notes from his course material. I also thank to Greg Ahuy for your

course note in how to develop the financial modeling in renewable energy,

and also Dr. Sam Savage as founder of probability management for giving us

a free SIPmath software to run probability modeling.

Finally, I would like to thank to my wonderful mother Watini, my beloved wife

Tuning Indraswari, my dear sons and daughters Fira, Haykal, Zildan, Briya

and all those who have provided opportunities and assistance in the process

of making this book.

Nothing is perfect. The author apologizes if there are still many shortcomings

of this book.

Jakarta, 20 – 12 - 2020

Nuzulul Haq

3

CHAPTER 01

Characteristics

of Renewable Projects

“

A

transition to clean energy is about making an

investment in our future

- Gloria Reuben -

4

Characteristic of Renewable Projects

What makes renewable projects different than other electric generation

• More Capital Intensive, economics driven majorly by the cost of capital

• Low capacity factor – risk Driven by resource Assessment

• Need a subsidy through Feed in Tariffs (exposure to changes in volume)

• Problem for financiers is the confidence in the capacity factor estimates

Three types of renewable projects discussed in this book

1. Hydro Power

2. Solar Power

5

• Basic design element of hydro facility.

• water at one elevation, and a dam or

reservoir to hold it there

• A lower elevation to which the water

output can be directed

• A hydraulic turbine, connected to a

generator

• These plants convert the potential

energy of the water to kinetic energy as

it changes elevation, then to

mechanical energy as it passes through

the turbine, then into electrical energy

• Very flexible operation

• Change operations quickly

• Large range of operations

• Good resource for ancillary service

• No fuel required

• Very low production costs

• Zero air emissions

• The solar resource assessment depends on

the latitude of the location on the earth as

well as the cloudiness or clearness. It also

depends on the temperature.

• The step by step process (used by

rescreen) includes:

• Compute the declination angle that

depends on the day of the year

• Compute the sunset angle and the hours

of sunlight that depend on the latitude of

the location.

• Compute the sunlight radiation from the

clearness index

3. Wind Power (On-shore/Off-shore)

• Wind is a form of solar energy

• Uneven heating of the atmosphere

• Irregulates in the earth’s surface

• Rotation of the earth

• Wind power turns in the wind into

mechanical and electrical power

• Power available in the wind is

proportional to the cube of its speed

Comparison between Renewable Projects

- High degree of certainty

- On site data measurement not needed,

interpolated ground based and satellite

data can be used

- Long term data sets available

SOLAR vs WIND

1. Resource

2. Energy Output

- Less certainty on resource estimation

- On site data measurement needed for a

period of 1 year

- Correlation against regional measurement

have been challenging

- Low capacity factors (18-26% on P50

depending on tracking equipment)

- Higher capacity factors (32-38% on P50)

3. Construction/Equipment

- Minimal construction risk, rating

agencies refer to “deployment risk”

- Off the shelf components, can be

packed into standard sea containers

- Inverters need to replaced during the

life of the projects

- Towers needs substantial foundation

structures

- Equipment difficult to move and

install on site (large cranes needed)

HYDRO vs WIND

1

2

3

Water flow

Limits on Amount of Water

Requires Sizing of Turbine and

Tradeoff Between Capacity Amount

and the Capacity Factor

Linear Relationship for Hydro

Wind Speed

No Limits on Amount of Air

Cubic Power Curve for Wind Speed

versus Wind Power

6

More volatility in water flow

4 Less volatility in wind speed

Less Uncertainty From Other Factors

Like Shear, Correlations, Wake, Icing,

Measurement

Specific Characteristics – 1

Solar

• Solar Power Involves Debt Structuring and Sizing more than Risk Analysis

• High Capital Cost

• Low construction, resource, O&M and pricing risk

• EPC Contracts with low premium

• Low Standard Deviation of Resource from Year to Year Solar Power

Involves Debt Structuring and Sizing

• Feed-in Tariffs Long Term

• Risk of Off-taker

• Objective to optimize debt structure to maximize the rate of return

• Analysis is more structuring and less risk analysis

Hydro

• Hydro power may sell power at merchant prices

• Risk analysis depends on electricity prices

• Storage Hydro – on peak prices

• Run of River – all hour prices

• Financing is affected by outlook for prices

• Break-even analysis of prices and marginal cost analysis

• Construction Over-run Risk

• High fixed costs

• Expensive to build

• Maintain dam, reservoir, & plant

• Environmental concerns

• Effect operations and economics

• Limited energy source

• Cannot always operate at full capacity

• Uncertainty

7

Specific Characteristics - 2

Wind in general

• Problems in accurately measuring capacity factor with P50, P75, P90, etc.

• Long-term trends in Wind Speed and Global Warming

• Performance of P50 studies

• Difference between 1-year P75 and 10-year P75

• Technology risks of technology evolution

• Costs of Grid Connection

Difficulties in connecting wind turbines to the grid can contribute significantly to

the risks and costs of a project.

Off-Shore Wind in specific

• The potential for offshore wind is enormous, but the technical challenges are also

great. The capital costs are higher than onshore, the risks are greater, the

project sizes are greater and the costs of mistakes are greater.

• Methods of installation and operation are already very different from onshore

wind generation, with great attention being given to reliability and access.

• Off-shore can have high construction risks, revenuer risks (from partial

merchant), scheduling risks, wind risks (from wake effect estimation) and O&M

risks (need for helicopters and ship hotels).

• Cabling from Off-shore may be subject to regulated risks

• Costs of Grid Connection for Off-Shore

Depending on the location of the project, cable must be laid over many of hostile

and inaccessible environment and, usually, ploughed into the sea bed. As a

result, costs for grid connection kilometers can constitute a very large share of

the total investment in an offshore project, easily 40%. This contrasts sharply

with onshore where, for most projects, costs for grid connection account for

around 10% of total project cost.

8

Financing Issues

Wind

• Project Financing

• Construction Over-run Facilities

• Higher Debt Service Coverage Requirement

• Shorter Tenor of Debt

• Cash Sweep

• Implications

• Measurement of Value from IRR

• Problems with Equity IRR due to Re-financing

• Improvements as Technology is Confirmed

Solar

• Solar Power Involves Debt Structuring and Sizing more than Risk Analysis

• High Capital Cost

• Low construction, resource, O&M and pricing risk

• EPC Contracts with low premium

• Low Standard Deviation of Resource from Year to Year

• Feed-in Tariffs Long Term

• Risk of Off-taker (Spain)

• Objective to optimize debt structure to maximize the rate of return

• Analysis is more structuring and less risk analysis

• Small Risks such as Variation in Losses Become Big Risks

Hydro Issues

• Hydro power may sell power at merchant prices

• Risk analysis depends on electricity prices

• Storage Hydro – on peak prices

• Run of River – all hour prices

• Financing is affected by outlook for prices

• Re-financing and cash sweeps

• Break-even analysis of prices and marginal cost analysis

• Construction Over-run Risk

9

CHAPTER 02

Key Performance

Indicator (KPI)

“

Birds are indicators of the environment. If they

are in trouble, we know we'll soon be in trouble.

- Roger Tory Peterson -

10

KPI of Renewable Projects - 1

1. Electricity Prices

• Costs of renewable technology are generally higher than prices of conventional

technology because of high capital cost and low capacity factors

• For most places in the world, renewable technologies need a subsidy in order to

be developed

• In Europe this has been a fixed power contract that has a higher price than the

cost of producing electricity

• In the U.S. this has been accomplished with tax breaks and government grants

• Where the price of electricity is very high (such as the Caribbean) and wind or

solar resources are good, renewable technologies can be competitive

• Renewable costs should include cost of back-up power

2. Investment Cost per kW

• High cost of renewable technology relative to conventional technology

• Cost of natural gas price plant is about US$1,000/kW

• Cost of on-shore wind from non-Chinese producer is about US$2,000/kW

• Cost of off-shore is about US$4,000/kW

• Cost of PV solar ranges from US$2,500/kW to US$4,500/kW

• Costs depend on base cost and balance of system (BOS) cost

• Lower cost per kW of Chinese solar and wind projects

• Because of high capital cost, the cost of capital is important

• With declining capital cost per kW for solar and wind as well as low cost of

capital, the electricity prices from renewable technologies can be competitive

11


3. Capacity Factor

• The major risk of renewable projects after they are built is the question of how

much they will operate or what is the capacity factor

• For conventional projects known as IPP’s capacity factor is not a big risk because

the capacity factor is controlled by the entity that buys the power. Since the

entity controls the power, it must take the capacity factor risk.

• For wind projects, consultants make estimates of the capacity factor which have

sometimes not been very good. Consultants make forecasts of the probability

that the capacity factor will be lower than a given number. For example if the

probability that the capacity factor will be above 20% is 90%, this capacity factor

is called the P90 capacity factor.

• For solar projects, the capacity factor is less of a risk because there is less

variability for changes in sunlight and there is less fluctuation in the amount of

power that comes from the sun.

Energy yield measurement

the result of an energy yield prediction in term of an Annual Energy Production (AEP) is called

the P50. The probability of reaching a higher or lower AEP is 50:50. P75 is the AEP which is

reached with a probability of 75%. The risk that an AEP of P90 is not reached is 10%. The P90

value is currently being used in analysis of these projects.

12


4. Operation and Maintenance Cost

• Relative to capital cost, the year by year operating cost is a minor item.

• The total price to cover the capital cost is in the range of US$ 70/MWH - US$

300/MWH depending on the technology, the cost per kW and the capacity factor.

• By comparison to the total price, the operation and maintenance cost is relatively

small – ranging from US$15/MWH to US$35/MWH which is generally covered by

a fixed contract.

• Given the importance of capital cost relative to operating cost, cost of capital

issues are important relative to operating cost.

• As the capital cost has come down for renewable costs, the operating cost has

become relatively more important.

5. Financing Considerations

• Project Finance is used for financing many renewable projects and has been the

most common form of financing in Europe where government feed in tariffs are

paid to private investors.

• A major problem for financiers is confidence in the capacity factor estimates for

projects that have not yet been constructed.

• When investing and financing a new renewable project, project financing analysis is

generally used which is driven by the equity IRR and the DSCR.

• The equity IRR which drives the investment from equity investors

• DSCR which is the ratio that lenders use to determine the amount of debt a

project can support.

• DSCR’s and the tenor of debt drive the amount of debt in a project which in turn

has a large influence on the equity IRR. The DSCR and the tenor of the debt

depend on the type of the project.

• Solar may have a DSCR of 1.20 while on-shore wind may have a DSCR of 1.40.

• The tenor of debt may be as long as 18 years or as low as 10 years.

• The required Equity IRR on a project may range from 7% to 12% depending on

the project and the area where the project is being developed.

• Repayment of debt generally uses sculpting which means that the repayment is

customized so that the DSCR remains constant over the tenor of the debt.

13


6. Valuation Considerations

• Economic analysis of capital investments whose value is directly or indirectly related

to volatile energy prices

• Contract with Independent power producers (energy charge versus capacity charge;

no volume risk)

• Importance of cost of capital and risk measurement for capital intensive technologies

• Statistical assessment of resources

• Risk analysis of long-term investments

• Contract structures to manage and transfer risk including Feed-in tariffs, PPA tariffs,

EPC contacts, maintenance contracts, availability and power curve guarantees

• In valuing projects that have an operating history, the risks and required return are

less because there is less dependence on uncertain consulting studies. DCF models

of equity or free cash flow can be used in valuing exiting projects with some of the

following considerations:

• Models should extend for the life of the project as growth rates are zero and the

projects do not produce cash flow after retirement.

• Equity cash flow can be used as investors normally consider a required rate of

return from 7% to 12%.

• The discount rate declines after the project has about four years of operating

history because of lower uncertainty in the capacity factor.

14

CHAPTER 03

Valuation and

Financing terms

“

Renewable

energy is proven technology, the price is

dropping, the rest of the world is going that way,

that's where our investment should be going as well.

- Bob Brown -

15

Valuation Terms in Renewable Projects

Detailed Terms for Renewable Projects

• P50, P90, P99 etc.

• Measures the chances that the capacity factor of a project will be below or equal

to the stated level. P99 will be a lower capacity factor than P50.

• 10 Year P50 versus 10 Year P75

• Feed-in Tariff

• A fixed price offered by the government for specific types of renewable capacity

over a given term. Can be related to market prices and/or have inflation.

• Merchant Prices

• LMRC or SRMC - Long/Short Run Marginal Cost

• The amount by which renewable technologies should be less than in order to be

economic. Could be long-term or short-term.

• Grid Parity

• LCOE – Levelized cost of electricity

• Debt Capacity

16

Financing Terms in Renewable Projects - 1

Debt Service Coverage Ratio (DSCR) for Renewable Projects

• Typically, a bank will base the financial model on the ‘exceedance cases’

provided within the energy assessment for the project.

• The mean estimated production of the project (P50) may be used to decide

on the size of the loan, or in some cases a value lower than the mean (for

example P75 or P90).

• This depends on the level of additional cash cushioning that is available to

cover costs and production variation over and above the money that is

needed to make the debt payments.

• The debt service cover ratio (DSCR) and is the ratio of cash available at the

payment date to the debt service costs at that date.

• For example, if €1.4 million is available to make a debt payment (repayment

and interest) of €1 million, the DSCR is 1.4:1.

Deb Sizing

• Banks loan money depending on the difference between the cash flow and

the amount of the debt service – this is the debt service coverage ratio

• The higher the risk the higher the debt service coverage ratio, because

banks need a margin.

• A project with a lot of risk may have a debt service coverage ratio of 1.8

whilst a project with little risk may have a DSCR of 1.2. (Look at graphs

on the next chart)

• Once you have the DSCR, you can find the level of gearing from the

DSCR (using the goal seek).

• The equity IRR which is the main thing that the sponsors are concerned

about depends on the debt terms

• It is better to have longer tenor

• It is better to have level debt service instead of declining debt service

(annuity payments)

• It is better to have lower DSCR

17

Statistical Analysis Used in Sizing Debt

• Computation of deviation in wind from period to period

• Distribution of wind

• Difference between risks

• New Technology and Consulting or Scientific Study

• Statistical Properties of Prices

• Mean Reversion of Weather

• Standard terms of debt define value and cost of capital

• Optimization of Capital Cost and Operating Cost

• Tax Incentives

Financing Terms for Renewable Projects - 2

Use of Probability Estimates in Debt Sizing and DSCR

• Financier’s models often size debt on the P90 10-year energy case, even if the main

‘base case’ uses the P50 over the long term.

• So, the lower the P90 relative to the P50, the lower the size of the loan

• The selection of either the P50 or P90 may not be critical, as the Debt Service

Coverage Ratio changes with each energy case.

• Europe

• Loan based on P50 with 1.4 DSCR vs Loan based on P90 (10 year) with 1.2 DSCR

• North America

• Loan based on P99 (1 Year) with 1.0 DSCR

DSCR criteria

1. On-Shore Wind

• DSCR 1.40 for P50 10 year (base case)

• DSCR 1.25 for P75 10 year (low case)

2. Off-Shore Wind

• DSCR 1.5 for P50

• DSCR 1.3 for P90 10 years

• Use of cash sweep facilities for

cost over-runs

• Debt tenor 12-14 years

• Sweep for Availability, Wake

Effect of other Farms

• Credit Spread 2.75% increasing

• Cost of Project 3,500 GBP per kW

• Merchant Price Risk with Band

3. Solar

• 1.20 DSCR

• Sculpted

• 1-2 year tail

4. Hydro

• DSCR Target: 1.8 or more

• Credit Spread: 2%

• Tenor: 10 Years

• Cash Sweep

18

CHAPTER 04

Valuation and

Financing Modeling

“

The

best financial models are simple enough for

anyone to understand, yet dynamic enough to

handle complex situations.”

- Tim Vipond -

19

Case Study

FINANCING IN RENEWABLE ENERGY PROJECT

Background

You have been instructed to build a financial model to handle renewable projects

such as wind, solar and hydro. The objective is to come up with the PPA energy

price, which results in an equity return of 10%, which will be used in negotiations

with PLN.

The financial model has to be capable to generate the construction debt size based

on the project’s cash flows.

You have recently met with a possible lender, which can arrange the financing to

the project, and received an indicative term sheet for construction and O&M

proposals.

For your analysis, you should assume the financial close date and construction

start date of December 31, 2019. The construction shall be complete in 12

months, at which time operations shall start. The model shall be based on

quarterly periods.

The case sample that will be explained in this book is on-shore wind.

The key assumptions of on-shore wind project are as follows:

20

Modular Development

“

The

development of a financial model may initially seem daunting.

Breaking the modelling task into self contained segments is one

approach – this is known as modular development

Each module will be represented as a sheet in the model

Cover sheet will explained the model description and the consensus term regarding

the cell formatting key. For example: the data that will be exported to other sheet

(export data) will be colored with red, meanwhile the data that imported from other

sheet (import data) will be colored with green. Other info in cover sheet is some

constant that will be used in the model related with unit and timing. We can format

the cell using Cell Styles (Alt+H+J)

21

Financial Model Structure

“

A

financial model developer should be aware that modules can have

precedents and dependents.

The final goal of the financial model: To provide three financial statements

Steps to Build the Model

Starting with Input sheet, we will develop sheet by sheet using the above process flow

until the final sheet (dashboard). Sometimes, we should export/import data to/from

other sheets.

Below is the detail for each sheet, i.e.:

1. Input: all detail assumption and scenario will be put in this sheet

2. OPS (Operation): temporary calculation to convert from single unit assumption to

quarterly input assumption

3. C&F (Capex & Funding): to determine the leverage ratio and breakdown of the

sources and uses of funds in monthly bases and will be convert to quarterly base

4. Debt: to determine the debt size and schedule of interest payment and principal

repayments

5. a. D&T (Depreciation and Tax): to calculate depreciation and tax expense included

tax paid

b. FS (Financial Statement): to provide the 3 statements (Income, Balance sheet

and Cash Flow) in quarterly base

6. a. Macro: calculation to mitigate the circular reference using VBA macro

b. Check: to check the modeling and ratio compliance is calculated correctly

7. Equity: temporary calculation for equity investment through shareholder capital

and loan

8. VAL (Valuation): to calculate IRR project/equity and equity NPV

9. AFS (Annual Financial Statement): to provide the 3 statements (Income, Balance

sheet and Cash Flow) in yearly base

23

10. Dashboard: to provide result summary of operation/debt stats, valuation and to

control scenario selection

The chronology of model building

based on the scheme of capex funding

Scheme of Capex Funding

First, the debt model is built by a static debt size which is based on a portion of

construction cost. Second, the debt model is built by a dynamic debt size which is

based on the project cash flow. Since project cash flow is influenced by the tax

deductibility of interest charged on the debt size, there will be a circular reference. VBA

macro is created to mitigate this circular reference. In the second scheme, DSRA will be

introduced and this is will affect to the total of financing cost. Third, shareholder loan

will be included in the model and now the project cash flow will be influenced by the tax

deductibility of interest charged on debt size and also shareholder loan.

Below is the list of 6 files to describe the chronology of the step by step how to build the

financial model.

I. Static Debt size (Debt size based on a portion of Construction Cost)

→ File Reference: 1. Static Debt start.xlsx and 2. Static Debt end.xlsx

II.

Dynamic Debt size (Debt size based on project cash flow that influenced by the

tax deductibility of interest charged on debt size)

→ File Reference: 3. Dynamic Debt start.xlsx and 4. Dynamic Debt + DSRA.xlsx

III. Dynamic Debt size + Shareholder loan (Debt size based on project cash flow

that influenced by the tax deductibility of interest charged on debt size and

shareholder loan)

→ File Reference: 5. Dynamic Debt+DSRA+SHL.xlsx and 6. Dynamic Debt end.xlsx

24

25

I. Static Debt Size

Reference File

1. Static Debt start.xlsx

In this file, we will focus first on sheets:

Input, Timing, OPS, C&Ftime, C&F, Debt

Timing

(quarterly)

INPUT

OPS

C&F

(Debt

Static)

Debt

CFtime

(monthly)

26

MODULE - INPUT

File: 1. Static Debt start

1

1

2

3

4

5

6

Detail of each input category

4

1

2

5

3

6

27

MODULE - TIMING


Content

Module Timing

is used to set quarterly time and would be a benchmark for timing in other sheets

except sheet C&F

Binary flags (either 1 or 0)

1 - if something is happening

0 - if something is not happening

→ we use combination “IF” and “Date” functions to model flags

1

28

MODULE - OPS


Content

OPS-Prod

OPS-Rev

OPS-Opex

OPS-WC

Maps

Module Operation (OPS)

This sheet will be a temporary calculation to convert from single unit assumption to

quarterly input assumption

29

Production

OPS-Prod


Sheet: OPS

Curtailment Reduction

reduction in the energy output on involuntary basis, can be compensable or noncompensable

• non-compensable curtailment: grid non-availability due to maintenance

• compensable curtailment: off-taker requirement to reduce power generation for any

reason

Degradation factor

Energy losses due to blade degradation in wind turbine (dust build-up on the blades)

1

30

Revenue

OPS-Rev


Sheet: OPS

PPA (Power Purchase Agreement)

a long-term power purchase agreement between the power seller (independent power

producer) and the buyer (utility)

Merchant Market (spot electricity market)

energy sales after the expiry of the PPA “merchant tale”

1

31

Operating Cost

OPS-Opex


Sheet: OPS

Variable costs

O&M variable costs, land royalty and insurance during operations

Fixed costs

OO&M fixed costs, and administration costs

1

OPS-Prod

OPS-Rev

32

Working Capital

OPS-WC

File: 1. Static Deb start

Sheet: OPS

Accounts Receivable

right to collect money from a customer at specified time in future, which is reported as

accounts receivable on the balance sheet.

Accounts Payable

are bills for materials, equipment or services bought on credit, that the company must

pay soon.

1

OPS-Rev

OPS-Opex

33

File: 1. Static Deb start

MODULE – C&Ftime

Labels Input Units

Financial period end date 31-Dec-18 31-Mar-19 30-Jun-19 3

Timeline - Quarterly Pre-FC FC / Construction Construction Constr

Financial year 2018 2019 2019

Timeline - quarterly

Pre-financial close date flag Flag 1 - -

Financial close date flag Flag - 1 -

Construction period flag Flag - 1 1

Operations period flag Flag - - -

Post operations period flag Flag - - -

Binary flags (either 1 or 0)

1 - if something is happening

0 - if something is not happening

we will use “IF” and “Date” functions to model flags

Capex & Funding (C&F) timing .

will be set as monthly base due to the interest charge is calculated based on the

monthly base.

34

MODULE – C&F


Content

Map

Module Capex & Funding (C&F)

This sheet will calculate detail capital expenditure (capex), leverage ratio, the source

and use of funds

35

Static Debt Size


Sheet: C&F

C&F-ConsDebt

Static Debt Size

Debt size is a portion of Construction Cost. The portion will be static since the

construction cost is fixed

1

Construction debt = 70% x 57,750 = 40,425

36

Financing cost

C&F-Fincost


Sheet: C&F

1

C&F-Consdebt

Breakdown of financing cost

• Upfront fee (arranging fee, origination fee): 0.5 - 1.5%, paid at the financial close

• Commitment Fee: 40 – 80 bsp p.a on the undrawn debt balance, paid during the

construction period

• IDC (Interest During Construction): interest expense during the construction period

• Agent bank fee: lump sum amount, paid at the financial close

37

Source and Uses of funds


Sheet: C&F

1

C&F-Fincost

Note:

Source and uses of funds should be balance

38

Timing Conversion


Sheet: C&F

1

Monthly to Quarterly timeframe

Sum-up the monthly data to quarterly data so that it can be exported to other sheets

that based on quarterly base

39

MODULE - DEBT


Content

Map

Module Debt

This sheet will calculate term loan, interest payment and principal repayment

40

Project Risk in financiers’ point of view

Financiers point of view

• Risky project → High DSCR and Interest rate

• Less Risky project → Low DSCR and Interest rate

DSCR across industries

DSCR

• Mining 3 – 4

• Telecommunication, Renewable (Merchant) 1.7 – 2.5

• Renewable (PPA) 1.2 – 1.4

• Toll Road (Revenue Huartanteed 1.1 – 1.2

High Risk

LowRisk

41

Debt Service

Debt-DSCR

File: 1. Static Debt.xlsx

Sheet: Debt

DSCR =

DSCR =

CFADS

Debt Service

CFADS

Principal repayment + Interest Payment

Principal repayment + Interest Payment = CFADS

DSCR

Principal repayment = CFADS

DSCR

− Interest Payment

Target DSCR P50 = 1.40

→ Debt service for P50 scenario is CFDAS / 1.40

1

OPS-Rev

OPS-Opex

OPS-WC

42

File Reference

2. Static Debt end.xlsx

In this file, we will add P75 Cash flow and Debt ratio in sheet Debt

and continue to discuss new sheets: FS, D&T, and Equity

43

Debt service - update

Debt-DSCR

File: 2. Static Debt end

Sheet: Debt

P50 CFADS

P50 DSCR

P50 Debt Service

P75 CFADS

P75 DSCR

P99 Debt Service

Debt Service for Debt Sizing =Minimum of P50 and P99 debt services

Debt sizing

In renewable energy projects, debt is sized based on two scenarios. P50 scenario –

base case, and P75 is conservative scenario

• 10 year P75 capacity factor– means the most conservative, worst - case scenario

energy production profile.

• 10 year P50 capacity factor – means the base - case energy production profile.

Therefore, there are two types of DSCRs in a term sheet: P50 DSCR and P75 DSCR.

• P50 DSCR is typically in the range of 1.20x - 1.40x for the renewable projects

based on the PPA

• P75 DSCR is set to 1.25x

2

44

Financial covenants

Debt ratio


Sheet: Debt

Covenant

an undertaking or promise by the borrower to the lender to do something or refrain

from doing something.

Financial Covenant

• Debt service coverage ratio (DSCR)

• Loan life coverage ratio (LLCR)

• Project life coverage ratio

• Reserve coverage ratio

Lock-up



Default



2

45

MODULE – D&T


Content

DEPRECIATION

PP&E balance for accounting book

Book Depreciation

TAX

PP&E balance for tax

Tax Depreciation

Tax Depreciation For Project IRR Calculation

Map

Module Depreciation and Tax (D&T)

This module will calculate the depreciation expense for book and tax purpose. This will

also calculate the tax expense and tax paid.

46

Depreciation

D&T- BookDep


Sheet: D&T

PPE (Property, Plant and Equipment)

is a total capex including financing cost . This cost is money spent on tangible (physical)

assets that will be used for more than one year in the operations of a business.

Depreciation Expense

allocation of the cost of physical asset over its projected life on the income statement,

therefore, depreciation expense is a non-cash expense.

Book Depreciation

Depreciation for book reporting. PPE will be depreciated by straight line depreciation

2

47

Tax Depreciation

D&T-TaxDep


Sheet: D&T

Tax depreciation (Accelerated)

Book depreciation (Straight line)

$

time

Tax Depreciation

Depreciaiton for tax calculation. It’s differennt than book depreciation, i.e. on schedule

and cost category. Tax depreciation will use accelerated depreciation method

2

48

Tax Expense vs Paid

D&T-TaxExp


Sheet: D&T

Tax Calculation

Tax expense will be calculated based on accounting principle amd will be

booked in Income Statement. It’s different than what we pay (Tax paid)

because tax office has own tax calculation

2

D&T-TaxDep

49

Deferred Tax

D&T-DefTax


Sheet: D&T

Deferred tax liability (taxes to be paid in future)

Deferred Tax Assets & Liabilities arise from timing differences; typically from

differences in accounting versus tax approaches to items such as depreciation

2

D&T-TaxExp

50

MODULE – EQUITY


Content

PAID IN CAPITAL

RETAINED CASH BALANCE

RETAINED EARNINGS BALANCE

Map

Module Equity

This module will calculate the equity investment through paid in capital. For loan

provided by shareholder will be discussed later in other files

51

Shareholder Capital

Equity-SHcapital


Sheet: Equity

Equity Investment

initial funds raised from sponsors that goes into the paid-in capital account. It is also

include subsequent equity investments into the project (Paid-in capital = par value +

additional paid-in capital)

2

52

Dividend payment

Equity-Div


Sheet: Equity

Retained Earnings

is accumulated net income / loss since the project’s inception. Dividends have to be

subtracted from the retained earnings balance. Typically, dividends are allowed to be

paid out if project meets the lender’s DSCR and DSRA covenants. If the DSCR covenant

is not met, the dividends may be locked-up. DSCR covenant is lower than DSCR we use

for debt sizing (margin of safety)

2

53

MODULE – FS


Content

INCOME STATEMENT

BALANCE SHEET

CASH FLOW (CF)

Map

Module Financial Statement (FS)

This module will calculate 3 financial statements (Income Statement, Balance sheet,

Cash Flow)

54

Financial Statement

FS – IS/BS/CF


Sheet: FS

Income

Statement

Net Profit

After Tax

Equity

Retained

Earnings

Balance Sheet

Cash Flow

Statement

Net Cash Flow

Current

Asset

Cash

55


MODULE – CHECK

Checks for Integrity

A system of checks will make a financial model more robust and will communicate to

the user areas of the model that require attention.

There are three key checks categories:

• Error Checks (e.g. the Balance Sheet balances)

• Alert Checks (e.g. a covenant breach)

• Sensitivity Checks (i.e. to alert the model user to the fact that a sensitivity case is

active)

56

57

II. Dynamic Debt Size

File Reference

3. Dynamic Debt start.xlsx

We will update sheets: C&F and Debt and adding

new sheet Debt to mitigate circular reference

58

Debt Dynamic

C&F-leverage

File: 3. Dynamic Debt start

Sheet: C&F

Debt size is calculated based on the CFADS where the size is the percentage portion

of total capex (leverage) included financing cost. It will be a circular reference

3

59

Debt Sizing

Debt-debt sizing


Sheet: Debt

Construction debt size is based on the project’s cash flows

If project costs increases, this will be covered mostly by equity funding.

If the project cost increases, this will slightly increase debt size, through the effect of

deprecation on the CFADS.

3

60

MODULE – MACRO


Sheet: Macro

Visual Basic

Sub Global_macro()

Do

Application.Calculation = xlCalculationSemiautomatic

Range("Leverage_paste").Value = Range("Leverage_live").Value

Range("cdebt_paste").Value = Range("cdebt_live").Value

Application.CalculateFull

Loop Until Range("Leverage_check").Value = 0 And Range("cdebt_check").Value = 0

Application.Calculation = xlCalculationAutomatic

End Sub

3

61

File Reference

4. Dynamic Debt + DSRA.xlsx

We will update sheet Debt with adding Debt

Service Reserve Account (DSRA)

62

DSRA

Debt-DSRA

File: 4. Dynamic Debt+DSRA

Sheet: Debt

uses of funds

sources of funds

Construction

Cost

Debt

DSRA

Financing

Cost

Equity

Debt Service Reserve Account (DSRA)

• a bank account withdrawals from which are controlled by the lenders

• Next periods debt services (Interest + Principal)

• a part of financing cost and would be sum up as total capex

4

63

Debt Dynamic (+DSRA)


Sheet: C&F

C&F-leverage

DSRA will add to the financing cost. This will affect the CFADS and create new

leverage ratio.

4

64

DSRA Macro

Macro-DSRA


Sheet: Macro

Update VBA Script

Sub Global_macro()

Do




Range(“dsra_paste").Value = Range(“dsra_live").Value



And Range(“dsra_check").Value = 0


End Sub

4

DSRA_check

65

III. Dynamic Debt Size

+ shareholder loan

66

File Reference

5. Dynamic Debt+DSRA+SHL.xlsx

We will update sheet Debt with adding Debt Service

Reserve Account (DSRA)

67

Debt Dynamic (+SHL)

File: 5. Dynamic Debt DSRA SHL

Sheet: C&F

C&F-SHL

Shareholder Loan

Loan from project sponsors to project company, subordinated to construction loan and

is subject to tax authorities interpretation. Interest rate charged is at market level and

will affect the CFADS

5

68

Shareholder loan


Sheet: Equity

Equity-SHL

Shareholder Loan Repayment

5

69

SHL Macro


Sheet: Macro

Macro-SHL

Visual Basic

Sub Global_macro()

Do




Range(“dsra_paste").Value = Range(“dsra_live").Value

Range(“SHL_paste").Value = Range(“SHL_live").Value



And Range(“dsra_check").Value = 0 And Range(“SHL_check").Value = 0


End Sub

5

70

File Reference

6. Dynamic Debt end.xlsx

This file will focus how to generate sheet VAL, AFS

and Dashboard

71

MODULE – VAL

Content

Map

VALUATION

Discounted cash flows

Free Cash flow to Equity (FCFE)

Free Cashflow to Firm (FCFF)

Multiples method

Enterprise value

Equity value

Summary

Module Valuation (VAL)

This module will value of the project based on the project/equity IRR and equity NPV

72

IRR

VAL-IRR

File: 6. Dynamic Debt end

Sheet: VAL

Internal Rate of Return

is the Discount Rate at which NPV becomes zero

Project IRR : IRR at project level

Equity IRR : IRR at shareholder level after debt financing

Formula:

CF = Net Cash Flow

6

73

Equity NPV

VAL-NPV


Sheet: VAL

Formula:

NPV(rate [1] ,value1,value2, [2] …)

[1] Rate is the rate of discount over the length of one period

[2] Value1, value2, … are representing cash flow

6

74

MODULE – AFS

Content

FINANCIAL STATEMENTS

Cashflow waterfall

Profit and Loss

Balance sheet

Cashflow statement (Direct method)

DATA FOR CHARTS (ANNUALLY)

Payable Metal

Debt

Cost ($/oz)

Gold Price vs Cash Cost ($/oz)

Map

ANNUALLY

FINANCIAL

STATEMENTS

(AFS)

QUARTERLY

FINANCIAL

STATEMENTS

(QFS)

Module Annual Financial Statement (AFS)

This module will summarize Quarterly Financial Statement into Annual Financial

Statement.

75

Financial Statement

FS


Sheet: AFS

6

76

MODULE – DASHBOARD

Content

Dashboard Report

• Key Input Assumption

• Result Summary

• Chart

Map

ANNUALLY

FINANCIAL

STATEMENTS

(AFS)

DASHBOARD

VALUATION

(VAL)

Module Dashboard

This module will summarize the key input and result in one page including charts and

scenario control

77

Dashboard


2

3

1

5

4

6

Module Dashboard

This module will summarize the key output and charts for selected scenario. The detail

is as follows:

1. Scenario Selected

2. Every time the scenario is selected, we should press the “global macro” button, and

wait until the calculation process finished

3. Key parameter ouput i.e. Valuation summary, operation and Debt stats

4. Key chart output i.e. operation cash flows, debt cash flows vs DSCR, cash flow per

unit, debt balance vs Debt ratio

5. Key Input assumption i.e.

6. Source & Uses of Funds

78

File Reference

7. Deterministic model.xlsx

This file is a complete model for deterministic approach.

This file will be used as a base for probabilistic model

that would be discussed in the next chapter.

79

CHAPTER 05

Probabilistic and

Optimization modeling

80

“ Monte

Carlo Simulation is a powerful risk analysis and

mitigation tool seldom used by Energy sector.

Companies generally perform some type of sensitivity

analysis but all that does is tell them under what

circumstances their project might fail. It does not tell

them what the probability of failure is.

(The Senior Gold book, HSBC Global research)

Monte Carlo Simulation (Probabilistic)

Probabilistic Model

• These are models that incorporate random variables and probability distributions

• Random variables represent the potential outcomes of an uncertain event

• Probability distributions assign probabilities to the various potential outcomes

• We use probabilistic models in practice because realistic decision making often

necessitates recognizing uncertainty (in the inputs and outputs of a process)

Key Features

• By incorporating uncertainty explicitly in the model we can measure the

uncertainty associated with the outputs, for example by giving a range to a

forecast, which is a more realistic goal

• In a business setting incorporating uncertainty is synonymous with

understanding and quantifying the risk in a business process, and ideally leads to

better management decisions

Key parameter

• Mean, median and mode measures centrality

• Skewness measures asymmetry

• Standard deviation and coefficient of variation measures of spread

• Correlation measures the joint variability of two variables

• Type of Distributions:

Normal Distribution

• Mean = median

• infinity – and infinity +

Lognormal Distribution

• Mean ≠ median

• Only infinity +

Triangular Distribution

• Low, most likely, high

81

SIPmath Simulation Software

SIPmath

Add-in Excel that simplifies spreadsheet simulation

Free download in : http://www.probabilitymanagement/tools.html

It provides:

• Dialogs & functions for generating random numbers

• Commands for running simulations

• Graphical & statistical summaries of simulation data.

Schematic Process

Chart Output

82

SIPmath Installation

Instruction

1. Download SIPmath software from the link that will be shared by your organizer, Or

you can download directly from the website by register first from:

https://www.probabilitymanagement.org/tools

2. Install SIPmath. You will run the SlPmath files which will walk you through the

installation. Make sure you close Microsoft Excel® before you begin the installation.

3. Ensure your laptop is not banned for new software installation. Some companies

have restriction on this especially for company laptoo. Please contact your IT admin

to get a permission.

4. After completing the installation, please check your add-ins in excel by click the tab :

File>options>add-Ins, as shown below.

5. And the click “Go”, the below picture will

be shown up.

Please check the add-ins for Analysis

ToolPak, Analysis ToolPak – VBA and

Solver Add-in as seen in the right picture

83

File Reference

8. Probabilistic Model.xlsx

This file will focus how to develop the probabilistic

model in our case study using SIPmath software

84

Probabilistic Model

File: 8. Probabilistic Model

Sheet: Dashboard

Setting Input and Output

• Capacity factor ss set as input assumption

• Equity/Project IRR and EV/MW is set as output assumption

Other

variables are

assumed as

single point

estimate

We will create an additional table to list input and target

output in sheet dashboard

85

Module Dashboard-update

File: 8. Probabilistic Model

Sheet: Dashboard

Module Dashboard - Update

We add some key parameter and chart to

describe the probabilistic analysis.

The detail is as follows:

1. Key Probabilistic Input (capacity factor)

2. Set target output (IRR & EV/MW)

3. Cummlative IRR distribution chart

2

1

3

86

Steps to build probabilistic Model - 1

1. Create senario options (determinstic/probabilistic) using

data validation function (sheet dashboard (cell E118)

by put the cursor in cell E118 and click tab: Data > Data Validation > combo box

2. Setting up the uncertain variable (sheet dashboard cell V9)

Define “Capacity Factor” as input variable with normal distribution

The mean input value is referred to the assumption used in the deterministic

model. The standard deviation will be assumed here is 7%. This input numbers

will be simulated as normal distribution using SIPmath. The first iteration result of

this simulation is 22.8%. There will be 99 numbers behind this number since we

iterate 100 scenario

next page.

The steps how to generate this result will be detailed in the

87


2a. click tab : SIPmath Modeler Tools > Initialize

set Number of Trials : 100 and Start Var ID : 1

2b. click tab generate input > normal

There will be an update formula in cell E13 sheet Debt to choose capacity

assumption between determnistic and probabilistic approach

=IF(Dashboard!$E$18="Deterministic",Dashboard!AE9,Dashboard!AD9)

88


3. Setting up the target output

3a. CFADS (sheet Debt , array J18:CU18)

Goal: Find the P50 and P75 CFADS as a base calculation of debt size

click tab : SIPmath Modeler Tools > Define Outputs

There will be an update formula in array E23:CU23 and E24:CU24 sheet

Debt to choose CFADS between determnistic and probabilistic approach

- CFADS P50:

=IF(Dashboard!$E$18="Deterministic",S19*S22,S22*PERCENTILE.EXC(CF_10,0.5))

- CFADS P50:

=IF(Dashboard!$E$18="Deterministic",S22*S20,S22*PERCENTILE.EXC(CF_10,0.25))

3b. Equity IRR and EV/MW (sheet dashboard array V12:W12)

Goal: Define “Equity IRR and EV/MW ” as target output

click tab : SIPmath Modeler Tools > Define Outputs

89


3c. calculate the statistical result with excel formula as

seen the below table

4. Create graph

4a. Create cumulative IRR graph

Put cursor in cell V12 click tab: Graphs and fill in column

“cumulative chart starting location” with AA7

Once we click “OK”, it will produce a graph

90


4b. Add dynamic dashed line

i) in sheet "SIPmath Chart Data", we should add calculation to produce

the probability for each value using index match

• Cell D322 (point x1) =INDEX( 'SIPmath Chart Data'!B325:B424, MATCH(

Dashboard!AH7, 'SIPmath Chart Data'!C325:C424, 0),0)

• Cell E323 (point y2) =INDEX( 'SIPmath Chart Data'!A325:A424, MATCH(

Dashboard!AH7, 'SIPmath Chart Data'!C325:C424, 0),0)

ii) on the cumulative IRR chart, add data chart with x-y type

91


iii) create scroll bar to determine the probability for each NPV, by

click tab: Developer > Insert > Scroll bar

iv) by click right on the scroll bar, then click format control, then

link cell AH7

92


4c. Add shaded area

i) same as the dashed line, we should add calculation to produce two

areas, i.e. : left tail and right tail area. For example:

• Left tail → Cell H325 =IF(B325<=$D$323,B325,NA())

• Right tail → Cell I325 =IF(B325>=$D$323,B325,NA())

ii) Click data series of right tail and use Error Bar by click:

Design>Add chart element>Error Bars>more error bar options

iii) For left tail area, we use the same procedure as step ii.

93

File Reference

9. Optimization Model.xlsx

This file will focus how to find the optimal price that

meet the target of shareholder required of return.

We divide this optimization into two parts, i.e:

a. Deterministic approach

b. Probabilistic approach

94

Price Optimization

a. Deterministic Model

File: 9A. Optimization Model

Sheet: Dashboard

Objective

• To find the optimal price that meet the equity return (in this case is 10%)

Procedure

• First, we set analysis type as deterministic

• then change the formula PPA price in table of commercial assumptions that link to

sheet macro instead of sheet input

Change the reference sheet from sheet Input to sheet Macro

• In sheet Macro, there will be additional calculation that would be linked to VBA

script as shown the next page

• Any change in assumption and scenario selected should press button “Global

Optimize” and wait the calculation process until modelling error and compliance

checks indicate “OK”.

• The result of statistic output is the same (10%) due to deterministic model

95

Optimization Macro

Macro-OPT

File: 9A. Optimization Model

Sheet: Macro

Adding VBA Script

Sub Price_optimization()

' Price_optimization Macro

Range("IRR_check").GoalSeek Goal:=0, ChangingCell:=Range("PPA_price")


End Sub

9

IRR check for finding the optimum price to meet IRR target

96

Price Optimization

b. Probabilistic Model

File: 9B. Optimization Model

Sheet: Dashboard

Objective

• To find the optimal price that meet the mean equity return (in this case is 10%)

Procedure

• Change the analysis type as probabilistic

• Then press button “Global Optimize” and wait the calculation process until

modelling error and compliance checks indicate “OK”. It takes more time than the

previous one (in deterministic model). It could be 5 – 10 minutes due to every

calculation would be repeated 100 times according to the number of iterations.

• Since the target of IRR in the probabilistic model at the mean value. The result of

mean equity IRR does not yet reached 10% as seen below table.

• The difference between mean and the first iteration of equity IRR is around 4.3%

(14.3%-10%). We solve it using trial and error by deducting the shareholder

required rate of return of 10% with a certain percentage (sheet “dashboard” cell

E22), and then press again button “Global Optimize” and wait the calculation

process until modelling error and compliance checks indicate “OK”.

• After conduct some trials, we found that by setting the target of shareholder

required rate of return at 6.6%, the mean of equity IRR is 10.00% with PPA price

at $80.4/MWh as shown below.

97

CHAPTER 06

Closing and References

98

WRAP - UP

1. Renewable Project Characteristic

• Need capital intensive and economics driven majorly by the cost of capital

• Low capacity factor due to risk on resource Assessment

• Need a subsidy from government through Feed in Tariffs scheme

• Financiers concerned about the confidence in the capacity factor estimates

2. Key value driver of Renewable Projects

• Electricity Prices, Investment cost per KW, Capacity factor, operating and

maintenance cost, financing scheme and target shareholder required rate of return

3. Key financing parameter of Renewable Projects

• Debt Service Coverage ratio (DSCR) and Debt Sizing

• Use of probability estimates in Debt sizing and DSCR

4. Financial Modeling of Renewable Projects

• Breaking the modeling task into self contained segments is known as modular

development.

• The modules that is built in the case study are: Input, Operation (OPS), Capex &

Funding (C&F), Debt, Depreciation & Tax (D&T), Financial Statement (FS), Equity,

Valuation (VAL), Annual Financial Statement (AFS) Dashboard, Macro and Check

• The chronology of model building based on the capex funding scheme, i.e.:

1. Static Debt size (no circular reference)

2. Dynamic Debt size (circular reference)

3. Dynamic Debt size included share holder loan (circular reference)

5. Probabilistic Risk Analysis

• The use of SIPmath software to run probability analysis on the impact of uncertain

capacity factor to the debt size and project economics

• Comparison between deterministic and probabilistic approach on the result of

equity IRR and other parameter.

6. Price Optimization modeling

• Set the target of equity IRR by finding the optimum electricity price

• Compare the optimization result between deterministic and probabilistic approach

99

REFERENCES

• Prof Edward Bodmer, Project Finance and Renewable Energy,

www.edbodmer.com

• Greg Ahuy CFA , Project Finance Modeling for Renewable Energy,

www.financialmodelonline.com

• SIPmath software, www.probabilitymanagement.org

CONVENTION

Convention

OPS-Prod

1

Meaning

Index for a specific topic (e.g. Production/PROD) and sheet

name reference in the excel file (e.g. Operation/OPS)

Excel File number (e.g. excel file no 1)

Reference Excel File

100

Modeling valuation and financing in renewable projects

Discusses the deficiencies that exist in conventional assessment techniques as well as the emergence of

modern valuation techniques to improve the conventional approach from a deterministic-static model to a

probabilistic-dynamic in accordance with the characteristics of the renewable project which has a high

uncertainty in capacity factor. Using the free SIPmath Monte Carlo software from probabilitymanagement.org

and the spreadsheet template that accompanies this book, it is hoped that probabilistic approach will be

easier to implement in assisting investment decisions on renewable projects.

List of Chapter:

1. Characteristic of Renewable Projects

2. Key Performance Indicator

3. Valuation and Financing Term

4. Valuation and Financing Modeling

5. Probabilistic and Optimization Modeling

6. Closing and References

Explorerealoptions.id

Author Biography

N u z u l u l H a q , is a p r a c t i t i o n e r in p r o j e c t e c o n o m i c s f o r 20 y e a r s

w i t h the l a t e s t p o s i t i o n as M a n a g e r of C o r p o r a t e P l a n n i n g a n d

I n v e s t m e n t d e p a r t m e n t in M e d c o E n e r g y I n t e r n a s i o n a l T b k .

He w a s g r a d u a t e d f r o m B a n d u n g I n s t i t u t e of T e c h n o l o g y ( I T B ) in

1996. H i s c a r e e r s t a r t e d as p r o c e s s e n g i n e e r in N e w m o n t a n d

N e w c r e s t . A f t e r he c o m p l e t e d a m a s t e r d e g r e e in f i n a n c i a l

m a n a g e m e n t in F a c u l t y of E c o n o m i c s , U n i v e r s i t y of I n d o n e s i a in

2001, he s t a r t e d a c a r e e r as a P l a n n i n g a n d E c o n o m i c a n a l y s t .

H i s e x p e r t i s e f o c u s on p r o j e c t e c o n o m i c s , v a l u a t i o n m o d e l i n g ,

e c o n o m e t r i c f o r e c a s t i n g , r i s k a n a l y s i s , r e a l o p t i o n s / m a r k e t b a s e d

v a l u a t i o n , a n d a s s e t p o r t f o l i o m a n a g e m e n t .

H i s t e c h n i c a l p a p e r s h a d b e e n p r e s e n t e d in I n t e r n a t i o n a l C o n f e r e n c e

s u c h as I n t e r n a t i o n a l E n e r g y E c o n o m i c s C o n f e r e n c e in P e r t h ( 2008),

B e r l i n ( 2006) a n d Z u r i c h ( 2004) .

He is a c r e a t o r of e x p l o r e r e a l o p t i o n s . id to p r o m o t e p r o b a b i l i s t i c

a n d R e a l O p t i o n s A n a l y s i s f o r b e t t e r p r o j e c t i n v e s t m e n t d e c i s i o n .

He h a s a l s o p u b l i s h e d s o m e b o o k s as l i s t e d b e l o w :

2018 M o d e l i n g V a l u a t i o n D e c i s i o n a n d R i s k in M i n i n g P r o j e c t s

2017 M o d e l i n g V a l u a t i o n D e c i s i o n a n d R i s k in O i l a n d G a s P r o j e c t s

2009 A N e w E r a of P r o j e c t E c o n o m i c s ( c o n v e n t i o n a l to m o d e r n

Manuscript - Financing Modeling of Renewable Energy Projects

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