Advanced Financial Modeling for Renewable Energy (US)
Tax Equity Flip Structure
Model Tax Equity's Investment Returns
Learn how to analyze tax equity deal structures and size tax equity partners' investment
Size Back-Leverage Loan
Learn how to correctly size back-leverage loan based on the P50 and P99 generation scenarios
Model Sponsor's Equity Return
Create financial model that correctly estimate the sponsor's equity IRR in tax equity flip structures
Students at FMO
Over 14 Hours
Where Our Students Work?
In an online environment, you will build a financial model suitable for advanced analysis of tax equity flip structures for wind and solar projects.
This course will provide step-by-step instructions on how to size tax equity investment, back-leverage loan, and how to estimate the sponsor's equity return.
By the end of this course, you will be able to build complex, real-life project finance models to analyze tax equity flip structures.
What This Course is About?
Project finance models are used to assess the risk-reward of lending to and investing in an infrastructure project. The project's debt capacity, valuation and financial feasibility depend on expected future cash flows generated by the project and a financial model is built to analyze this. In the tax equity flip structures, there is additional complexity related to the IRS tax rules that have to be reflected in the financial model. On top of that, we have to be able to correctly size the back-leverage debt in the downside scenario, taking into account and reflecting the tax equity's seniority in the financial model.
In this course, we will model a complex tax equity flip structure for wind and solar projects in excel.
You will learn about:
- How renewable projects are financed;
- How to create best practice macro’s and Excel VBA codes to break circularities;
- How to size debt based on multiple covenants for wind and solar projects;
- how to create best practice macro’s and VBA codes to break circularities
- How to model the allocations of tax benefits between tax equity and sponsor, including modeling the capital accounts, DRO, Qualifies Income Offset provisions, and outside basis;
- How to size tax equity investment in a yield-based flip;
- Optimize the model to achieve the requirements of lender, sponsor and tax equity investor;
- Gain insights into the financial model development process, step-by-step – for a renewable energy model;
This is the same comprehensive financial training used to prepare analysts and managers at top financial institutions and infrastructure funds.
How Does It Work?
The course length is over 14 hours.
First, we will review how renewable energy projects get financed, so we understand all the essential components of project finance transaction.
Then, we will go over the case study and review modeling methods to improve our productivity in excel. We will then dive into building our advanced financial model. We will model the tax benefits allocation and cash distributions before adjustments between partners, which will give us the correct cash flow to the parties.
Next, we will size a preliminary back-leverage loan and model the construction funding. Once we have the construction funding, we will work on the adjustments that have to be made to the tax benefits allocated to the tax equity partner. We will implement the IRS requirements in the financial model (capital accounts, DRO, Qualified Income Offset, outside basis). This will allow us to size the tax equity's investment correctly.
We will then finalize the calculations of the cash flow available for the distributions to the sponsor. We will have to incorporate the DSCR lock-up and default covenants, and debt service reserve account into the calculations of the sponsor's cash flow to get to the sponsor's IRR.
Next, we will work on scenario analysis to find a tax equity transaction structure that could enhance the value of the project for the sponsor and the tax equity partner.
And, finally, we will work on modeling the partners' equity return when the sponsor exercises his buyout option. For those, who are interested in the accounting side of the tax equity transaction, we will also include the discussion and modeling of the HLBV accounting.
Is This Course For You?
Yes, if you need to build, review or analyse project finance models for wind and solar projects in the United States.
Typical students include analysts, managers, senior managers, associate directors, financial advisors, financiers and CFOs from project companies, investment banks, private equity and infrastructure funds.
Note that this is an advanced financial modeling course, and it is expected that you know how to model the project finance models for renewable energy projects. Most of our students take our other course "Project Finance Modeling for Renewable Energy" before taking the advanced course.
In this video we will go over the course structure and describe what we will learn in each part of the course. The course is divided into five parts:
- in part 1, we will learn basic project finance theory, so we understand in and outs of project finance before we begin modeling;
- in part 2, we will introduce the toll road case study, review the modeling methods to increase your excel productivity and we will jump into excel to model the construction period in our project finance model;
- in part 3, we will model out financial statements which will include income statement, balance sheet and cash flow statement.
-in part 4, we will introduce project finance items such as cover ratios, debt sculpting, debt service reserve account (DSRA), maintenance reserve account (MRA), revolver and shareholder loan. We will introduce to the problem of circularity in project finance models and we will learn how excel VBA can help us to resolve this circularity in excel. We will carry out valuation and model optimization in this part.
- in part 5, we will go over the advanced project finance modeling methods such as equity first financing, debt sizing macros, DSRA macros and scenario analysis automation.
It is highly recommended to watch this video so that you have the big picture of our journey ahead.
In this lesson we will be talking about what project finance is in the context of raising capital to fund construction of infrastructure projects. We will review distinctive features of the project finance and how project finance is different from the corporate finance.
In this lesson, we will review the important financial players, that participate in project finance transaction. These include investors, which are called project sponsors in project finance. Project sponsors, as we shall see, can further be divided into industrial investors, financial investors and sometimes government may also be an investor in the project.
Lender is another financial player which participate in project finance transaction. In fact, lender make project finance possible, because, typically, a majority of construction costs are financed with debt in project finance transaction. We shall see that due to transaction size, lenders typically unite and form a syndicate to arrange a syndicated loan to the project.
In this lecture, we will talk about the role of the Government and public private partnerships (PPP) in project finance. We will look at the development of PPA for power industry in the US and its effect on the PPP development. We will then review a dominant PPP form - concession agreement and its main varieties.
In this lesson, we will be looking at the risks in project finance transactions. As in any business venture, the project company in project finance faces 4 types of risks, these are project specific risks, macroeconomic risks, political risks and natural disaster risks. We will discuss these risks and see how they are allocated to the party which is best capable of managing those risks.
In this lesson, we will be looking at the capital and operating cash flows in project finance at different stages of project development. We will review the composition of project costs and project's Capex, different financing methods and forms, and important cash flows for lenders and equity investors.
In project finance, lenders usually impose strict restrictions on how the project company uses its cash. Cash movement in project company is controlled by means of control accounts and cash flow waterfall structure. In this lesson we will review these two important aspects of project finance transaction.
In this lesson we will talk about the covenants in project finance documentation. A covenant, also called an undertaking, is a promise by the borrower to the lender to do something or refrain from doing something in return for getting the loan. Covenants appear in the loan agreement. The financial covenants are extremely important to understand for modelers, because they are part of project finance models.
In this lesson we will review the case study which will serve as a basis for our project finance model throughout the course.
Frequently Asked Questions
The course is based on the tax equity flip structure for wind and solar case study.
Video content length over 14 hours.
You’ll also get personalized, one-on-one support from me, so you can get your questions answered every step of the way.
When you enroll in this course, you'll be able to ask me questions around how to apply what you're learning in the course (see the screenshots below).
It's kind of sitting in the class asking me questions but through an ongoing email chain comments whenever you need help.
Absolutely. Each financial modeling video has "before" and "after" excel files so you can practice what you have learnt from the video lessons. And, final lesson has final project finance model.
Yes! If you don’t feel like you’re mastering project finance modeling and analysis in the first 30 days of your enrollment, just email me and let me know. I’ll give you a full refund - no questions asked.
No catch here. My objective is to get my courses out to as many students that needed them as possible, which results in lower pricing as a starting point. Right now, I’m able to answer questions thoroughly at this price point. However, as enrollments continue to grow, I will probably need to increase enrollment price to reduce the number of students enrolling every month so I can continue to provide the level of personal attention I want to for everyone who decides to enroll in the course.
FMO specializes in developing your financial modeling skills in project finance, investment banking, asset and wealth management. While we are a young firm, the team has decades of experience of complex financial transaction modelling.
The course is taught by Gregory Ahuy. Gregory started his career in investment banking as M&A analyst in London at Renaissance Capital - leading Russian investment banking firm https://www.rencap.com/. He was later relocated to Moscow to help with some of the biggest Russian M&A deals in mining and infrastructure sectors. Gregory continued his career at InfraRed Capital Partners, one of the largest infrastructure funds, focused on sourcing and executing greenfield and brownfield infrastructure projects in Eastern Europe. Later, Mr. Ahuy joined Eneco, one of the largest energy companies in the Netherlands where he led several renewable energy projects.
If you have any questions, please send us an email: [email protected]