Energy projects financial model viola-funding December 3, 2023

Energy projects financial model

Energy projects financial modelling
Energy projects financial modelling

A high-quality energy projects financial modelling is paramount to predict key performance indicators, attract long-term financing, and  project milestones.

The role of financial modeling in modern business is difficult to overestimate.

Viola Funding Limited brings together a team of experienced professionals in the fields of project finance, financial modeling, lending, accounting, business law and engineering.

Our projects include thermal power plants, wind farms, solar power plants, geothermal power plants, electrical substations and other projects.

Contact us for more information.

Creating energy projects financial modelling

Financial analysis based on basic financial ratios is one of the most important and widely used tools in the planning of capital-intensive investment projects such as the construction of power plants and substations.

Standards and requirements for financial models are numerous and may vary significantly depending on the type of project, the scale of the investment, and even the legal framework of the host country.

General requirements applicable to energy projects financial modelling are below;

Compliance with the best practices of financial modeling. The model should allow simple calculations of the optimistic and pessimistic scenarios, among other things.

• Flexible project parameters. The model should be easily adaptable to any changes in the project schedule, construction costs and other parameters.

• Flexible project financing structure. Calculation of funding flows and repayment of debts must be accurate and fully automated in order to avoid critical errors when further changing project parameters.

• Convenient structure of the financial model. A high-quality model should be planned in such a way that the customer’s employees can easily work with it.

Financial modeling requires a certain sequence to be followed in order to avoid errors and delays. Approaches to this service may vary, but in general the process looks like this.

Steps for developing an energy projects financial modelling:

1:Calculation of performance indicators based on discounted cash flows.

2:Forecasting income from the implementation of an investment project in a certain time horizon.

3:Development of the most appropriate project debt repayment schedule for different sources of capital.

4:Calculation of performance indicators based on discounted cash flows.

Since the financial model is the basis for the further development of the project and attracting funding, we recommend trusting the modeling to professionals.

Our team will help you save time and get reliable and predictable results.

Advantages of energy projects financial modelling, transmission line power plant developed by Viola Funding Limited:

Customer support at all stages. We assist the customer’s project team in coordinating project documentation, testing models, negotiating with lenders, guarantees and other aspects related to the financing.

Project finance in the construction of energy projects

The first group of financial resources is associated with the resources of creditors (for example, long-term investment loans), and the second group is associated with the resources of owners and investors.

The capital structure of an investment project is a mix of equity and debt capital in various ratios, arising in accordance with the sources of financing used by the participants for its implementation.

With the development of off balance sheet financing (project finance), energy companies have gained a much greater degree of freedom.

Project finance (PF) refers to a financing mechanism based on the ability of a project to generate positive cash flows.

Long-term financing actually converts high initial investment costs into periodic debt service payments or dividend payments to project shareholders.

As for energy projects, they are usually one element of a larger energy or industrial investment, so the financial prospects of a substation are entirely dependent on the associated facilities.

Introduction of the Project finance mechanism completely changes the approach to building energy projects financial modelling.

We provide project finance services around the world, helping to implement capital-intensive energy projects with minimal risk and debt burden.

If you are interested in project finance for the construction of a power plant, electrical substation line, please contact us.

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