Project Financing Model Research Articles

Techno-Economic Assessment of Electricity Generation From a Medium-Scale CSP-PV Hybrid Plant Using Long-Duration Storage

The South African electricity sector is transitioning from a single utility buyer model to an open market model due to increasing utility tariffs, the energy crisis, sustainability goals, and enabling legislation. As a result, the private sector is seeking to procure private power generation technologies, with solar photovoltaics (PV) and onshore wind being the primary choices. However, the integration of these technologies is limited due to their variability and lack of dispatchability. Concentrating solar power (CSP) tower technology combined with long-duration storage is gaining traction in high solar resource regions due to efficiency improvements and cost reductions. This paper evaluates a medium-scale CSP-PV hybrid plant’s technical and economic feasibility in South Africa, focusing on cost savings, energy security, and sustainability. The study identifies a hybrid plant suitable for large power users, with independent power producers (IPPs) developing such a plant using non-recourse project finance and energy sold to large users through long-term power purchase agreements (PPA). The first-year PPA tariffs are determined using a typical project finance model developed for local market conditions. Depending on the plant design and the off-taker’s utility tariff structure, the plant offers cost savings (and average tariffs) ranging from 9.25% (at 78 USD/MWh) to 17.58% (at 81 USD/MWh). Hybrid plants are expected to become more feasible and “bankable” with improving technology and decreasing costs in South Africa.

Search on Risk Assessment of PPP Project Financing Based on ISM-FAHP Model

With the rapid development of China's economy, the demand of large-scale infrastructure construction projects is increasing day by day, but the shortage of funds has become the bottleneck restricting the progress of projects. In order to solve this problem, the Chinese government has gradually implemented the PPP project financing model in the field of infrastructure to attract social capital to participate and share the risk. However, with the implementation of this model, the problem of financing risk has gradually become prominent. Therefore, this study aims to provide scientific theoretical support and practical suggestions for relevant decision-making through in-depth analysis of PPP project financing risk and application of ISM-FAHP model.

Role of Domestic Banking and Financial Institutions in Project Finance: Insights from Hydropower Sector in Nepal

Hydropower is a low carbon renewable energy alternative for replacing carbon emission energy sources. In Nepal, this infrastructure sector is being developed for fulfilling the internal demand of electricity. Previous studies emphasized public-private partnership (PPP) utilizing project finance (PF) model in infrastructure sector. Recognizing the importance of domestic banking and financial institutions (BFIs) in project finance this study delves into factors significantly affecting the role of BFIs in project finance. Cross-sectional survey utilizing questionnaires was conducted among respondents representing the independent power producers (IPPs) and BFIs in Nepal. Regression analysis showed predictor variables like economic environment, guidelines of the central bank and low default rate have significant impact on project finance. issues related to adequate legal provision for non-recourse financingrole of BFIs for project finance arrangement. Credibility of hydropower project sponsors is an important determinant in financing hydropower project. The availability of comparatively more bankable projects in other investment sectors against the investible fund constraints resulted in limited complete project finance arrangement of hydropower projects. Detail investigation on guarantees to the lenders against the project loan and improvements needed in legal frameworks to accommodate the non-recourse finance and making economic and legal environment friendlier to private sector is the limitation of this study left for future researches.

Sustainable Project Financing and Financial Model: Take Construction Enterprises as An Example

Sustainable Project Financing and Financial Model: Take Construction Enterprises as An Example

RISK ANALYSIS METHODOLOGIES FOR THE FINANCIAL EVALUATION OF WIND ENERGY POWER GENERATION PROJECTS

Pursuant to European legislative and energetics trends, Croatia must significantly increase the number of renewable energy sources in the electrical energy system. Wind power plants are among the most attractive on the market. Since the European experiences of the development, construction and utilization of power plants predominantly employ the project financing model, it is necessary to establish a framework for the analysis of the financial profitability of investments in the construction of a wind power plant. Moreover, in order to increase the security of such investments, a rapid and efficient system is required for the analysis of the investment risks of the project in order to reduce them on the planning or acceptable economic levels. With these goals, a model for the financial evaluation of wind energy power generation projects is presented, together with the elements of the risk analysis employed. The data used are from a project for a wind power plant with a power rating of 18 MW, which is planned for construction on the territory of Zadar County in the environs of Benkovac. In cases where there are no reference documents for Croatia, data and experiences from European projects are used.

Research on Risk Issues under PPP Mode

The PPP mode is a new type of project financing model and a new type of partnership between the public sector and the private sector. This paper starts with three aspects of risk analysis: risk identification, risk control and risk allocation, and conducts an in-depth study of the PPP mode. . Using the risk distribution utility model and the risk game model, the risk problems in the operation of the PPP mode are analyzed.

Research on Risk Issues under PPP Mode

The PPP mode is a new type of project financing model and a new type of partnership between the public sector and the private sector. This paper starts with three aspects of risk analysis: risk identification, risk control and risk allocation, and conducts an in-depth study of the PPP mode. . Using the risk distribution utility model and the risk game model, the risk problems in the operation of the PPP mode are analyzed.

Forfaiting by Waiver as an Alternative to Project Financing for the Realization of Public-Private Partnership Projects in Poland

Despite growing social infrastructure investment needs, public-private partnership (hereinaf- ter: PPP) is not developing in accordance to expectations in Poland. Only 25% of initiated proceedings conclude in the realization of a contract – a significantly lower rate as compared to other European nations. While there are many potential explanations for the poor development of PPP in Poland, this article showcases the inefficiencies in the project financing model, as well as analyzes the appli- cability of forfaiting by waiver for Polish PPP projects. It outlines the necessary conditions as well as potential benefits to PPP development should the forfaiting by waiver model be applied comprehensively as a mode of financing for Polish PPP projects. Critical success factors in PPP will be addressed, as well as project risk division and factors influencing the project price.

Research on Comparison Model of Connected Project Financing Model Based on Fuzzy Hierarchy Theory

A scientific and reasonable project financing mode is very important for the development of transnational grid interconnection projects. On this basis, this paper first analyzes the status of the interconnection project, and designs the interconnection project financing mode comparison index system from four dimensions, external financing environment, financing method, financing efficiency and financing risk. Secondly, with the help of fuzzy analytic hierarchy process, the comparison model and calculation process of the interconnection project financing model are established. Finally, the S interconnection project is selected for case analysis, and it is concluded that the interconnection project should adopt the BOT project financing model, which is helpful to reduce project financing risks and increase revenue.

Emerging Challenges in the Completion of Construction Projects through Public Private Partnerships: Empirical Literature Review

The process of engaging private sector in the provision of public infrastructure can improve economic value in service delivery and enable the government to utilize the capabilities and expertise held by private sector. This has a positive impact on the public in terms of improving their well-being. This literature review attempts to compare the challenges encountered in implementation of PPP projects across the world, with a view to determining cross cutting challenges and recommendations for developing countries. A literature review was conducted for empirical studies focusing on construction projects. The studies are reviewed by analyzing the methodology used and conclusions made to identify the geographical study area, Public Private Partnership project financing model, emerging challenges and recommendation for future project management. The literature search was based on four keywords: construction projects, completion of construction projects, public private partnership, challenges in construction projects. Thus, a total of 11 empirical studies were identified for review in Europe, Asia and Africa. The review revealed that most risk factors affecting project completion can be categorized as human and organizational factors and unknown geotechnical conditions that were not known beforehand. Specifically, project owners’ interference was also attributable to delays with the delays having significant implications for project execution. Risks have great impact on the performance of construction projects because they affect their quality, time and cost. The general remedy to such potential risk factors is adoption of reliable prediction mechanisms which would estimate those factors using a probabilistic model that does not rely on expert judgments as they tend to be unreliable.

The urban dimension of Chinese infrastructure finance in Africa: A case of the Kotokuraba Market Project, Cape Coast, Ghana

ABSTRACT For many years, Chinese infrastructure finance has been secured by African governments to provide infrastructure of national significance, while cities continue to lack fiscal tools for the provision of large-scale urban infrastructure. This article not only demonstrates that Chinese infrastructure finance is being extended to municipal authorities in Africa to undertake critical urban infrastructure but also scrutinizes the urban dynamics and local impact of using Chinese infrastructure finance for urban regeneration. Through empirical scrutiny of the regeneration of Kotokuraba Market in Cape Coast, Ghana, findings reveal that municipal authorities, like national governments, are subjected to political and embedded conditionalities. However, the conventional resource-backed repayment conditionality characteristic of Chinese-funded national projects differs from the project finance model—relying on the project’s cash flow for repayment—adopted in Cape Coast. We found in Cape Coast a locally-driven emphasis on affordable rents that stands in stark contrast to the practice of project finance, resulting in potential default of the Chinese loan. The wider consequences of this disjuncture for urban development, financing and governance in Cape Coast, Ghana, and Africa are discussed.

The geography of project finance in U.S. electricity generation

Technology costs, state and federal policies and incentives, and local factors such as construction costs and prevailing electricity prices interact to determine the economic favorability of a generation technology in a particular place. To disentangle these factors and better understand how federal policies can make new generation economically viable, we present an integrated multi-technology, state-level project finance model called the Project Finance Mapping Tool and apply it to a variety of policy scenarios.

Design, Structure, and Risk Assessment of a Pre-Securitization Financing Facility for Rooftop Solar Projects in India

This article discusses the design, structure and risk assessment of a pre-securitization financing facility for industrial and commercial rooftop solar projects in India. Such a facility will aggregate Power Purchase Agreements (PPA) and syndicate loans, thereby serving as an investment vehicle to attract new class of investors into the rooftop solar segment, and will subsequently enable refinancing via securitization. The credit risk of the aggregation facility is assessed using a comprehensive project finance model and simulation of debt service coverage ratios (DSCR), volatility of DSCR, distance-to-default, frequency and quantum of soft defaults, probability of hard default, and loss given default. The structure of the aggregation facility is discussed w.r.t the legal entity, capital structure, size and draw-downs from debt service reserve account, the number of tranches in the financing facility and returns on fixed income tranches. The Copula function is used for the assessment of securitized tranches. The reduction in the weighted cost of debt is realized both during aggregation phase as well as during securitization. This reduction is driven by the combined effect of the reduction in credit risk due to aggregation, reduction in agency and transaction cost, and the ability of the mandated financial intermediary in the syndicate to identify high quality and underpriced assets in the origination market.

Confessions of a Project Finance Modeler

Despite detailed financial modeling by project developers, investors, and lenders, projects seldom work out as planned, leading to questions about the value of modeling. The main uses of a project finance model, however, are not for predicting the future but for identifying the most important risks, for describing in greater detail the project outlined in signed documentation, for monitoring the project throughout its implementation, and for developing early warning signs of trouble and laying out possible solutions. In this case, the author, a lender, finds that the process of building a model to check a project’s viability helps him create and then answer the questions that allow him to understand the risks and various factors that can make or break a project.

Multi-Objective Optimization Of Build-Operate-Transfer (BOT) Tender Problem For Private Sector Companies

Bugun dunyada pek cok projede Yap Islet Devret (YID) proje finansman modelinin siklikla kullanildigini gozlemlemekteyiz. YID ihalesini kazanmak isteyen proje sirketinin basarisi icin kilit gorus, YID sozlesmesi geregince iliskide oldugu taraflarin beklentileriyle uyumlu finansal bir paket hazirlamasidir. Proje sirketinin belirleyecegi ozsermaye borc orani, imtiyaz (calisma) suresi ve urun/hizmetlerin birim fiyatlari onemli finansal karar degiskenleridir. Proje sirketinin ihaleyi kazanma potansiyeli ve borc bulma potansiyeli iki farkli ihale hedefidir. Calismanin amaci, bu hedefleri iceren finansal optimizasyon modelini sunmaktir. Cok amacli evrimsel algoritma ile cozumlenen model, pareto cozumler kumesi sunarak, iki celisen amac arasindaki degisimi degerlendirmede karar vericilere yardimci olmaktadir. Modelin uygulamasi icin Turkiye’deki bir havaalani YID projesi verileri kullanilmistir.

What is normal profit for power generation?

Purpose– This paper aims to present a multi-period dynamic power project financing model to produce pragmatic estimates of benchmark wholesale power prices based on the principles of normal profit. This, in turn, can guide policymakers as to whether price spikes or bidding above marginal cost in wholesale electricity markets warrants any investigation at all. One of the seemingly complex areas associated with energy-only wholesale electricity pools is at what point market power abuse is present on the supply side. It should not be this way. If a theoretically robust measure of normal profit exists, identification of potential market power abuse is straightforward. Such a definition readily exists and can be traced back to the ground-breaking work of financial economists in the 1960s.Design/methodology/approach– Using a multi-period dynamic power project model, the authors produce pragmatic and theoretically robust measures of normal profit for project financed plant and plant financed on balance sheet. These model results are then integrated into a static partial equilibrium model of a power system. The model results are in turn used to guide policymaking on generator bidding in energy-only power markets.Findings– Under conditions of perfect plant availability and divisibility with no transmission constraints, energy-only markets result in clearing prices which are not economically viable in the long run. Bidding must, therefore, deviate from strict short-run marginal cost at some stage. To distinguish between quasi-contributions to substantial sunk costs and market power abuse, a pragmatic and robust measure of normal profit is required.Originality/value– This article finds policymakers can be guided by an ex-post analysis of base energy prices against pragmatic estimates for the long-run marginal cost of the base plant, and an ex-ante analysis of call option prices along the forward curve against pragmatic estimates of the carrying cost of the peaking plant.

Hydroelectricity Project Financing Model in Nepal: Need for Discussion

Energy is a basic requirement of the development and it has played very important role in macro economy. Hydropower generation and its use in a wide range expected that Nepal can accelerate its pace of economic growth. During the 100 years history of hydro power development, we are harnessing only 1.5% of 43000 MW technically water resources and welcoming 18 hours of load shedding in dry seasons in spite of numbers of policies, rule and regulation, strategies and report have been prepared. Past two governments envisioned clear picture on hydro power - production of 10 GW to 25GW within ten years to 20 years has bring a new momentum. The ambitious plan can implement and achieve the goal if country has political stability, transparent and committed accountable mechanism and create suitable investment environment.

Risk Analysis Paramount in Project Financing Decisions

AbstractThe project finance model is used to mobilize several billion dollars of investment annually for projects worldwide. Making these projects an attractive investment opportunity to lenders requires a careful assessment of the risks involved in a project.

Project Finance Model for Small Contractors in USA

Construction projects do not require a large capital outlay but a large working capital to start up the project. Unfortunately, for small contractors there are very limited options available from the banks or other lending institutions to cover this large working capital requirement in the absence of sufficient collateral. The “Project Finance” method presented in this paper is recommended as the most effective method for small contractors in the United States. The problems of small and start up contractors in funding their projects have been little addressed in the literature. The current financing practices were observed through both the literature review and interviews with contractors and bankers in the western Michigan area and subsequently a system has been proposed which could help a small start-up company seeking higher growth. The growth rates that can be achieved using the project finance system in contrast to the traditional “line of credit” arrangements as illustrated in this paper show that the project finance model is beneficial.

The risk assessment model of BT construction engineering project financing

In this paper the BT construction engineering project financing model is analyzed to identify the 5 major factors that affect the risk of financing, and to formulate the questionnaire report. It applies the standardization processing and model application to data after investigating, and get the risk synthesis value, then judge the risk level of the project A. It provides the advantageous basis for BT construction engineering projects related parties in the risk management.