Economic Analysis, Financing & Modelling for Renewable Energy

5 days 5-9 Dec 2016, London UK £4,495.00 + VAT* Download brochure Add to basket

* Claim back your VAT
Find out more

Request a different date or location for this course (we regularly add courses following requests).


* Claim back your VAT
Find out more


This five day training course will discuss the following:

  • Contrast risk and financial structuring for different types of renewable projects including biomass, on-shore wind, off-shore wind, solar PV, solar thermal and geothermal
  • Create flexible and transparent financial models of renewable energy from A-Z that incorporate resource risk, financing structure, tax treatments, alternative pricing policies and other factors
  • Learn practical tools to analyse renewable energy including efficient tools to work with wind, hydro and solar data; creating flexible scenario and sensitivity analysis to evaluate resource risk, construction risk, O&M risk and debt structuring; developing techniques to resolve circular references related to funding debt and sculpting debt without copy and paste macros
  • Measure and evaluate changes in the risk of projects over different stages of the project and how equity returns and value change if purchases and sales occur at different phases of a project's life
  • Understand the implications of project finance features in the context of renewable energy (sculpting, debt funding, debt size, DSCR, DSRA, debt tenor, re-financing) on costs and equity returns from renewable energy
  • Develop efficient ways to quickly compute the levelised electricity cost of different technologies using carrying charge factors and alternative financial models
  • Work through resource assessments and compute probability of achieving different levels of production (P90, P75 etc.) using hands-on exercises for different types of projects in order to effectively review consulting studies
  • Evaluate recent cost trends in capital cost, operating cost and efficiency of renewable resource through studying financial condition of wind and solar suppliers over the past few years
  • Measure the effect of probabilistic risk assessment on the debt capacity of alternative renewable projects and the effects of the DSCR constraint versus the debt to capital constraint

Course resources

Other than the instruction in how to build, use and analyse financial models in evaluating renewable energy projects, all participants will receive a comprehensive suite of financial modelling software, tailored teaching exercises and research articles on a series of compact disks which include a variety of template models and excel add-ins. 

The software includes of project finance models that measure the effect of alternative elements in a cash flow waterfall including debt service reserves, junior debt, covenants, defaults and pre-payments; corporate models that accept historic financial data and generate alternative valuation measures; M&A models that consolidate two companies using alternative financing assumptions and produce accretion and dilution estimates; LBO models that measure the debt capacity of a transaction; option pricing models that account for alternative structures; and debt valuation spreadsheets, Monte Carlo simulation models, tornado diagram and sensitivity analysis.

In addition to the software resources, participants will receive databases on actual projects, commodity price history and case studies.  Finally, participants will receive financial library and a manuscript from the book titled The Valuation Mirage, which addresses many modelling and valuation issues covered in the course.


We work with a series of expert instructors, please select the course location of interest to review the credentials of who will be delivering the programme.

Ed Bodmer
Ed has created innovative forward pricing, productivity measurement and investment valuation software for consulting clients throughout the United States. He has taught energy economics and finance throughout the world, and formulated significant government policy and corporate strategy in the U.S. 

His consulting clients include investment banks, commercial banks, research institutions and government agencies on a wide variety of complex valuation and advisory matters. He has constructed a unique framework for electricity price forecasting and valuation using production cost modelling techniques combined with option price theory and Monte Carlo simulation.

He is also an adjunct professor at leading University where he teaches courses in microeconomics. Along with his practical experience that covers a multitude of major advisory projects, he has taught specialised courses in financial modelling, electricity pricing, option valuation, mergers and acquisitions and contracting to investment banks, commercial banks, industrial corporations and electric utility companies.

He was formerly Vice President at the First National Bank of Chicago where he directed analysis of energy loans and also created financial modelling techniques used in advisory projects. He has used the models in providing expert testimony on subjects ranging from capital structure to investments in multi-billion dollar nuclear plants to complex valuation of new investments.

He received an MBA degree specialising in econometrics (with honours) from the University of Chicago and a BS degree in finance from the University of Illinois (with highest university honours). He has written many articles and is in the process of completing a textbook on valuation of electricity assets.



Central London Hotel Venue

All courses are held at four or five star venues in Central London, Zone 1. We strive to provide you with a training environment of the highest quality, to ensure that the whole learning experience exceeds your expectations.

Your training venue will be confirmed by one of our course administrators approximately 3-4 weeks before the course start date.

Related Courses


We can bring this course to your company's office.

If you simply want to run this course at a location convenient to you or if you want a completely customised learning solution, we can help.

We produce learning solutions that are completely unique to your business. Our tailored learning solutions are designed specifically for your organisation’s needs.

We’ll be here to support you every step of the way. From the initial consultancy through to evaluating the success of the full learning experience. We'll ensure you get the maximum return on your training investment.

Find out more


Day 1

Part 1: Definition of terms, renewable costs, levelised cost of electricity

Overview of terms in project finance terms in the context of renewable energy through review of financial models

  • Renewable energy terms
    - Economic issues associated with renewable energy
    - Alternative contract structures relative to conventional plants
    - Grid parity
    - Carrying charge factor
    - Feed-in tariff policy
  • Renewable energy pricing versus multi-part tariffs in conventional energy

Drivers of value in renewable energy projects

  • Resource assessment and capacity factor
  • Development cost and timing
  • Electricity pricing
  • Capital costs
  • Operating and maintenance costs
  • Capital recovery factor, taxes, financing
  • Operating costs, maintenance costs and availability

Capital intensity and levelised cost of alternative technologies

  • Definition of capital intensity and cost of capital
  • Four factors that drive LOCE
    - Capital cost of project
    - Capacity factor of project
    - Operation and maintenance expenses
    - The carrying charge rate 

Exercise on computing grid parity

  • Databases for electricity costs
  • General discussion of cost trends in wind, solar, natural gas and other technologies
  • Review of IEA cost analysis for various types of renewable and non-renewable plants including on-shore and off-shore wind, solar PV, solar thermal, geothermal, wave energy, hydro and biomass
  • Natural gas prices by region and over time
  • Grid parity with different capital cost, carrying charge rates and natural gas prices


Day 2

Part 2: Overview of project finance, cost of capital and pricing contracts for renewable energy

Economic and financial theory of project finance

  • General discussion of risks for renewable projects
    - Capacity factor risk (solar, on-shore wind, off-shore wind, hydro)
    - Construction risk (off-shore wind and hydro versus solar)
    - Operation and maintenance risk
    - Contract risk
  • Measurement of risk using traditional finance theory and WACC
    - Review of solar manufacturers
    - Theory of cost of capital, beta and equity risk premium applied to renewable energy
    - Contrast of solar and off-shore wind from traditional cost of capital and free cash flow perspective
  • Measurement of value and risk using project finance
    - Debt capacity and credit analysis of different transactions
    - Use of equity IRR versus project IRR
    - Relying on external cash infusions rather than internal analysis
    - Financing for different types of projects
  • Debt capacity and project finance terms
    - Effects of debt service coverage constraint versus debt to capital constraint
    - Debt service coverage ratio definition and targets
    - Debt tenor, alternative repayment structure, average life
    - Credit spreads and target credit ratings in project finance
    - Debt service reserve and maintenance reserve
    - Covenants, cash flow sweeps and subordinated debt

Project finance valuation for renewable energy

  • Project IRR to screen projects
  • Equity IRR to structure projects and minimum required equity IRR for different renewable projects
  • Equity IRR complexities from re-financing and development fees

Part 3: Review of costs, capacity factors, and pricing structures for alternative renewable technologies and build-up of project finance model

Discussion of wind and solar technologies

  • On-shore wind
    - Historic and current trends in capital cost
    - Review of financial data for suppliers
    - Fixed and variable O&M cost
    - Capacity factors and general discussion of one-year versus long-term P90, P75 etc.
    - General contract terms
    - Feed in tariffs and PPA agreements for on-shore wind
  • Off-shore wind
    - Capital cost data base, distance, depth and height
    - Balance of system costs for off-shore versus on-shore
    - Operating costs and availability issues
    - Capacity factors
    - Feed-in tariffs
    - Case study of Princess Amelia financing
  • Solar PV
    - General discussion of technology
    - Demand and supply and changes in German feed-in tariffs
    - Review of solar companies and financial issues
    - Financial performance of manufacturers
    - Balance of system costs and inverter costs
    - Performance guarantees and other contract terms
    - First solar case study
  • Solar thermal
    - Costs and capacity factor
    - Operating cost
    - Potential trends

Day 3

Part 4: Resource assessment

Overview of resource assessment in renewable projects

  • Resource assessment of wind – working with hourly wind speeds, wiebull distributions and statistical analysis (P90, P50 etc.)
  • Resource assessment of solar – direct and diffuse radiation, sunlight angles and RetScreen)
  • Resource assessment of geothermal and hydro
  • Probability distributions of resources
  • Case study on resource analysis in loans

Modelling resource distributions of solar power

  • Data sources for solar irradiation
  • Computation of production from efficiency with adjustments for performance
  • Statistical and seasonal distribution of production data in different locations
  • Use of RetScreeen for simple analysis
  • Computation of P95, P90, P75 and P50 statistics

Case study on interpretation of P75, P90, P95 and P99

  • Review of credit analysis for wind projects
  • Analysis of resource risk in different reports
  • P90/P50 for one year and for ten years
  • Case study on detailed calculation of resource distribution

Modelling resources for hydro power

  • Fundamental hydro power equation
  • Sizing of hydro plants and exceedence curves
  • Variance in rainfall and river flow
  • Computation of P95, P90, P75 and P50 statistics for hydro capacity factor

Modelling resource distributions of wind

  • Overview of wind data
  • Wiebull distribution and wind data
  • Power curve for wind turbines
  • Distribution of wind resources and wind studies
  • Simulation of power distribution
  • Computation of P95, P90, P75 and P50 statistics

Interpretation of resource assessment for risk analysis

  • Mean reversion of resources
  • Aspects of probability distribution other than resources
  • Use of probabilities in financial analysis
  • Contrast among different risks


Day 4

Part 5: Valuation and project finance modelling for renewable projects

Financial statement analysis in renewable project finance

  • Risks and stages of project
  • Source and use of funds statement before commercial operation
  • Focus on cash flow and EBITDA
  • Interpretation of cash flow statement
  • Reserve accounts for debt service and other factors
  • Computation of equity cash flow and free cash flow and IRR versus return on investment

General discussion of project finance models

  • General objectives of financial models and financial forecasts
  • Objectives of project finance models
  • Flexibility, structure, accuracy and transparency of project finance models
  • Examples of the structure of actual project finance models
  • Creation of project finance model structure

Mechanical issues in creating and interpreting project finance models

  • Phases in project financing for renewable projects
  • Sources and uses analysis in models
  • Importance of debt sizing, debt funding and debt repayment
  • Fixed asset analysis
  • Profit and loss statement and tax analysis
  • Cash flow waterfall
  • Tax flip structures
  • Resolving circular references without copy and paste macros arising from funding and sculpting

Model complexities for renewable finance projects – accelerated tax depreciation, investment tax credit, production tax credits and renewable energy pricing

  • Mechanics and rational for alternative incentive schemes
  • Benefits of investment schemes relative to feed-in tariffs
  • Effects of incentives on the overall cost and require feed-in tariffs of different renewable projects
  • Flips and allocations of cash flow to different equity investors – interpretation of risk and return with different cash flow allocations
  • Computation of project value assuming different sale dates and risk adjusted discount rates from buyer perspective as risk of project changes from signing contracts, working through mechanical issues and demonstrating cash flows from historic record
  • Incorporate refinancing assumptions in financial models through adding sources and uses of funds analysis in alternative re-financing periods and evaluating different possible features of re-financing


Day 5

Part 6: Risk analysis of renewable energy

General discussion of risk in renewable energy projects

  • Discussion of differences in the nature of risks for on-shore wind (wind resource), off-shore wind (maintenance and life expectation), solar (small risks become big with high leverage), hydro (capacity factor and merchant price risk), wave (refurbishment timing), geothermal (development probability)
  • Risk matrix, risk classification and risk mitigation
  • Risk evaluation using break-even and sensitivity analysis
  • Risk evaluation using scenario analysis with focus on the manner in which bankers apply downside analysis
  • Measurement of risk using structured master scenario page in Excel Model with options for adding sensitivity analysis to defined scenarios
  • Risk analysis using spider and tornado diagrams

Credit analysis in renewable project finance

  • Background on probability of default and loss given default
  • Definition and calculation of DSCR
  • Use of DSCR in base (P50 cases) and downside (P90, P95 cases) in determining debt capacity
  • Application of LLCR and PLCR

Contract structuring in renewable project finance

  • Importance of EPC contract in different projects (off-shore wind and hydro)
  • Performance contracts in solar projects
  • Power curve and availability guarantees in solar and wind projects
  • O&M contracts and warranties
  • Insurance
  • Counterparty risk in different projects

Part 7: Re-financing, electricity pricing, biomass and geothermal issues

Re-financing for renewable projects

  • Types of projects where re-financing is important – off-shore wind, wave energy, merchant hydro projects and geothermal
  • Effects of re-financing on equity IRR and difficulty of defining the equity IRR with short-debt duration
  • Structuring project finance models and analysis to measure the effect of re-financing on equity returns

Electricity pricing analysis in the context of renewable energy

  • Overview of electricity prices and electricity pricing designs around the world
  • Relevance of electricity pricing to renewable analysis
  • Short-term and long-term marginal cost for pricing analysis

Pricing analysis for biomass projects

  • Evaluation of project finance model for biomass
  • Capital cost, heat rates and operating costs of biomass projects
  • Examples of biomass projects
  • Tipping fees and construction of price curves from local supply and demand data

Development costs in renewable projects

  • Development time frame and costs in wind and solar projects
  • Exploration costs and time frame in geothermal projects
  • Fees and compensation for development and treatment of development fees when computing equity IRR.
  • Probabilities of proceeding beyond development
  • Value and costs of development and research stage
    - Value of development expenditures versus construction expenditure
    - Payment of development fees
    - Development costs and real option
    - Valuation of development as real option
    - Compensation for development costs

Modelling exploration and development options – geothermal case

  • General cost and resource parameters for geothermal projects
  • Review of project finance model for geothermal project
  • Exploration and development cost, probability time frame
  • Segregating development phases
  • Discount rates for different stages
  • Computation of expected value

Interpretation of development value

  • Relative effect of development cash costs and construction costs
  • Break-even development probability
  • Length of development period
Course summary and close
Why us

We have a combined experience of over 60 years providing learning solutions to the world’s major organisations and are privileged to have contributed to their success. We view our clients as partners and focus on understanding the needs of each organisation we work with to tailor learning solutions to specific requirements.

We are proud of our record of customer satisfaction. Here is why you should choose us to help you achieve your goals and accelerate your career:

  • Quality – our clients consistently rate our performance ‘excellent’ or ‘outstanding’. Our average overall score awarded to us by our clients is nine out of ten.
  • Track record – we have delivered training solutions for 95% of worlds’ top 100 banks and have trained over 250,000 professionals.
  • Knowledge – our 150 strong team of industry specialist trainers are world leading financial leaders and commentators, ensuring our knowledge base is second to none.
  • Reliability – if we promise it, we deliver it. We have delivered over 20,000 events both in person and online, using simultaneous translation to delegates from over 180 countries.
  • Recognition – we are accredited by the British Accreditation Council and the CPD Certification Service. In an independent review by Feefo we scored 96% on service and 95% on product