COURSE
OVERVIEW

The course will address a variety of economic, valuation and financial structuring issues associated with wind and solar energy projects as well as battery storage. The course is designed as a hands-on workshop that includes financial modelling to investigate how various valuation techniques and financial structures can be used in attempting to achieve competitive power prices while maintaining a satisfactory equity return. The course will begin by discussing distinctive valuation techniques and tax structuring features of facilities that depend on wind, biomass, storage or solar resources.

Subsequent sessions will address the details of resource analysis for wind and solar projects including how probabilistic analysis affects financing. In working through modelling issues, the theory underlying PPA and O&M contract issues for liquidated damages, performance as well as design of other incentives that is inherent in different contract structures. Nuanced project finance issues associated with financing structures with merchant prices or synthetic PPA contracts will be discussed including under what conditions the DSCR drives debt capacity and when the debt to capital ratio is instrumental.

 

COURSE
BENEFITS

Understand the theoretical issues with computing LCOE and the importance of cost of capital with tax incentives 

 Explore storage characteristics of alternative batteries and how different structures work in alternative markets

 Review tax equity financing that influence the bid price required to meet the return for tax equity investors

 Analyse how to compute P50, P90 and P99 for different projects driven by resource risk

 Discuss complexities of tax equity including inside and outside capital, suspended losses, and back leverage

 

WHO SHOULD ATTEND?

This course is ideal if…

You are from the investment community. Renewable power presents a fast-growing market opportunity which you are keen to investigate, but you want to gain an independent perspective on the competing options, the economic environment in which such projects operate, and the operational and revenue risks which are important to them.

You are working within the power sector in a commercial or business development role. You need a clearly-explained, multi-faceted understanding of how, where and why renewable power is disrupting existing markets and business models, so that you can understand new market opportunities and competitive risks facing your own business.

AGENDA
AT A GLANCE                             

Dec

10

Dec

11

DAY 1 OUTLINE
09:00 - 17:00

Review of wind, solar and battery cost trends through LCOE analysis

Capital intensity of Solar, Wind and Hydro compared to other technologies and the importance of cost of capital for capital intensive projects. 
Understanding of levelised cost of energy mathematics and why discount rates and energy levels must be considered in the calculation and why real LCOE is a more appropriate measure than nominal LCOE.
Benchmarking fixed and variable O&M costs for solar, wind and hydro projects compared to conventional power plants with fuel expense. 
The theory of carrying costs applied to convert one-time costs to time-period costs and relation to LCOE and the importance of adjusting carrying charges for inflation, investment tax credit, production tax credit, and accelerated depreciation with different tax rates.
Illustration of project finance features in relation to the LCOE of wind, solar and hydro projects compared to conventional projects and how project finance features can affect the cost of wind, solar and hydro facilities.

 

Introduction to analysis of battery costs and configurations through micro-grid and merchant price analysis

Cost analysis of solar versus diesel in an island scenario and using variable cost of diesel relative to total cost of solar.
Compute the optimal sizing of solar capacity in the island scenario with different load profiles and daily solar patterns.
Measurement of the value of solar and wind energy in different merchant markets around the world.
Review and analyse the trade-offs between storage time per cycle, capital costs, operating life, future capital expenditures, efficiency and operating costs.  Work through which configuration of batteries makes most sense in alternative situations.
Assess the economics of different battery configurations in merchant electricity markets.
Evaluate the economics of batteries together with different daily load and solar patterns and compute the optimal amount of solar capacity as well as battery capacity.

YOUR TRAINER
EDWARD BODMER

 

Edward Bodmer provides financial and economic consulting services to a variety of clients, he teaches professional development courses in an assortment of modelling topics (project finance, M&A, and energy). He is passionate about teaching in Africa, South America, Asia and Europe. Many of the unique analytical concepts and modelling techniques he has developed have arisen from discussion with participants in his courses.

Professor Bodmer has taught customised courses for MIT’s Sloan Business School, Bank Paribas, Shell Oil, Society General, General Electric, HSBC, GDF Suez, Citibank, CIMB, Lind Lakers, HSBC, Saudi Aramco and many other energy and industrial clients. Bodmer’s consulting activities include developing complex project finance, corporate and simulation models, providing expert testimony on financial and economic issues before energy regulatory agencies, and advisory services to support merger and acquisition projects.

Mr Bodmer has written a textbook titled Corporate and Project Finance Modelling, Theory and Practice published by Wiley Finance. The book introduces unique modelling techniques that address many complex issues that are not typically used by even the most experienced financial analysts.

Over the course of his career Professor Bodmer has been involved in formulating significant government policy related to electricity deregulation; he has prepared models and analyses for many clients around the world; he has evaluated energy purchasing decisions for many corporations; and, he has provided advice on corporate strategy. Mr Bodmer’s projects include development of a biomass plant, analysis and advisory work for purchase of electricity generation, distribution and transmission assets by the City of Chicago, formulation of rate policy for major metro systems and street lighting networks, advocacy testimony on behalf of low income consumers, risk analysis for toll roads, and evaluation of solar and wind projects. He has constructed many advisory analyses for project finance and merger and acquisition transactions.

Professor Bodmer 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 received an MBA specialising in econometrics (with honours) from the University of Chicago and a BSc in Finance from the University of Illinois (with highest university honours). Mr Bodmer was born in Manchester, England, he lived in Switzerland as a child and currently resides in Chicago. 

 

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If you have an enquiry about our in-house training, contact our Business & Development Manager, Jonathan Hull.

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