Biomethane Producer Financial Model (Renewable Natural Gas)

Biogas, Financial Model, Renewable Energy

10-year Financial Projections, 5-year Financial Projections, Accounting, Budget, Budgeting, Business Valuation, Cap Table, Cash Flow Analysis, Cash Flow Projections, Cash-on-Cash Multiple, CFO, Controlling, DCF Model, Debt Schedule, Debt Service Coverage, Discount Rate, Excel, Financial Analysis, Financial Due Diligence, Financial Feasibility, Financial Model, Financial Modeling, Financial Planning, Financial Projections, Financial Ratios, Financial Statements, Forecast, Forecasting, Income Statement, Investing Cash Flows, Investment Multiple, Investor Cash Flows, IRR (Internal Rate of Return), Joint Venture, Know-How, KPIs (Key Performance Indicators), NPV (Net Present Value), Pro-Forma, Profitability Analysis, Return on Invested Capital (ROIC), Return on Investment (ROI), Revenue Projections, Scenario Analysis, Sensitivity Analysis, Startup Financial Models, Terminal Value, Three Statement Model | Three Financial Statements, Venture Capital

Video Overview:

*Update – I’ve adjusted the construction loans so that during the interest-only period, you can choose to accrue the interest or not. Before it was only letting users accrue.

I’m happy to complete my second major renewable energy startup financial model. This is for up to 5 feedstock processing facilities that are scaled up over the course of 10 years. The user can plug in all relevant assumptions and see the resulting expected revenue, direct costs, indirect costs, and cash flow. The basic business model involves acquiring feedstock and processing it into biomethane (renewable energy).

The model is flexible and works for just a single facility analysis or multiple. Each facility deployment has its own construction / debt financing schedule that is dynamic based on the start month / interest only period / construction period. These loans also have an option to be configured as PIK. Any remaining cash requirements come from operators and/or investors depending on how the cap table is used.

Key Revenue Assumptions per Facility and per Feedstock Type:

Start Month
Maximum tons of feedstock processed per month (up to 6 feedstock types)
Percentage of maximum capacity attained over time.
Expected cubic meters of biomethane yield per ton of feedstock processed.
Processing efficiency

The above assumptions are highly effective financial planning frameworks for small to large operations. One of the KPIs this model can produce is the average cost and average revenue per cubic meter of biomethane produced. This is displayed in a visualization.

All assumptions use monthly periods for timing assumptions. This means the user simply defines the total number of months the model is to produce data for (up to 120 months), the start month of all relevant inputs such as facility start month, the month various overhead costs start, and so forth.

Primary Output Reports:

Monthly and Annual Income Statement, Balance Sheet, and Statement of Cash Flows
DCF Analysis
Annual Executive Summary with high level detail showing components of EBITDA and cash flow as well as IRR, ROI, Equity Multiple, total cash invested / returned for the project, investor group if applicable, and owner/operator group.
Monthly and Annual Pro Forma Detail

With the visualizations, the user can easily see when operating cash flow pays back the initial investment and the potential total returns with and without a terminal value.

Direct Costs:

I built a range of ways to account for direct costs. This involves inputs for the cost per ton of feedstock processed, the cost per cubic meter of biomethane transmitted, and costs to operate the facility for each of the 5 facilities. This is to account for things like energy needs, property taxes, rent (if not constructing the processing plants), and extra slots for other relevant costs.

I feel good about continuing to help this industry by trying to build the best financial simulations for renewable energy and will look forward to building more modeling frameworks in the space.

You may also be interested in the wind farm financial model.

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