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Financial Advice, Financial Institutions

Solar and Wind Now the Cheapest Power Source



Unsubsidised solar and onshore wind are now the cheapest source of new bulk power in all major economies except Japan thanks to falling technology costs.

That’s the findings of a new report by Bloomberg New Energy Finance, which examines the levelized cost of electricity (LCOE) worldwide of different power generating and energy storage technologies, excluding subsidies.

The report out today says that solar and/or onshore wind are now the economic generation source of choice, even in China and India “where not long ago, coal was king. In India, best-in-class solar and wind plants are now half the cost of new coal plants.”

The study notes that the utility-scale solar PV market in China has contracted by more than a third in 2018 because of policy revisions in that country. “This in turn has created a global wave of cheap equipment that has driven the benchmark global levelized cost of new PV (non-tracking) down to $60/MWh in the second half of this year – a 13 per cent drop from the first half.

BNEF’s benchmark global levelized cost for onshore wind sits at $52/MWh, down 6 per cent from its LCOE analysis in the first half of this year. “This is on the back of cheaper turbines and a stronger US dollar,” the report explains. “Onshore wind is now as cheap as $27/MWh in India and Texas, without subsidy.”

It adds that “in most locations in the US today, wind outcompetes combined cycle gas plants supplied by cheap shale gas as a source of new bulk generation. If the gas price rises above $3/MMBtu, our analysis suggests that new and existing CCGT are going to run the risk of becoming rapidly undercut by new solar and wind. This means fewer run-hours and a stronger case for flexible technologies such as gas peaker plants and batteries that do well at lower utilization.”

The report finds that in the Asia-Pacific, more expensive gas imports mean that new-build combined-cycle gas plants with a levelized cost of $70-117/MWh continue to be less competitive than new coal-fired power at $59-81/MWh. “This remains a major hurdle for reducing the carbon intensity of electricity generation in this part of the world,” it notes.

In terms of energy storage, BNEF states that short-duration batteries are now the cheapest source of new fast-response and peaking capacity in all major economies except the US, “where cheap gas gives peaker gas plants an edge”.

As electric vehicle manufacturing ramps-up, battery costs are set to drop another 66 per cent by 2030, according to BNEF’s analysis. This, in turn, means cheaper battery storage for the power sector, lowering the cost of peak power and flexible capacity to levels never reached before by conventional fossil-fuel peaking plants.

The report highlights that batteries co-located with PV or wind are becoming more common and the analysis suggests that new-build solar and wind paired with four-hour battery storage systems “can already be cost competitive, without subsidy, as a source of dispatchable generation compared with new coal and new gas plants in Australia and India”.

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Financial Advice, Financial Institutions

EBRD invests in wind and solar energy in Poland




The EBRD is advancing the green energy transition in Poland by supporting Qair’s portfolio of almost 200 MW of renewable energy with five loans totalling PLN 280 million (approximately €63 million equivalent). BNP Paribas is also providing project finance lending to the portfolio on a parallel basis.

The portfolio includes the construction under the Polish renewable energy auction support scheme (contract for difference) of 93 MW of new capacity – the three wind farms Udanin (50 MW), Parzeczew (9 MW) and Wrzesnia (9 MW) and 25 MW of solar photovoltaic – as well as the operation of wind farms Linowo (58 MW) and Rzepin (48 MW).

The EBRD loans will be provided to five Polish special-purpose vehicles that are ultimately owned by two experienced sponsors – the French renewable energy developer and operator Qair and the French infrastructure fund RGreen Invest.

Harry Boyd-Carpenter, EBRD Director, Head of Energy EMEA, said: “While so many efforts are rightly focused on addressing the Covid-19 crisis, it is also vital to sustain the momentum behind the green transition. Climate change may now feel less immediate, but it is every bit as serious a challenge. By providing long-term finance under the current circumstances, the EBRD is making a significant contribution to Poland’s energy transition and demonstrating its commitments to its partners and strategic goals. We are delighted to engage for the first time with such strong partners as Qair and RGreen Invest in this.”

Jean-Marc Bouchet, Qair founder and Chairman, said: “From its beginning, Qair has been focused on the energy transition by developing, building and operating renewable assets in France, Europe and the rest of the world. These financings from the EBRD and BNP Paribas of operating and new assets in Poland are a clear sign that Qair’s lifelong commitment to promoting green electricity is more relevant than ever and that the strategy that Qair has been pursuing in Poland for over five years is coming to fruition.”

Poland still generates 80 per cent of its energy from coal, with harmful effects on the environment and human health. The country has committed itself to the EU climate and energy targets for 2030, which include a reduction of at least 40 per cent in greenhouse gas emissions. Renewable energy has a key role to play in meeting that goal.

The EBRD started investing in Poland in 1991 and to date has provided €10.3 billion through 434 projects to all sectors of the economy. Supporting the country’s green transition with investments in renewable energy and energy efficiency remains one of the Bank’s priorities in Poland.

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Financial Advice, Financial Institutions

Modelling in renewable energy projects as a tool for strategic decision making




The most critical financial services in the energy due diligence services is financial advisory and specially financial modelling, as causing a decrease in financing costs and optimizing the finance structure. Financial modelling plays a part in both investment decisions and evaluation. 

In project finance, financial model allows a project-specific calculation that demonstrates all cash flows and presents all the outstanding performance indicators. Financial models help financiers through indicating entire funding decisions, providing flexible functionality for funding, forecasting production amount, reviewing tax calculations, creating master scenario and optimizing the project. Another benefit of financial modelling is that it provides input to sensitivity analysis.

For renewable energy projects, focus of the financial modelling is unit cost of production. In this context, financial modelling ensures calculation of the unit cost with considering different conditions. Outcomes of this process help determining the lowest levelized cost of energy in certain conditions and constitute the base of a PPA. 

Financial models can be divided into two depending on the stage of use and the details of the model. It is important to form operational models after the financing is secured and financial close models to be updated. In Project Finance transactions in Turkey, the usual structure is to use project finance financial close models as is for future operational phases that cause problems in both the financing and operations of the plant. With this respect of experience and a recent article by Matthew Bernath we would like to dig deeper into these models, and how to manage the transition. Two financial models can be stated as: 

  • Financial Close Model
  • Operational Model

“The financial close model is a model that aims to raise capital, comprehend a deal and finally reach financial close. This model is useful for not only equity but also debt providers in terms of understanding project risks and sensitivities. This makes the model favourable for financial close and hedging process, in addition being a powerful negotiation tool. Construction and operations begin after the financial close. Financial covenants and ratios are considered to measure in order to interpret the project, because project starts to create revenues and incur expenses. 

Operational model advantageous for events that happen at operational phase such as refinancing and sell-downs. In addition, operational model is useful for equity holders as refinancing or additional gearing are deliberated. 

Both models are helpful in different phases of the projects. The most common problem in the renewable energy sector is to continue to use of the financial close model during the operational period without creating a separate operational model. To convert financial close model to an operational financial model, there are several points financiers should pay attention. 

Hard-Coding Inputs

Inputs which cannot be changed once Financial Close have to be reached are hard-coded. This may include sculpted debt repayments, hedged rates or sensitivities built into the model for running scenarios during the funding process. It should not be possible for future model users to change these cells or any other inputs that have been ’hard-coded’ and agreed to during Financial Close.

Make Changes Easy

Inputs that do require changes or to be updated during operation (wind data or power generated, sales etc.) can be changed very easily and the place in which these can be changed can be easily found because tracking changes helps illustrating the situation. Anyone responsible for updating the operational financial model should understand exactly what and where they need to update assumptions with actual figures when updating the operational model.

Handover Process

Have a proper handover process and training to ensure the model builder adequately explains how the model works and what will be changing now that the model is being converted to an operational financial model. In addition, it should be clear what key ratios and outputs equity and debt providers expect to see on an ongoing basis.


Ratios and covenants should be clearly displayed as the bank will be particularly interested in monitoring these.


Cash flow waterfall have to be still functional in the operational financial model – this will be key to ensure that ratios are correctly calculated, and the bank can assess cash flows.


Build in an operational dashboard that will be useful for management reporting. This dashboard will also show when key events can or should occur.

Operational Financial Model Audit

Audit the operational model to give management and the banks confidence in the model. While this might seem like overkill, auditing a model that will probably survive the length of the project – be it 17 – 25 years, is extremely worthwhile and an easy decision to make.

Making the Operational Financial Model ‘Decision-Useful’

Of course, the list above is not extensive. All complications of the certain transaction should be considered when transforming a financial close model to operational. Following the above list will be provided to move forward a model that can be used to monitor a project and is decision-useful. 

Ultimately – every financial model should be decision-useful, i.e. it should be a tool used for decision making of both an operational and strategic nature. A Financial Close Model that has successfully been transitioned into an Operational Model will be both operationally useful for management report, and strategically important for key project decision making.”

As a result the modelling differences and points to watch out is pointed above. As a practitioner advisory service firm in financial modelling it is critical for project owners and corporates to outsource modelling work to an independent advisory company. This independence from corporate structures and decision lines and day to day operations will prove a successful conversion to operation models from all set financial close models. 


  • Matthew Bernath, “What is a Financial Close Model vs. an Operational Financial Model?”, 2019
  • EIA Publication, Levelized Cost of New Generation Resources in the Annual Energy Outlook 2013 
  • Ed Bodmer, Energy Financial Modelling, 2015 

Ozlem Kildir, Founder of Profinstance Project Finance Advisory Incorporation

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Financial Advice, Financial Institutions

Solar park business development in foreign countries for Turkish corporates




In recent years, Turkish corporates are extending their solar activities to foreign countries like MENA; Africa, Eastern Europe, CIS countries etc. The main focus of these companies are to export solar equipment, be a cont- ractor, perform outsourced construction works. In order to get the maximum benefit and profit from foreign country operations in renewable energy it is important to have a business development perspective. 

In terms of the business development perspective, the companies to enter the market, should consider the structure, financing, and advisory services as a package along with contracting, EPC and equipment procure- ment. This article will mainly focus on a Solar Park Development Project and state main pinpoints for players in the market.


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