This module provides an introduction to project finance and a tutorial on project finance modelling in the context of the Sustainable Asset Valuation (SAVi). In this module, we discuss what project finance is and where it comes from, the usual stakeholders and their role in project finance transactions, the fundamental features of project finance, and the most common financial key performance indicators (KPIs) used by investors and asset owners. The tutorial section provides a step-by-step walkthrough on how environmental, social, and economic externalities, measured by the system dynamics component of SAVi, can be integrated into project finance models.
The module also includes a basic financial model, which can be downloaded and used for training purposes.
The module has the following components:
- An introduction to project finance: This section provides a thorough introduction of how non-recourse financing is used for infrastructure projects.
- Tutorial on project finance modelling: This section provides a detailed explanation of how SAVi assessments integrate externalities into project finance models.
- Project finance training model: This is a spreadsheet of a simplified financial model for a hypothetical wind farm. It can be used alongside the “Tutorial on project finance modelling” to customize the model for any infrastructure project and demonstrate the financial impact of externalities.
The objectives of this module are to:
- Introduce project finance and project finance modelling
- Demonstrate how the SAVi financial analysis works in practice
- Share a basic project finance model
- Bodmer, E. 2015. Corporate and Project Finance Modeling: Theory and Practice – https://www.wiley.com/en-us/Corporate+and+Project+Finance+Modeling%3A+Theory+and+Practice-p-9781118854457
- Corality: SMART Guidelines for Financial Modelling – http://info.corality.com/download-10-smart-guidelines-for-financial-modelling
- F1F9: The FAST Standard for financial modelling – http://www.f1f9.com/wp-content/uploads/2013/04/FastStandard_01b13.pdf