Renewable Energy Valuation

Hey everyone!

I was wondering if there is an energy banker here who can explain to me the difference between a Project Finance valuation of a solar plant and a wind plant. 

I did not find a financial model on the topic so if somebody has some materials, I would love to see them.

Thanks!

5 Comments
 

I did some research on the topic for interviews a few months back. I remember seeing some good videos on youtube from the channel Pivotal180 among some other videos. It took a while to snoop around until I actually knew what I was looking for. I think being able to understand the concepts like PPA's, usage rates (like PV solar using a certain % of capacity) and fluctuation sensitivities. It seemed like much of it was a lot of excel macros for investment decisions. Someone correct me if I'm wrong, I'm also interested to see what others have to say.

 

For valuation purposes its the same - look at the  PPAs, merchant vs contracted cash flows, and then assign different discount rates depending on that + geography, lifecycle (planning vs construction vs operating), and technology.

Basically you’re just building up to a 20+ year DCF, oftentimes with no terminal value.

PF bankers don’t do valuation, but they do layer on the financing that affects levered IRR. Financing for solar vs wind is a whole other topic.

 

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