About this Training Course
This 3-day course is intended as a time-efficient primer for both non-financial and financial professionals in the power and energy sector. For participants without a finance background, it will build confidence in reading financial models, interpreting analyses, and understanding the variables that influence power project investment decisions. For those with finance experience, it provides sector-specific insights into how project economics, technical parameters, and market dynamics shape the bankability of power projects.
Attendees will receive clear explanations of the common elements of a power project financial model, the key terminologies, and the changing economic and market context in which renewable power business plans must exist (and create financial returns for investors).
The course will highlight the key financial inputs and outputs, without swamping those who lack a financial background in unnecessary detail or complexity. It will thus be valuable to people from a variety of non-finance job roles - from engineering, to project development, to marketing. They will better understand how economic and investment considerations influence, and are influenced by, their own activities; and will be better placed to converse with financial functions within their organisation.
Provided Excel models, plus other handouts and short illustrative exercises throughout the course, will help with revision and cementation of learning long after the course has been completed.
Q1: What is power project economics and why is it important?
Power project economics is the study of costs, revenues, and financial performance across a project’s life cycle. It helps determine whether a solar farm, wind project, gas plant, or hybrid system is financially viable. Key factors include capital expenditure (capex), operating costs, financing terms, electricity prices, and policy incentives. Understanding these drivers helps developers secure funding, investors assess profitability, and policymakers design supportive energy markets.
Q2: What is Levelized Cost of Energy (LCOE) and how do you calculate it?
LCOE measures the average cost per unit of electricity generated over the life of a project, expressed in $/MWh. It accounts for capex, operating expenses, fuel costs (if any), and a discount rate. LCOE is widely used to compare different generation technologies on a cost basis. However, it doesn’t capture price volatility, grid integration costs, or revenue risks—so it is often combined with cashflow modeling and sensitivity analysis for more accurate decision-making.
Q3: What are the key financial metrics for evaluating power projects?
Critical metrics include IRR (expected rate of return), NPV (net value created over costs), DSCR (ability to service debt), EBITDA (operating profitability), and WACC (overall cost of capital). These indicators allow stakeholders to assess whether a project is bankable, competitive, and resilient to changes in market conditions or financing terms.
Q4: What are the biggest risks in power project finance?
Power projects face internal risks (construction delays, cost overruns, technology underperformance) and external risks (price volatility, policy changes, permitting delays, weather/resource variability). Developers use strategies like long-term PPAs, hedging, robust contracts, and scenario analysis to reduce risk and secure favorable financing terms.
How do policy and regulation impact project bankability?
Government policies—such as tax credits, feed-in tariffs, renewable portfolio standards, and carbon pricing—significantly affect project revenues and financing costs. Stable, transparent regulations make projects more attractive to lenders and investors, while sudden policy changes can undermine revenue forecasts. Modeling multiple policy scenarios helps ensure resilience and supports confident investment decisions.
Q6: Why is sensitivity analysis critical in power project planning?
Sensitivity analysis tests how project returns change when variables such as capital cost, interest rates, electricity prices, or capacity factors shift. It identifies the most influential drivers of project profitability, helping developers prioritize risk mitigation strategies and design contracts or hedges to stabilize cashflows in volatile markets.