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Video Overview:

I’m excited to enter the renewable energy space with this wind farm financial model. It is a timeless tool that will help anyone figure out the financial requirements and potential returns of a wind farm business. I’ve run it for up to a period of 10 years with easy assumptions for timing. Everything is driven off a month # input.

Key Outputs:

Monthly / Annual Income Statement, Balance Sheet, Statement of Cash Flows
Monthly / Annual Pro Forma Detail (shows more detailed line items rather than high level summary data)
DCF Analysis, IRR, ROI, Equity Multiple, Annual Executive Summary
Visualizations

The input structure is clean and simple. Just configure your deployment tranches based on the number of wind turbines deployed, the month #, the total cost of the turbines based on megawatt capacity, and the total land/development/construction costs. Each tranche also has its own financing assumptions, and those loans can be interest only accrual with a REFI at the end of the interest only period or simply regular p+i amortization loans.

Revenue is driven by two potential options. The user can define each deployment tranche as using a power purchase agreement or selling energy on the open market (wholesaling). The power purchase agreement is more stable where the wind farm will be paid a fixed amount of money per month with regular escalations and will have to maintain some level of productivity. The open market strategy is a bit more complicated and requires inputs for seasonality / capacity, the market price for megawatts, and the change in expected prices over time. There is also an annual production degradation factor to account for.

For direct costs, I’ve included a few different drivers. The user can account for monthly costs per turbine per month, a cost per megawatt transmitted, and then an entire cost schedule for the monthly cost per total tranche deployment. For the total costs per deployment per month, the user can enter monthly costs for things like:

Repairs / Maintenance
Environmental Compliance
Spare Parts / Equipment
Land Lease (if not purchasing land)
Insurance
Property Taxes
Utility and Grid Connection Fees (fixed)
Monitoring and Control Systems

There is an option to increase those costs on an annual basis as well.

For the capex section, which will drive depreciation, I’ve separated each of the five tranches into three categories for good cost segregation allocations. They include Turbines, Land, and Sitework.

There is also a section to account for joint ventures. The cap table has an input for equity investments by outside investors, their share of the company as well as cash contributed by owners/operators, and their share of the company. Each individual investment has a related cash flow stream and IRR. There is also a DCF Analysis that applies to the investor pool and owner pool.

You can run complex simulations with this model that accounts for various expected assumptions, pricing, capacity, and costs to see what environments are feasible and favorable for starting up your wind farms over time.

This template is included in two bundles: