Introduction

The development of power projects, whether in renewable energy, conventional generation, or transmission infrastructure, involves substantial capital investment, long operational lifespans, and complex revenue streams. Financial modelling is the indispensable tool that underpins all investment decisions in this sector, providing a robust framework to evaluate project viability, assess risks, attract financing, and optimize returns. A well-constructed financial model translates technical specifications and market assumptions into a coherent set of financial statements, cash flow projections, and key performance indicators, enabling stakeholders to understand the project's economic merits and sensitivities. Given the dynamic nature of energy markets, regulatory frameworks, and technology costs, the ability to build, analyze, and interpret sophisticated financial models is paramount for project developers, investors, lenders, and government agencies alike. Without mastery of Financial Modelling for Power Projects, stakeholders risk making suboptimal investment decisions, failing to secure necessary funding, or misjudging project risks, underscoring the vital need for specialized expertise in this critical domain. This comprehensive training course focuses on equipping professionals with the expertise to master Financial Modelling for Power Projects.

This training course is meticulously designed to empower project developers, investment analysts, finance professionals, government energy planners, utility strategists, and consultants with the theoretical understanding and practical skills necessary to build, analyze, and audit sophisticated financial models for power projects. Participants will gain hands-on experience in structuring project finance models, forecasting revenues and costs, incorporating taxation and depreciation, performing sensitivity and scenario analysis, and calculating key financial metrics such as IRR, NPV, and DSCR. The course will delve into topics such as debt structuring, equity returns, PPA (Power Purchase Agreement) analysis, merchant risk assessment, impact of regulatory frameworks, and the application of financial modeling best practices to diverse power generation technologies. By mastering the principles and practical application of Financial Modelling for Power Projects, participants will be prepared to make sound investment decisions, secure competitive financing, mitigate financial risks, and contribute significantly to the successful development and operation of vital energy infrastructure.

Duration: 10 Days

Target Audience

• Project Developers (Renewables, Conventional Power)
• Investment Analysts (Infrastructure, Energy Funds)
• Corporate Finance Professionals (Utilities, IPPs)
• Commercial and Business Development Managers (Power Sector)
• Bank and Financial Institution Professionals (Project Finance)
• Government Energy Planners and Regulators
• Consulting Professionals (Energy, Finance)
• Energy Economists
• Due Diligence Specialists
• Utility Strategists

Objectives

• Understand the fundamental concepts of project finance and its application to power projects.
• Learn the best practices for building robust and transparent financial models.
• Acquire skills in forecasting project revenues and operating costs accurately.
• Comprehend techniques for structuring debt and equity financing within models.
• Explore strategies for calculating and interpreting key financial metrics (IRR, NPV, DSCR).
• Understand the impact of taxation, depreciation, and incentives on project economics.
• Gain insights into performing sensitivity, scenario, and Monte Carlo analysis for risk assessment.
• Develop a practical understanding of modelling Power Purchase Agreements (PPAs) and merchant risk.
• Learn about equity valuation methods for power projects.
• Master the principles of model auditing and validation.
• Acquire skills in modelling specific power generation technologies (e.g., solar, wind, thermal).
• Understand the application of macroeconomic and market assumptions in financial models.
• Explore refinancing and restructuring considerations in long-term models.
• Develop proficiency in presenting and communicating financial model results effectively.
• Prepare to make informed investment and financing decisions for power projects.

Course Content

Module 1: Introduction to Project Finance and Financial Modelling

• Overview of project finance characteristics and structures.
• Role of financial modelling in power project development and financing.
• Key stakeholders in a project finance transaction (developers, lenders, equity investors).
• Overview of a typical project finance model structure.
• Financial modelling best practices: transparency, flexibility, auditability.

Module 2: Setting up the Financial Model Structure

• Designing a clear and logical model layout.
• Input sheets: Assumptions, Timing, Macroeconomic.
• Calculation sheets: Development, Construction, Operations, Financing, Tax, Returns.
• Output sheets: Financial Statements, Debt Service, Returns, Charts.
• Naming conventions and cell formatting best practices.

Module 3: Project Assumptions and Timing

• Defining key project phases: development, construction, operations.
• Setting up calendar and timing conventions.
• Macroeconomic assumptions: inflation, exchange rates, discount rates.
• Technical assumptions: capacity factor, degradation, availability.
• Market assumptions: power prices, fuel costs.

Module 4: Construction Phase Modelling

• Capital expenditure (CAPEX) breakdown and profiles.
• Construction period interest (CID) and fees.
• Working capital during construction.
• Sources of funds during construction (debt, equity).
• Construction cost overrun provisions.

Module 5: Revenue Modelling

• Power Purchase Agreements (PPAs): fixed prices, escalators, indexation.
• Merchant revenue modelling: electricity price forecasting, volume risk.
• Ancillary service revenues (capacity, ancillary services).
• Renewable energy certificates (RECs) or similar support mechanisms.
• Revenue adjustment mechanisms and penalties.

Module 6: Operating Costs and Maintenance Modelling

• Variable operating costs (fuel, consumables).
• Fixed operating costs (O&M, salaries, G&A).
• Major maintenance (overhauls) and reserve accounts.
• Land lease payments and other recurring expenses.
• Energy efficiency and performance guarantees.

Module 7: Depreciation and Taxation

• Different depreciation methods (straight-line, declining balance).
• Tax considerations: corporate income tax, withholding tax.
• Tax depreciation vs. accounting depreciation.
• Tax holidays and investment tax credits.
• Impact of tax regimes on project returns.

Module 8: Debt Structuring and Modelling

• Types of debt: senior debt, subordinated debt, mezzanine.
• Debt sizing methodologies (e.g., DSCR, LLCR, PLCR).
• Repayment profiles (annuity, sculpted, straight-line).
• Interest rate mechanisms (fixed, floating, swaps).
• Debt service reserve accounts (DSRA) and other reserves.

Module 9: Equity Investment and Returns

• Equity contribution profiles and sources.
• Equity IRR (Internal Rate of Return) calculation and interpretation.
• NPV (Net Present Value) calculation and decision criteria.
• Payback period and other equity metrics.
• Dividend distribution waterfall.

Module 10: Financial Statements and Key Ratios

• Building the Income Statement (P&L).
• Constructing the Balance Sheet.
• Developing the Cash Flow Statement.
• Calculating key financial ratios: Debt Service Coverage Ratio (DSCR), Loan Life Cover Ratio (LLCR), Project Life Cover Ratio (PLCR).
• Understanding the interdependencies between financial statements.

Module 11: Sensitivity, Scenario, and Monte Carlo Analysis

• Performing one-way and two-way sensitivity analysis.
• Defining scenarios (optimistic, base, pessimistic).
• Stress testing the model for key variables.
• Introduction to Monte Carlo simulation for probabilistic risk assessment.
• Interpreting sensitivity and scenario outputs.

Module 12: Advanced Modelling Topics

• Refinancing mechanisms and modelling implications.
• Debt restructuring in distressed scenarios.
• Lease vs. buy analysis for project assets.
• Modelling for merchant risk exposure.
• Integrating hedging strategies (e.g., interest rate, currency).

Module 13: Model Auditing and Validation

• Principles of model auditing: checks, robustness, logic.
• Common errors in financial models and how to identify them.
• Building in error checks and alerts.
• Best practices for model documentation.
• The role of independent model auditors.

Module 14: Case Studies by Technology

• Modelling a solar PV project (e.g., PPA vs. merchant).
• Modelling a wind farm project (e.g., intermittency, capacity factor).
• Modelling a conventional thermal power plant (e.g., fuel price volatility).
• Modelling a battery energy storage project (e.g., multiple revenue streams).
• Specific considerations for transmission infrastructure projects.

Module 15: Presentation and Communication of Model Results

• Designing effective output summaries and dashboards.
• Clearly articulating key assumptions and drivers.
• Presenting sensitivity and scenario analysis results.
• Communicating risks and opportunities to investors and lenders.
• Best practices for model walkthroughs and explanations.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 10 working days before commencement of the training.