Case Study: E-Learning Services on Solar Power Project Financial Modeling Supporting Renewable Energy Investment Readiness

Background on Case Study Solar Power Project Financial Modeling

An expanding community of practitioners in the renewable energy developers, infrastructural investors and project finance units were becoming more engaged in the assessment and funding of solar power projects. With the rapid expansion of solar energy implementations in various markets, organisations needed effective in-house resources that would allow them to determine the feasibility of projects and how to finance and communicate efficiently with lenders and investors.

Even after having good technical knowledge about solar assets, most professionals did not have a coherent knowledge of solar power project financial modeling especially in cash flow forecasting, project finance structures, sensitivity analysis as well as the measures of returns. Geographic dispersion, time, and flexibility of learning schedules could not always allow the use of traditional classroom training.

In support of these problems, our firm was contracted to create and present an overall e-learning course on Solar Power Project Financial Modeling so that those involved could develop an actual, industry relevant, model by utilizing a structured self-paced digital platform.

Issues and Challenges

One of the challenges that were encountered by the participants involved the necessity to have a special e-learning solution.

Lack of coherent financial modeling ability was one of the challenges. Students had different backgrounds such as engineering, operations, finance, and investment roles, which meant that they had different financial competencies.

The other problem was the knowledge of project finance structures. The structure of solar projects is frequently complicated with such features as special purpose vehicles, non-recourse or limited-recourse financing, and a variety of interests of stakeholders.

There were other challenges with cash flow forecasting. There was a need to have technical expertise and financial rigor in order to accurately model energy generation, tariff structures, operating costs, debt service and tax consideration.

Another problem experienced by the participants was the problem of interpreting the financial outputs. They were IRR, NPV, DSCR and equity returns among others that were calculated but not comprehended to the full extent of a project finance.

Lastly, there were a lot of professionals who were unable to apply concepts to live investment or financing decisions as there were no model examples which were specifically solar power projects.

Objectives

The main aim of the engagement was to create an e-learning programme on Solar Power Project Financial Modeling which had the capacity to create a feasible and scalable financial modeling capability.

Key objectives included:

• Creating a systematic comprehension of the solar project economics.
• Training in end-to-end solar project financial modelling methods.
• Discussing project finance and structures of funding.
• Enhancing the interpretation of important financial measures.
• Offering range, self-paced learning that is regional.

The programme should have been able to strike a balance between technical and clarity to be accessible to the learners of various experience levels, and still applicable to the solar projects in the real world.

How We Helped

We have employed a formal approach to instructional design to come up with an all-inclusive financial modelling e-learning programme on solar power projects.

Its involvement started with a curriculum design stage. We laid down a stepwise learning process of the entire life cycle of a solar project financial analysis, project assumptions, through financial outputs.

The e-learning modules began with the basics, including a general introduction of the solar power projects, the types of revenues that the solar power plant may have (including: feed-ins tariff, power purchase agreement and other essential aspects), and the cost elements.

Next, we presented project finance principles, which describe the way solar projects are usually organized, financed and controlled. Students were taken through the profession of equity investors, lenders and other stakeholders.

The key elements of the programme concentrated on the development of a financial model of a solar power project. Learners through guided lessons were taught to:

• Input and assumptions of structure model.
• Predict power production and revenues.
• Model operating and maintenance costs
• Include investment and capital financing.
• Debt service and cash flows calculations.

The e-learning material incorporated a thorough walkthrough on the financial statements so that the learners could know the connection among the income statements, cash flow statements and project returns.

In order to solidify the learning, we also used practical modeling scenarios on simplified but realistic solar project scenarios. Students had the opportunity to stop, replay and learn at a certain speed, which increases the retention and confidence among students.

Also discussed in detail was sensitivity analysis and scenario analysis. The modules illustrated the effects of tariff variation, generation assumption, cost and financing terms variation on project returns and risk profiles.

The programme also laid a lot of emphasis on interpretation. The meaning and use of major metrics including IRR, NPV, DSCR, and payback periods were explained to the learners in ways specific to a solar power project.

All the materials were presented in a convenient e-learning platform, which can be accessed on different devices and locations. Templates and reference guides were also provided to support the practical use of it later in life than the course itself.

Learning Design and Delivery

The e-learning programme was made flexible and modular. Students would be able to advance chronologically or reconsider certain subjects depending on their positions and requirements in learning.

The combination of instructional videos, structured explanation, and modeling exercises allowed accommodating the various learning styles. Practical assignments and knowledge checks were used to support knowledge and did not overwhelm the participants.

The ideal fit of the self-paced programme is that it enables the professionals to manage learning and work obligations and therefore could be deployed to individual learners and also corporate training.

Value Delivered

The case study shows that EL Services of Solar Power Project Financial Modeling can be applicable in developing renewable energy finance capability in an accessible and scalable way.

The integration of formal teaching with hands-on modeling activities enabled the learners to gain confidence in assessing the solar power projects, learning about the financial risks and sharing financial knowledge with the stakeholders.

The e-learning system offered a flexible and reusable training system, which aids the continuous improvement of skills since solar markets, technology and finance structures are still being developed.