Finance » Renewable Energy Projects

Financing your renewable energy project

What's a good project?

Key to getting funding is to have a 'good' project where the underlying parameters (before financing) present a solid case.

We have developed an interactive, holistic tool to compare different opportunities in solar pv. It scores the projects along 5 dimensions (irradiation, tariff, quality, cost as well as political stability & local knowledge) and depicts the resulting area in a diagram. A larger area implies potentially better opportunity.

For an in-depth analysis or feasisbility study of your project, please contact us.

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5 dimensions of a solar pv project opportunity
The 5 dimensions in our holistic estimator of an opportunity for a solar photovoltaics power plant are:
  1. Irradiation: This is the annual global irradiation that falls onto a horizontal surface per annum. Best locations have more than 2,000kWh per square meter.
  2. Tariff: In this interactive tool, it is assumed that the lifetime of the asset is 25 years. The tariff may be split into 2 phases with different tariff levels. As a maximum tariff the tool accepts €50c per kWh.
  3. Performance: The performance ratio is an indicator of the quality of the system, i.e. how much of the available irradiation (in the horizontal plane) is actually converted. It depends on the choice of components as well as the angle of the modules to the sun.
  4. Capex: Capital expenditure is the single most important cost item in a solar photovoltaic generator. In this interactive tool, we score any capex that is below 1600€/kW with a 10/10.
  5. Political stability & local knowledge: The success of a project and its prospects for investment very much depend on country-specific aspects such as political stability of the law governing renewable energy, ease of doing business and getting permits as well as local knowledge. Score 1 - 10 with 1 being "high risk" and 10 "very safe"

The above graph shows the scores along those axis. The larger the resulting area, the better the opportunity might be.

The top half (i.e. the top 3 dimensions) relates to revenues, whereas capex and political stability are concerned with costs.

On earth, values hover from 500 - 2500. See irradiation maps for more details.
Performance Factor: Values depend on choice of system as well as the position of the module. For a crude approximation, use:
  • Horizontal: 80%
  • Optimum tilt angle: 90%
  • 1-axis tracker: 100%
  • 2-axis tracker: 110%
See separate article on calculation of performance factor
Comparison: Hamburg and Grude
We have used the tool to compare two ficticious projects - one in Hamburg (Germany), the other in Grude (Bosnia-Herzegovina).

We have assumed the tariff as of 2011 for 1MW capacity. Furthermore, the project in Grude uses a tracker that makes that project more costly.

With more sun and using the tracking device, the Grude project scores higher on performance and irradiation. On the other hand, Hamburg enjoys a higher tariff and political stability. Some of the concerns about political risks in Bosnia-Herzegovina can be mitigated through a strong local team. Hence, a score of 4 or 5/10 on political stability & local knowledge.

Two different projects in two very different locations. However, the size of the pie is surprisingly similar.

 

Try it out for yourself
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