Example: Input for a thermal power plant model
For a thermal power plant project, a project finance model's input typically looks as follows:
- Power plant's installed capacity, MW
- Capacity utilization factor
- Internal consumption rate, %
- Power plant's gross efficiency, %
- Lower heat value of fuel, MJ/unit
- Price of fuel, $/unit
- Offtake electricity price, $/MWh
- Inflation rate, %
- Fuel price escalation, % per year
- Electricity price escalation, % per year
- Cost of consumables, $/MWh
- Equipment maintenance, $/MWh
- Depreciation period, years
- Personnel expenses, $ per year
- General and administrative expenses, $ per year
- Corporate tax rate, %
- Total CAPEX $
- 'Buffer' for cost overruns, % of total amount to be financed
- Fuel and consumables reserve, days
- Imported equipment, % of total CAPEX
- Import duties, %
- Initial insurance premium, % of total CAPEX
- Construction period, years
- Period of commercial operation, years
- Equity portion in total financing, %
- Required return on equity, %
- Tenor of debt, years
- Grace period on debt repayment, years
- Interest rate during construction, %
- Interest rate during commercial operation, %
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A project finance model is a specialized financial model, the purpose of which is to assess the economic feasibility of the project in question. The model's output can also be used in structuring, or "sculpting", the project finance deal.
