Infrastructure and project financeAdvanced · ~60 minWorking draft · 10 sheets · 2466 formulas

Renewables project finance model

Solar or wind: P50 yield, PPA, merchant tail, debt sizing. Build energy from a P50 capacity factor, availability and degradation, split it between a PPA and merchant sales, size the senior debt as the lesser of a gearing cap and a sculpted DSCR on the lenders’ case, and show what a weak year, lower merchant prices or a construction overrun do to coverage and to the equity return.

Built in: Investment banking, Private equity

By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.

On this subject: renewables project finance model.Updated 22 October 2026

Who builds it, and for whatThe model a renewables developer, an infrastructure fund and the lending banks each build before a solar or wind farm reaches financial close. The developer uses it to decide what PPA price it can accept and how much merchant exposure to keep; the lenders run their own case on P50 energy with uncontracted revenue cut back, size the loan on it and test it on a P90 year; the equity investor reads the return that is left once the reserves and the lock-up have taken their share.

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Inspect the workbookRenewables project finance model · Working draft · 10 sheets · 2466 formulas

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Every value, every sheet, as the workbook holds it.

	A	B	C	D	E	F	G	H	I	J	K	L	M	N	O	P	Q	R	S	T	U	V	W	X	Y	Z	AA	AB	AC	AD	AE
1	Assumptions
2	$m unless stated. Annual periods: C1 and C2 construction, O1 to O25 operations.
4	Year	Unit		C1	C2	O1	O2	O3	O4	O5	O6	O7	O8	O9	O10	O11	O12	O13	O14	O15	O16	O17	O18	O19	O20	O21	O22	O23	O24	O25	Notes
5	Timing
6	Period number	#		1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27
7	Construction years	years	2	C1 and C2, fixed by the layout; commercial operation starts at the beginning of O1
9	Technology and scenario
10	Technology	#	1	1 = solar, 2 = wind. Selects the technology inputs below.
11	Scenario	#	1	1 = base, 2 = upside, 3 = downside. Sets yield, merchant price and capex.
13	Scenario factors
14	Energy yield, base case	% of P50	100.0%	P50: the yield expected to be exceeded half the time
15	Energy yield, upside case	% of P50	104.0%
16	Energy yield, downside case	% of P50	92.0%	Close to a one-year P90 for a single site
17	Energy yield, selected scenario	% of P50	100.0%
18	Merchant price, base case	% of curve	100.0%
19	Merchant price, upside case	% of curve	115.0%
20	Merchant price, downside case	% of curve	65.0%
21	Merchant price, selected scenario	% of curve	100.0%
22	Construction cost, base case	% of budget	100.0%
23	Construction cost, upside case	% of budget	95.0%
24	Construction cost, downside case	% of budget	110.0%	Known at financial close and financed then
25	Construction cost, selected scenario	% of budget	100.0%
27	Capacity and energy yield
28	Capacity, AC	MW	100.0	Grid export capacity
29	Hours per year	hours	8760
30	Solar: DC to AC ratio	x	1.30
31	Wind: DC to AC ratio	x	1.00	Solar panels are oversized against the inverters; a turbine is rated at its AC output
32	DC to AC ratio, selected technology	x	1.30
33	Capacity, DC	MW	130.0
34	Solar: net capacity factor, P50	%	24.0%
35	Wind: net capacity factor, P50	%	38.0%	On AC capacity, after wake, soiling and electrical losses
36	Net capacity factor, P50, selected technology	%	24.0%
37	P50 yield	MWh per MW	2102	Hours per year x capacity factor
38	Solar: availability	%	99.0%
39	Wind: availability	%	97.0%
40	Availability, selected technology	%	99.0%
41	Solar: annual degradation	%	0.5%
42	Wind: annual degradation	%	0.2%	Output lost each year as panels age or blades wear
43	Annual degradation, selected technology	%	0.5%
44	Operating life	years	25	Both technologies; the layout carries 25 years
46	Revenue
47	Solar: PPA price, O1	$/MWh	66.0
48	Wind: PPA price, O1	$/MWh	63.0	Power purchase agreement (PPA) price in the first operating year
49	PPA price, O1, selected technology	$/MWh	66.0
50	PPA escalation, annual	%	2.0%
51	PPA tenor	years	15	From commercial operation; all output is merchant afterwards
52	Contracted share of energy	%	85.0%	Sold under the PPA while it runs; the rest is merchant
53	Baseload merchant power price	$/MWh				58.0	55.0	52.0	50.0	49.0	49.0	50.0	51.0	52.0	53.0	54.0	55.0	56.0	57.0	58.0	59.0	60.0	61.0	62.0	63.0	64.0	65.0	66.0	67.0	68.0	Nominal; the base curve
54	Solar: capture rate	%	85.0%
55	Wind: capture rate	%	92.0%	Share of the baseload price the technology earns: solar output arrives when every panel is producing
56	Capture rate, selected technology	%	85.0%
57	Green certificate price	$/MWh	4.0	On merchant energy only; contracted energy sells its certificates with the PPA
58	Green certificate term	years	12
59	Capacity payment, O1 prices	$k per MW	6.0	Per MW of AC capacity a year; uncontracted; indexed with operating costs
61	Operating costs, O1 prices
62	Solar: operations and maintenance (O&M)	$k per MW	14.0
63	Wind: operations and maintenance (O&M)	$k per MW	36.0	Per MW of AC capacity a year
64	Operations and maintenance (O&M), selected technology	$k per MW	14.0
65	Land lease	$k per MW	6.0
66	Insurance	$k per MW	4.0
67	Operating cost inflation, annual	%	2.5%
68	Decommissioning cost, net of salvage	$k per MW	45.0	O1 prices; indexed to the final operating year
69	Decommissioning reserve funding period	years	5	Funded in equal amounts over the final years of operation
71	Capital cost
72	Solar: construction cost per MW DC	$m per MW	0.65
73	Wind: construction cost per MW DC	$m per MW	1.25	Modules, inverters and balance of plant, or turbines and foundations, under the construction contract
74	Construction cost per MW DC, selected technology	$m per MW	0.65
75	Development costs	$m	4.0	Permits, land rights, studies and grid application; paid in C1
76	Construction draw profile	%		40.0%	60.0%																										Share of construction cost drawn in C1 and C2
77	Contingency	%	5.0%	% of construction cost
78	Grid connection and commissioning	$m	6.0	Paid in C2, the final construction year
80	Senior debt
81	All-in interest rate, annual	%	5.5%	Fixed by swap; charged on opening balances
82	Debt tenor	years	18	From commercial operation; repaid by O18
83	Target DSCR	x	1.3x	Sculpting: debt service = sizing-case CFADS / target DSCR
84	Gearing cap	%	80.0%	Maximum debt as a share of capital cost before financing
85	Lenders’ case: uncontracted revenue	%	70.0%	Share of merchant, certificate and capacity revenue the lenders size on
86	Arrangement fee	%	2.0%	% of senior debt; paid in C1
87	Commitment fee, annual	%	0.8%	On the average undrawn amount
88	DSRA requirement	years	0.50	Debt service reserve account (DSRA): years of next year’s scheduled debt service
89	Lock-up DSCR	x	1.1x	No distributions in a year whose DSCR is below this
90	Cash sweep	%	0.0%	Share of cash available for distribution used to prepay debt; 0% = no sweep
92	Tax
93	Tax rate	%	25.0%
94	Accelerated depreciation period	years	0	Tax depreciation over this many years; 0 = straight line over the operating life
95	Investment tax credit	%	0.0%	% of construction, contingency and grid cost; 0% = none
96	Memo: price received for the credit	$ per $1	0.92	Used only when the credit is above 0%: sold for cash in O1
97	Memo: basis reduction for the credit	%	50.0%	Used only when the credit is above 0%: share of the credit taken off the depreciable basis
99	Returns
100	Equity discount rate	%	8.0%	For the equity NPV: the sponsor’s required return

Select a cell to see its row, its schedule and the type of cell. Font colours: blue for inputs, black for formulas, green for links to other sheets. Scroll sideways to see every period.

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Renewables project finance model: the workbook

Excel workbook with working formulas, no macros and no external links. Work with it above first; it is the same model as the preview.

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The worked model: The workbook above as an Excel file: 10 sheets and 2,466 live formulas, all 9 schedules built and linked, every check reading zero. Change an input in Excel and the whole model moves, so you can rebuild a step and compare.
The starter: The same inputs and layout with the debt sculpting left blank for you to build, each blank cell marked. Free with any account. It has no worked answer to check yourself against; the worked model is that answer.

What the base case says

Senior debt: $77.9m
Equity IRR: 8.7%
Minimum DSCR, selected case: 1.4x
Binding sizing constraint: DSCR
Gearing, debt / total uses: 71.9%
Project IRR: 7.6%
Equity NPV at the discount rate: $2.1m
Equity payback from commercial operation, years: 11.46
LLCR at commercial operation: 1.4x
Years in lock-up: 0

Read from the workbook as served, every input at its default. Periods: C1, C2, O1, O2, O3, O4, O5, O6, O7, O8, O9, O10, O11, O12, O13, O14, O15, O16, O17, O18, O19, O20, O21, O22, O23, O24, O25. The figures are invented and move with whatever you type in.

What this model is

A project finance model for a 100 MW solar farm or wind farm, chosen on the Assumptions sheet: two years of construction, then twenty-five years of operation selling part of its output under a power purchase agreement (PPA) and the rest at merchant prices.

Energy comes from a P50 capacity factor, availability and degradation. Senior debt is the lesser of a gearing cap and the amount a sculpted DSCR target supports on the lenders’ case, which cuts uncontracted revenue by a haircut. Each year runs through a waterfall: debt service, the debt service reserve, the decommissioning reserve, the lock-up test, an optional cash sweep, then distributions.

Uses: learning why a renewables loan is sized on cash flow rather than on cost, and testing what a weak wind or solar year, lower merchant prices or a construction overrun do to coverage and to the equity return.

Seats: Investment banking, Private equity.

Careers that do this work: infrastructure & real assets, debt capital markets, private credit.

Sheets in the workbook

Cover. How to read it, the conventions, the sheet map.
Assumptions. Technology (solar or wind) and scenario, the yield inputs for each technology, PPA and merchant revenue, operating costs, capital cost, debt terms, tax and the discount rate.
Construction. Capital cost by phase, senior debt drawn pro rata, interest during construction, fees, the initial DSRA, sources and uses, and the tax basis and investment tax credit.
Operations. Energy after availability and degradation, contracted and merchant revenue, operating costs, EBITDA, tax and CFADS for the selected case, and the lenders’ sizing case.
Debt. Debt sized by the lesser of the DSCR and the gearing cap, the sculpted schedule, the balance with any cash sweep, and DSCR, LLCR and PLCR.
Waterfall. CFADS, debt service, the DSRA, sponsor support for a shortfall, the decommissioning reserve, the lock-up test, the cash sweep and distributions.
Returns. Project and equity cash flows, project and equity IRR, equity NPV, payback, sources and uses, gearing and the coverage summary.
Sensitivity. Equity IRR by PPA price and P50 capacity factor with the debt re-sized in each cell; minimum DSCR by capex overrun and merchant price.
Grid Workings. The rows behind every grid cell: per-unit revenue and cost rows, debt sized at each cell, one equity cash flow row and one DSCR row per cell.
Checks. Sources and uses, debt drawn and repaid, the sculpt at its DSCR, the waterfall tie, reserve balances, the grid centres, and warnings.

How the schedules connect

Every row in the workbook is tagged with the schedule it belongs to; the inspector above shows the tag when you click a row. These are the schedules this model is made of and where each one lives.

Construction funding

Draws, interest during construction, fees, equity

Assumptions, rows 6–7 · Assumptions, rows 22–25 · Assumptions, rows 72–78 · Construction, rows 6–11 · Construction, rows 14–21 · Construction, rows 24–26 · Returns, rows 20–27

Energy yield and power revenue

P50 energy, degradation, PPA and merchant revenue

Assumptions, rows 14–21 · Assumptions, rows 28–44 · Assumptions, rows 47–59 · Operations, rows 6–9 · Operations, rows 12–15 · Operations, rows 18–21 · Operations, rows 24–25

CFADS

Cash flow available for debt service

Assumptions, rows 62–67 · Assumptions, rows 93–97 · Construction, rows 29–32 · Operations, rows 28–31 · Operations, rows 34–37 · Operations, rows 40–42

Debt sculpting

Service shaped to CFADS at a target DSCR

Assumptions, rows 81–87 · Debt, rows 6–15 · Debt, rows 18–24

Reserve accounts

Debt service reserve and maintenance reserve

Assumptions, rows 68–69 · Assumptions, row 88 · Construction, row 20 · Waterfall, rows 11–16 · Waterfall, rows 19–22

Distribution waterfall

Debt service, reserves, lock-up, equity

Assumptions, rows 89–90 · Waterfall, rows 6–8 · Waterfall, rows 25–32

Coverage ratios

DSCR, LLCR and PLCR

Debt, rows 27–29 · Returns, rows 30–34

Project and equity returns

Gearing, project IRR, equity IRR and multiple

Assumptions, row 100 · Returns, rows 6–10 · Returns, rows 13–17

Sensitivity tables

Two assumptions at once, without a data table

Sensitivity, rows 5–8 · Sensitivity, rows 11–14 · Sensitivity, rows 18–23 · Grid Workings, rows 6–14 · Grid Workings, rows 17–31 · Grid Workings, rows 34–38

What you should be able to explain

Why a renewables loan is sized on cash flow: CFADS divided by a target DSCR in each year, discounted at the loan rate, and why a gearing cap sits beside it.
What P50 and P90 mean, why the lenders size on P50 and test on a weaker year, and how degradation and availability shape the energy line.
Why contracted and merchant revenue carry different risk, and how a haircut on uncontracted revenue in the sizing case leaves the base case above the target DSCR.
What the debt service reserve, the decommissioning reserve and the distribution lock-up each do to equity’s cash, and when the lock-up bites.
How DSCR, LLCR and PLCR answer different questions, and how a cash sweep shortens the loan.

What a reviewer looks for

Sizing the debt on the P50 base case with merchant revenue at full price, so the first weak year breaches the covenant.
A flat energy line with no degradation, which overstates the late years of a solar farm exactly when the PPA has ended.
Using the baseload power price for solar output instead of its capture price.
Testing gearing on a total cost that includes interest during construction funded by the debt being sized, which makes the sizing circular without saying so.
A tenor that runs past the PPA with no change in how the merchant years are sized.

Conventions this workbook uses

Stated on the cover sheet too. A model is only as trustworthy as the decisions it tells you it made.

Annual periods. C1 and C2 are construction years; O1 to O25 are operating years. Commercial operation starts at the beginning of O1.
Energy each year is MW x hours x net capacity factor x availability x degradation. The P50 capacity factor is the yield expected to be exceeded half the time; the scenario then scales it (1.00 base, 1.04 upside, 0.92 downside, close to a one-year P90). Annual periods average away the seasonal swing in output, which matters more for liquidity than for sizing.
The PPA covers a fixed share of energy at an escalating price for its tenor; everything else, and all energy after it ends, is sold at the baseload merchant curve times the technology’s capture rate. Merchant energy also earns green certificates for their term. Capacity payments are per MW. None of the uncontracted revenue is hedged.
Debt is sized at financial close on the lenders’ case: P50 energy, the contracted revenue in full and uncontracted revenue at the haircut. Debt service in each tenor year is that case’s CFADS divided by the target DSCR; capacity is its present value at the loan rate. Senior debt is the lesser of that capacity and the gearing cap on capital cost before financing. When the gearing cap binds, the sculpted profile is scaled down, so coverage is above the target in every year. DSCR reads n.a. in a year with no debt service (construction, after maturity, or once a cash sweep has repaid the loan), and the minimum DSCR, on the Returns sheet and in the grid, is taken over the years with debt service only.
Interest during construction, commitment and arrangement fees and the initial debt service reserve are paid by equity, and the gearing cap is tested before financing costs, so the debt size does not depend on itself. Interest is charged on opening balances. Tax is charged on EBITDA less tax depreciation, before financing (no interest deduction), and a loss is relieved in the year it arises, as in a tax group.
The DSRA holds a share of next year’s scheduled debt service and is drawn when CFADS falls short; any remaining shortfall is met by sponsor support and reported as a warning. Distributions stop in any year whose DSCR is below the lock-up DSCR and the cash is held until a year that passes. A cash sweep, off by default, prepays debt from cash available for distribution; scheduled principal then stops when the balance reaches zero.
An investment tax credit, off by default, is sold for cash in O1 and reduces the depreciable basis by a share of the credit. Accelerated depreciation, also off, writes the basis off over a shorter period. The decommissioning cost, net of salvage, is funded in equal amounts over the final years and paid in the final year.
The sensitivity grids are recomputed from rows on the Grid Workings sheet rather than an Excel data table. The equity IRR grid re-sizes the debt in each cell; the minimum DSCR grid keeps the financial-close sizing and moves debt service with any overrun.

Build it yourself

The starter workbook

The Debt sheet has been cleared from the sizing to the balance paid: debt service at the target DSCR, the DSCR capacity, the gearing cap, the senior debt as the lesser of the two, the sculpted schedule and the balance after any cash sweep. Build them so that the Construction, Waterfall and Returns sheets calculate again. The Checks sheet shows when the balance closes to zero at maturity and the sizing-case DSCR equals the sculpting DSCR in every year of the tenor.

Blanks: Debt sculpting. Free with any account. Compare with the worked model when you are done: download above.

The path around this model

Understand it, drill it, read the build, then apply it to a real company.

Build · Lab · ~12 min

DSCR Sculpting

Sculpt debt service to CFADS at a target DSCR, size the loan as its present value, split a payment into interest and principal, and explain why a level repayment profile fails a project lender.

Read · Guide · 12 min

Project Finance Modelling: Cash Flow Waterfalls, DSCR Sizing and the Debt Sculpt

Read · Guide · 11 min

Credit and Covenant Modelling: What a Lender Actually Tests

Read · Guide · 10 min

Scenario and Sensitivity Architecture: Building a Model That Can Be Stress-Tested

Apply · Skill

Model Audit

Find the errors in a financial model before someone senior does.

Vocabulary: DSCR (Debt Service Coverage Ratio), CFADS (Cash Flow Available for Debt Service), Debt Sculpting, LLCR (Loan Life Coverage Ratio), Debt Service Reserve Account (DSRA), Distribution Lock-Up, Interest During Construction (IDC), Cash Sweep, Debt Capacity.

Questions about this model

How is the senior debt sized?

Two ways, and the lesser wins. The DSCR test takes the lenders’ case (P50 energy, the PPA in full, merchant, certificate and capacity revenue at 70%), divides its CFADS in each year of the 18-year tenor by the 1.30x target and discounts that service at the 5.5% loan rate. The gearing test allows 80% of capital cost before financing. For the base solar farm the DSCR binds at $77.9 million, just under the $79.0 million the cap allows. In the upside the construction cost falls by 5%, so the cap binds first and coverage sits above the target in every year.

Why is the base case DSCR above the 1.30x target?

Because the debt was sized on the lenders’ case, which counts uncontracted revenue at 70%. The base case earns all of it, so the solar farm’s minimum DSCR is 1.36x. That margin is what the downside spends: a P90-style year with merchant prices 35% lower takes the minimum to 1.12x, just above the 1.10x lock-up, and the equity IRR from 8.7% to 0.9%.

What changes between solar and wind?

Almost every input on the yield side. Solar runs at a 24% capacity factor on AC capacity with panels oversized 1.3 times on the DC side, loses 0.5% of output a year and earns 85% of the baseload price because every panel produces at once. Wind runs at 38% with almost no degradation and captures 92%, but costs nearly twice as much per MW and more to maintain. Its revenue leans harder on the merchant years, so in the downside its DSCR falls to 1.05x once the PPA ends and it spends the last three years of the tenor in lock-up.

How is this different from the wind farm project finance model?

That model is fully contracted, semi-annual and sizes on one revenue sensitivity; it is the place to learn sculpting and reserve mechanics. This one adds what renewables lenders spend their time on: an energy yield with degradation, a PPA that covers part of the output for part of the life, a merchant tail, a sizing haircut, the lesser of gearing and DSCR, a tax credit and a decommissioning reserve.

What does it cost?

Nothing to preview: the whole workbook is on this page, and a free account works with it online, every formula included. Every starter workbook downloads with a free account. L3VLUP Plus ($4.99/month) keeps one worked model each billing month, yours for good, and L3VLUP Pro ($25/month) keeps every one.

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