Renewable Energy-Financial Modeling for Project Finance
Autor: prashkumar91 • September 16, 2017 • Exam • 462 Words (2 Pages) • 793 Views
Renewable Energy-Financial modeling for Project Finance
Objectives:
- To understand basic financial concepts and some of the metrics used
- Prepare a basic financial model
- To understand basic renewable energy metrics, industry functioning and structure
The Case:
Greenco Energy is an independent power producer in India. It operates primarily in renewable energy sector, especially- Solar and Wind. Within Solar the company has two divisions – Solar rooftop and Solar utility (Large scale solar farms). The business development team for the solar rooftop has got a lead that Kyriu Inc, an automotive manufacturer is looking for rooftop solar solution for its plant.
The engineering team assesses the roof and estimates a potential capacity of 100 kWp. This would roughly require an area of 1200 sqm. Kyriu’s management approves the capacity and has now asked Greenco Energy to submit a commercial proposal.
In order to estimate the cost Greenco takes a rough quote from its various suppliers. A typical rooftop solar system consists of the following materials and services:
- Solar Panel: Rs. 34,00,000
- Inverter: Rs. 7,00,000
- Structure: Rs. 7,00,000
- Cables and Cable Trays: Rs. 50,000
- Monitoring system: Rs. 50,000
- Cleaning System: Rs. 50,000
- Meter & Switchgears: Rs. 50,000
- Installation & Commissioning: Rs. 5,00,000
After collecting the rough prices, Greenco adds its margins (16%) and submits a proposal of Rs 63,80,000 to Kyriu. Seeing, the high cost, Kyriu’s management decides that it would not be able to bear such a high one-time expense and asks Greenco to submit another business model.
Greenco’s business team does not want to lose this lead and thus approaches the Investment team if they could propose a business model that helps company generate required return while meeting Kyriu’s expectation.
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