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TT 1 Which of the following is NOT true about renewable energy? Review Later The energy generated with the use of sunlight is called solar
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1 Which of the following is NOT true about renewable energy? Review Later The energy generated with the use of sunlight is called solar energy Examples of renewable energy include sunlight, wind, rain, waves, tidal and natural gas Modeling a solar PV project is simpler than modelling a hydropower project Renewable energy is any energy that is collected from renewable resources, that are replenished with little or no human interaction Concepts and Definitions N Match the following renewable energy terms with the correct descriptions. Review Later Net capacity factor (NCF) Power purchase agreement (PPA) P50 P99 A. Used by banks to govern the maximum amount that they are willing to lend from a debt service coverage ratio B. The ratio of actual electric energy output to the maximum possible energy output over a time period C. Electricity used for grid interconnection D. Mean production of an energy asset E. Governs the sale of energy to a utility or commercial and industrial consumer F. Reduction of power production by a photovoltaic panel due to UV exposure and weather cycles G. Electricity produced by solar panels Degradation Alternate current (AC) power Direct current (DC) power 3 Review Later What is the correct formula for calculating the total effective rate of borrowing for a renewable energy project LIBOR - Margin + Swap Rate LIBOR + Margin - Swap Rate LIBOR + Margin + Swap Rate LIBOR - Margin - Swap Rate Page 3 of 20 Prev Page Next Page 4 Identify the characteristics for corporate finance and project finance. Review Later B Long-term financing of independent capital investments A. Corporate Finance B. Project Finance Use cash flows from existing activities to fund new initiatives . Issue debt based on the creditworthiness of the overall corporation Distinct economic units with cash flows and assets that are easily isolated Issue equity with an indefinite time horizon Financing made up of debt and equity with a finite life tied to the life of the asset Page 4 of 20 LO Which of the following is the correct definition of cash-on-cash Review Later Measure of a project's return without the impact of capital structure A measure of the time it takes to break-even on a project, ignoring the time value of money A metric used to determine the multiple of cash received over the life of the project vs the amount of invested capital/equity Return on a project after adjusting for principal and interest, capital structure and taxes 6 Review Later Complete the assumptions section in the renewable energy financial model. What is the total operating cost per MWh if the energy probability is P60? $18.39 $21.57 $20.49 $19.23 Page 6 of 20 Prev Page Next Page General Asumption Capex Eneren Energy Proty 15 EJS 1 PPA Tem Post PDA Tem Escala Midc Swac 21220500 0.00% Ganecalinguts Esime Projecte 000 Aeace Crexinvesmert Aerace debtcontona Project Size DO Projecte 200% 30 yeJS Wan21 30 20 30 Jun 20 280W 180MW P50 488500 MWh 478300 MW 458500W 427800W 250 P80 PTS 299 Pricing $ $ $ $ S S S $ S Year BC Corta: Land Other Coss itecornecion Costs Acoustion cost TruSion Coss AT Mentos Detsenice reserve account Coningency Tota Levered Costs Year 670, 800 1.161.000 455,310 387,000 172,000 905 650 1290 000 PPA Tem Price 558.5000W Pos: PPA Tem PriceMW SERDODONW Degecoin 0696 Operating costs S/M Financing Assumptions Operation and Mainte ce GIA Legal Admin rsurance Property Tax Lesse 1-15 Lecce 1630 EcoTec OSM herer Resene Cortingency 925530000 $59375.00 295275.00 $143,375.00 S106375.00 $15262500 $25.900.00 $27750.00 50% From 1 1 1 1 1 16 1 1 1 TOYJ 30 30 30 30 15 30 30 20 Ancrizion Period Masim un Sing pacenti.cape 3 month UBOR SET Swap ROE Alinde DSCR P50 minimum DSCR P99 minimum 15 years 8096 240 bps 140 bos 60 bos 1 1.40% 110X herer Replacement 20 DER Acortion 60 months Figrisien Tax Figisies TRE 25.00% SA os Oss 035 760CD 0.396 0.1% 3.596 0.4% 91096 Deprecizion POE 5.096 200% 5.09% 10096 25096 1 Production, Revenue, Expenses, EBITDA Year Production Year Degredation Year Inflation year Revenue Annual Energy per year % of original output PPA Power Price Post PPA Power Price Total Revenue Expenses Operation and Maintenance G&A/Legal/Audit/Admin Insurance Property Tax Lease 1-15 Lease 16-30 Interconnect O&M Inverter Reserve Contingency Total Expenses S/MWh EBITDA, used for financing Debt Sizing Discounting Year for Debt Number of days in year P50EBITDA P99 EBITDA P50 299 PSOEBITDA P50 DSCR Maximum Debt Service Amount Less: Interest Target Principal Amount P99 EBITDA 199 DSCR Maximum Debt Service Amount Less: Interest Target Principal Amount Maximum Sizing at 80.0% percent of apex Debt Sizing Per DSCR Opening Debt Balance Less: Interest Less: Prindpal Ending Debt Balance DSCR - P50 DSCR -P99 Debt Sizing Discounting Year for Debt Number of days in year P50EBITDA P99 EBITDA P50 299 PSOEBITDA P50 DSCR Maximum Debt Service Amount Less: Interest Target Principal Amount P99 EBITDA 199 DSCR Maximum Debt Service Amount Less: Interest Target Principal Amount Maximum Sizing at 80.0% percent of apex Debt Sizing Per DSCR Opening Debt Balance Less: Interest Less: Prindpal Ending Debt Balance DSCR - P50 DSCR -P99 Depreciation Balances, and Cash Taxes Payable 960*Capex Depreciation Race CISA Class Class Class Classe Class A Beginning Depreciation Ending Class B Beginning Depreciation Erding Class C Beginning Depreciation Oncing Class D Beginning Depreciation Ending Class Beginning Depreciation Erding Depreciation available for year EBITDA for year Less: Interest Less: Taxshelter depreciation Taxable income Taxes payable Tax shelter depresition opening balance Additions Usage Taxshelerdeprecision Closing balance Retums Discountng dates FreeCash Flow ESTOA There Replacement Usage of inverter resene Principal Tales Total Adjustments Free Cash Flow hement Amount Debt contribution amount Free casion Equy leeed, ater-ax Equly balance Project RR ater-axleed Project running after-axleered Proje.Cash-on-Cash Running Cash-on-Cash Payback Sensitivity Analysis IRR PPA Price 76.50 19.00 A Tem Paybok PPA Price 76.50 $ 55.00 Post PPA Rate Charts & Graphs Revenue Expenses EBITDA Cash Flow PPA Fate Sources Debt Equity Uses EPC Contract Land Other Costs Interconnection Oosts Acquisition cost Transaction Costs Arrangement costs Debt zeruce rezerve account Oond ngency Total Total 7 Review Later Complete the Assumptions section in the renewable energy financial model. What is the total levered cost per Wac? $1.46 $1.58 $1.26 $1.14 Page 7 of 20 Prev Page Next Page 8 8 Review Later Complete the Production, Revenue, Expenses, EBITDA section in the financial model. What is the EBITDA used for financing in the 20th production year with P50 energy probability? $207,775 $272,247 $240,237 $218,148 Page 8 of 20 Prev Page Next Page 9 > Review Later Complete the Production, Revenue, Expenses, EBITDA section in the financial model. What is the total expense per MWh in the 30th production year with P50 energy probability? $33.37 $34.28 $32.48 $31.62 Page 9 of 20 Prev Page Next Page 10 Review Later Complete the Debt Sizing section in the financial model. What is the debt sizing per DSCR if the energy probability is P75? $16,545,992 $15, 119,698 $18,226,982 $17,605,525 11 Review Later Complete the Debt Sizing section in the financial model. What is the DSCR - P99 on 30-Jun-30 given that the energy probability is P507 1.14x 1.15x 1.17x 1.16x Page 11 of 20 Prev Page Next Page 11 Review Later Complete the Debt Sizing section in the financial model. What is the DSCR - P99 on 30-Jun-30 given that the energy probability is P507 1.14x 1.15x 1.17x 1.16x Page 11 of 20 Prev Page Next Page 12 Review Later Complete the Depreciation Balances and Cash Taxes Payable section in the financial model. Determine the ending balance of Class D assets on 30-Jun-30. 21.011 31,516 10,505 Page 12 of 20 Prev Page Next Page 13 Review Later Complete the Returns section in the financial model. What is the free cash flow to equity on 30-Jun- 40 with an energy probability of P60? 163,992 94,260 138,213 142.718 Page 13 of 20 Prev Page Next Page 14 Review Later Complete the Returns section in the financial model. What is the project IRR with an energy probability of P60? 3.27% 2.00% 3.51% 2.65% Page 14 of 20 15 Review Later Complete the Returns section in the financial model. What is the project cash-on-cash with an energy probability of P50? 1.33x 1.28x 0.95x 1.17x 16 Review Later Complete the Returns section in the financial model. If the energy probability is P60, how long does it take to pay back the initial investment? 11.8 years 12.5 years 13.9 years 13.4 years 17 Review Later Complete the Returns section in the financial model. If the energy probability is P50, on which date will the equity balance become positive? 30-Jun-33 30-Jun-31 30-Jun-32 30-Jun-30 17 Review Later Complete the Returns section in the financial model. If the energy probability is P50, on which date will the equity balance become positive? 30-Jun-33 30-Jun-31 30-Jun-32 30-Jun-30 18 Review Later Complete the Returns section in the financial model. What is the running cash-on-cash on 30-Jun- 39 when energy probability is P60? 1.10x 1.14x 1.12x 1.15x Page 18 of 20 Prev Page Next Page 19 Review Later Complete the sensitivity Analysis section in the financial model. Given that the energy probability is P50, what is the IRR if the PPA price is $64.50 and the PPA term is 17 years? 3.6% 2.1% 4.6% 2.9% Page 19 of 20 Prev Page Next Page 20 Review Later Complete the sensitivity Analysis section in the financial model. Given that the energy probability is P75, what is the payback period if the PPA price is $80.50 and the post PPA rate is $20.00? 6.2 years 7.7 years 8.3 years 6.4 years Page 20 of 20Step by Step Solution
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