Solar (PV) Project Finance Model with Tariff Optimiser (Excel XLSB)

BENEFITS OF THIS EXCEL DOCUMENT

1. Delivers a comprehensive, investor-ready template for project finance practitioners, requiring minimal editing for immediate use.
2. Features a detailed dashboard with key metrics, including Levelized Cost of Energy (LCOE), Net Present Value (NPV), Internal Rate of Return (IRR), project and equity payback periods, and other essential financial indicators.
3. Uses Brent's Method (advanced Numerical Method) to determine the optimal tariff--more stable and reliable than GRG Nonlinear or Goal Seek. Alternatively, users can input a user-defined tariff.

SOLAR ENERGY EXCEL DESCRIPTION

This product (Solar [PV] Project Finance Model with Tariff Optimiser) is an Excel template (XLSB) with a supplemental Zip archive file document, which you can download immediately upon purchase.

Background
As the demand for clean, reliable power rises, utility-scale solar projects have become essential to the global energy transition. Unlike rooftop systems, solar farms deliver electricity directly to the grid, supporting national supply and decarbonisation goals. With growing investments and supportive policies, the need for clear, credible financial planning is greater than ever. This model was built to meet that need—offering a structured, transparent framework to assess feasibility, optimise returns, and support investment decisions from early-stage development through to financial close.

This Solar PV Financial Model delivers a robust 25-year forecast, capturing key metrics across energy generation, revenue flows, operating costs, and financing obligations. At its core is a detailed energy production module that integrates project-specific solar irradiation data to estimate electricity output and associated revenues. By incorporating seasonal variations, degradation rates, and probability scenarios (P50, P75, P90, and P99), the model enables developers and investors to assess the bankability, financial viability, and risk-adjusted performance of utility-scale solar projects.

This data-driven approach forms the foundation for informed investment decisions and long-term planning across the project lifecycle. The Excel-based model follows the FAST modelling standard, ensuring clarity, modularity, and auditability. It is structured to cover the full lifecycle of a utility-scale solar project—from energy production and tariff formulation to financial close and equity returns.

Model Overview
Production
Models gross annual generation, degradation, availability, curtailment, and grid losses. Calculates net deliverable energy after technical and operational losses. Includes generation profile and probability scenarios.

Revenue
Applies fixed or escalatable tariffs to net energy produced.
• Tariff Method 1: User-defined input
• Tariff Method 2: Solver to calculate the tariff required to meet a target equity IRR

Opex
Captures all operating costs, escalated by inflation (including expensed DSRA L/C).

Working Capital
Models receivables and payables. Impacts cash flow and funding requirements.

VAT
Separately models input VAT recovery and output VAT obligations. Assumes VAT is refunded during construction.

Depreciation & Tax
Models accounting and tax depreciation schedules. Includes fixed asset summary and capitalised finance costs.

Reserves and Upfront Working Capital
Includes upfront working capital. Models interest earned on cash balances, factoring in VAT and working capital movements. A DSRA and DSRA L/C have also been modelled.

Financing Structure
Debt
Drawdowns, interest, repayments, sculpted cash flows, DSCR monitoring, and associated fees.

Equity
Paid-up capital and shareholder loans with returns and repayment.

Drawdown Sequencing
Pari Passu or Equity First. Circularity breaker aligns tariff, IRR, and interest during construction (IDC).

Valuation & Returns
Calculates project and equity IRRs (pre- and post-tax). Computes project NPV, equity payback, and dividend flows.

Outputs
Stakeholder-ready dashboard with KPIs, summary assumptions, and return metrics.

Dashboard
Clean, user-friendly interface for investment committee presentations.

Tariff Methodology & Advanced Solver
This model employs a custom-built tariff optimisation engine powered by Brent's method to determine the tariff required to meet a user-defined target equity IRR.

Operation
The main Solve macro (located on the Dashboard) must be re-run any time material assumptions change:
• Method 1: Resolves model circularities and establishes the steady-state tariff structure.
• Method 2: Performs full tariff optimisation with a progress form and real-time updates.
• Failure to re-run the macro after changes may result in inconsistencies or calculation errors.

About Brent's Method
Brent's method is a hybrid root-finding algorithm that combines the robustness of bisection with the efficiency of secant and inverse quadratic interpolation techniques. Unlike derivative-dependent methods, Brent's algorithm ensures convergence even when dealing with irregular or non-smooth IRR functions—making it particularly well-suited to the complex, circular cash flows found in project finance.

The Embedded VBA Function
• Iteratively adjusts the tariff based on a target equity IRR
• Resolves circularities involving IDC, DSRA, etc.
• Incorporates adaptive damping and safeguard logic to ensure convergence
• Delivers results typically within 5 minutes depending on model complexity and return target

Why Brent's Method?
• Guaranteed convergence in typical project finance conditions
• Superior numerical stability over Excel's Goal Seek or GRG Nonlinear Solver
• Compatible with circularity-heavy financial models

How It Works
Phase 1 – Feasibility Check
Scans a range of tariff values to find a valid starting point where IRR is defined and positive.

Phase 2 – Anchor Point Establishment
Calculates a second IRR at an incremented tariff to build the secant approximation.

Phase 3 – Iterative Optimisation (Secant Loop)
Executes Brent's method using a secant-style update loop, refining the tariff until IRR estimates meet the defined precision.

Real-Time Monitoring & User Control
A custom UI form updates users with tariff and IRR values during each iteration. Users can monitor convergence trends and cancel the run at any time.

Circularity Resolution
Each iteration includes a call to the dedicated circularity system (ResolveCircularities) to update dependent ranges before recalculating IRR. This ensures IDC and reserves are correctly resolved throughout the optimisation loop.

Key Solver Features
• User-defined target IRR (via input prompt or sheet cell)
• Live dashboard with real-time tariff and IRR values
• Built-in failsafes for invalid IRR outcomes
• Adaptive step size, tolerance, and precision settings
• Typical runtime under 5 minutes depending on project complexity

Technology Adaptability
While structured around solar PV, the model can be adapted to other infrastructure and energy technologies including wind, hydro, geothermal, and PPP transactions.

Note: This model is primarily intended for solar PV projects, and its structure reflects that intent.

What's Included in Your Purchase
Your purchase includes a zipped folder containing:
• 1 Excel Model – Fully functional, VBA-enabled, and ready for input
• Comprehensive 31-page Model Manual – Covers methodology, instructions, and structure
• Model PDF Printout – Pre-formatted PDF version of the model for quick viewing
• "Read Me" File – Key notes and version guidance for users

Disclaimer
This financial model is the intellectual property of Project Finance Lab and is provided under a commercial-use licence. Reproduction, resale, or redistribution without written consent is strictly prohibited.

While the model has been developed to ensure robustness and reliability, no warranties are made regarding fitness for purpose, jurisdictional compliance, or completeness. Users are responsible for conducting due diligence, entering relevant assumptions, and applying professional judgment. The model offers a solid foundation but must be tailored to reflect legal, technical, and commercial specifics. Project Finance Lab accepts no liability for any losses resulting from its use.

Fair Use Expectations & Support Policy
This model is intended for users with a working knowledge of Excel, VBA, and project finance. To maintain platform integrity:

• Review the full product description and disclaimers before use
• This is a professional tool—not a beginner course or automated platform
• Support is available via inbox for functional questions only. Extended training, debugging, or consulting must be arranged separately.

Note: The model is best suited to low-tariff regions (e.g., the US, EU, LATAM, MENA) and USD/EUR-denominated structures, where average tariffs approximate $0.06/kWh.

Source: Best Practices in Solar Energy, Integrated Financial Model Excel: Solar (PV) Project Finance Model with Tariff Optimiser Excel (XLSB) Spreadsheet, Project Finance Lab