Aerial image of solar panels illustrating a financial projection model for solar farm businesses.

PURPOSE OF MODEL
Highly versatile and user-friendly Excel model for the preparation of an 8-year rolling 3 statement (Income Statement, Balance Sheet and Cashflow Statement) financial projection with a monthly timeline for a startup or existing business developing and operating up to 5 solar farms at different stages of development or operation and generating revenue through the sale of electricity.

The model calculates revenue for each of the modeled solar farms based on the capacity in MW/h, yield per month and the application of degradation factors and performance ratios. The model includes different development expenses, capitalizable costs, operating expenses and decommission costs applicable at the different lifecycle stages for each solar farm. It also includes the ability to model staff costs, other expenses, taxes, dividends, borrowings, and changes in equity.

KEY OUTPUTS
The key outputs include:
– Projected full financial statements presented on a monthly basis across up to 8 years and summarised on an annual basis.
– Dashboard with:
o Summarised projected Income Statement and Balance Sheet
o Compounded Annual Growth rate (CAGR) for each summarised income statement and Balance Sheet line item
o List of key ratios including average revenue growth, average profit margins, average return on assets and equity and Average Debt to Equity ratio.
o Bar charts summarising income statement and Balance Sheet projections
o Revenue and direct expenses by a solar farm in table and bar-chart format
– Discounted cash flow valuation using the forecasted cash flow outputs.

KEY INPUTS
Inputs are split into Income Statement and Balance Sheet Inputs. Most inputs include input validations and conditional formatting to help users understand what the input is for and populate correctly.
Setup Inputs:
– Name of business;
– Currency;
– First projection year and month;
– Naming for solar farms, development expenses, capitalizable costs, operating expenses, staff costs, other expenses and borrowings;
– Sales tax applicability for revenue, expense and fixed asset items.
Actuals Inputs:
– Opening balance sheet (for existing businesses);
– Income Statement actuals (for trend analysis);

Projection Inputs:
– Solar farm revenue including capacity in MW/h, performance ratio, yields by month, degradation factors by year, tariff rates and credit terms offered;
– Development and operating expenses across the lifecycle of each solar farm;
– Capitalisable costs including additional amounts and useful life;
– Other costs inputs including staff costs and other expenses;
– Sales and corporate tax inputs including rate and payment periods;
– Dividend inputs including amount or percentage of retained earnings and frequency;
– Borrowings including addition amounts and interest rate;
– Share Capital additions;
– Discount rate inputs (for valuation calculation).

MODEL STRUCTURE
The model comprises of 9 tabs split into input (‘i_’), calculation (‘c_’), output (‘o_’) and system tabs. The tabs to be populated by the user are the input tabs (‘i_Setup’, ‘i_Actuals’ and ‘i_Assumptions’). The calculation tab uses the user-defined inputs to calculate and produce the projection outputs which are presented in ‘o_Fin Stats’, ‘o_Dashboard’ and ‘o_DCF’.

KEY FEATURES
Other key features of this model include the following:
– The model follows good practice financial modeling guidelines and includes instructions, line-item explanations, checks and input validations;
– The model contains a flexible timeline that allows for a mix of Actual and Forecast periods across an 8-year period. This allows projections to be easily rolled forward;
– Timeline is split on a monthly basis and summarised on an annual basis;
– The model allows the user to model 5 solar farms each with its own unique lifecycle, revenues and direct expenses;
– The model is not password protected;
– The model is reviewed using specialized model audit software to help ensure formula consistency and reduce the risk of errors;
– The model allows for the following number of underlying categories for each line item (these can be easily expanded if required):
o Solar Farms – 5 farms;
o Development expenses – 5 categories;
o Capitalizable costs – 3 categories;
o Operating expenses – 5 categories;
o Staff costs – 5 categories;
o Other expenses – 15 categories;
o Borrowings – 5 facilities
– Apart from projecting solar farm revenues and expenses the model includes the possibility to model depreciation of capitalizable costs, receivables, borrowings, dividends and corporate tax;
– Business Name, currency, starting projection period and volume units are fully customizable;
– Revenue, cost and fixed asset descriptions are fully customizable;
– The model included an integrated discounted cash flow valuation using the projected cash flow outputs;
– The model includes instructions, line-item explanations, checks and input validations to help ensure input fields are populated accurately;

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