Project Finance Modeling

Project Finance Model — Course Description

SPV Structure | DSCR | Debt Sculpting | Equity IRR | SolarPlus Energy Case Study

Course Overview

This course builds a complete, interview-ready Project Finance Model from first principles. You will learn how infrastructure projects are financed through Special Purpose Vehicles using non-recourse debt, how to project 25 years of operating cash flows, how to build a full debt schedule with DSCR analysis and sculpted repayments, and how to calculate equity IRR and key lender metrics including LLCR and PLCR. The course follows SolarPlus Energy Ltd. — a 200MW ground-mounted solar plant in Rajasthan, India — through every stage of the project finance process, from financial close and construction drawdowns through to final equity distributions in Year 25.

By the end of this course, you will be able to build a fully integrated project finance model, explain every formula and its economic rationale, defend DSCR and LLCR calculations under pressure, and answer the most demanding project finance questions in investment banking, infrastructure, and development finance interviews.

What You Will Learn

• How project finance differs from corporate finance — non-recourse debt, SPV structure, risk allocation through contracts, and why lenders focus entirely on project cash flows
• The full contract structure: EPC, O&M, Power Purchase Agreement, and Concession Agreement — what each does, who bears each risk, and why all four are required for bankability
• The cash flow waterfall in precise detail — from revenue to operating costs, DSRA top-up, debt service, lock-up tests, and equity distributions — in the correct priority order
• How to build the construction phase model: CAPEX drawdown schedule, debt and equity tranches, Interest During Construction (IDC), and DSRA sizing at COD
• How to project 25 years of operating revenue using capacity factor, panel degradation, technical availability, and a fixed PPA tariff
• How to build operating costs with escalation: fixed O&M, variable O&M, insurance, and management fees
• How CFADS differs from EBITDA and why lenders insist on using CFADS as the DSCR numerator
• How to build a full debt schedule: amortisation, interest, DSCR by year, distribution lock-up tests, and equity distributions
• The difference between DSCR, LLCR, and PLCR — what each measures, when each is used, and typical covenant levels
• What debt sculpting is, why it maximises debt capacity, and how to implement it: Repayment = CFADS / Target DSCR − Interest
• How to calculate equity IRR, Money-on-Money, and project IRR — and how leverage amplifies equity IRR relative to project IRR through the same mechanism as in LBO modelling
• How P50 and P90 generation scenarios are used in practice — sponsors model at P50, lenders size debt at P90
• How to stress-test a project finance model across six scenarios: revenue downside, OPEX overrun, construction delay, interest rate shock, degradation acceleration, and combined stress

Course Structure

ModuleTopic

1. What is Project Finance? — Structure, SPV & Participants

2. The Contract Structure—PPA, EPC, O&M & Concession

3. The Cash Flow Waterfall — Priority, DSRA & Lock-Up

4. Construction Phase — CAPEX Drawdowns, IDC & DSRA Funding

5. Operating Model — 25-Year Revenue & OPEX Build

6. Debt Schedule—Amortization, DSCR & Debt Sculpting

7. Returns Analysis — Equity IRR, MOIC, LLCR & PLCR

8. Sensitivity Analysis — DSCR & IRR Stress Testing

9. Excel Model Guide — Before & After Tabs

10. Common Mistakes & Interview Traps

11. Q&A Bank — 40 Advanced Interview Questions

12. Glossary — 30 Project Finance Terms & Formulas

Case Study — SolarPlus Energy Ltd.

A 200MW ground-mounted solar PV plant in Rajasthan, India financed at a total project cost of $480mm ($2.4mm per MW all-in EPC, development, and contingency). The project is financed with $336mm of senior debt (70%) at a fixed rate of 6.5% over a 20-year amortising tenor, and $144mm of equity (30%). Revenue is fully contracted under a 25-year Power Purchase Agreement at a fixed tariff of $85/MWh, with base-year net generation of 457,300 MWh (27% capacity factor, 97% availability). OPEX is dominated by fixed O&M of $8.5mm per year, escalating at 2.5% annually, plus variable O&M, insurance, and management fees.

The model is built across 27 years in total — two construction years and 25 operating years post-COD. IDC of $14.7mm is capitalised into total debt at COD of $350.7mm. The debt schedule is straight-line over the 20-year tenor with a DSRA of approximately $20.5mm funded at COD. Average DSCR over the debt life is approximately 1.35x, well above the 1.15x minimum covenant. Equity IRR is approximately 13.5% against a project (unlevered) IRR of approximately 9.2% — the 4.3 percentage point amplification comes entirely from leverage.

Excel Model — What's Included

The course includes a fully built Excel workbook with 14 tabs and 593 formulas:

• Project Assumptions tab — every driver in one place: capacity, tariff, capacity factor, degradation, debt terms, OPEX components, tax rate
• Before tabs — four separate student practice sheets (Construction, Op Model, Debt Schedule, Returns) with ??? placeholders and formula hints
• After tabs — four complete answer keys with all formulas, cross-sheet links, and correct sign conventions
• Sensitivity Tables — three tables: DSCR across tariff versus capacity factor; DSCR across tariff versus OPEX multiplier; Equity IRR across debt rate versus gearing — all traffic-light colour coded
• Q&A Bank — 40 questions embedded directly in the model across five categories
• Glossary — 30 project finance terms with definitions and formulas

The Three Critical Ratios — Explained and Modelled

This course teaches all three lender metrics in full and builds each one in the model:

• DSCR — annual cash flow coverage test. Must stay above 1.15x minimum or distributions are locked up. CFADS / (Interest + Principal). Built year by year in the Debt Schedule tab.
• LLCR — forward-looking loan coverage. PV of remaining CFADS over the loan life divided by outstanding debt. Target above 1.30x. Tests whether the loan will be fully repaid.
• PLCR — whole-project coverage. PV of CFADS over the entire 25-year concession divided by outstanding debt. Target above 1.50x. Tests the terminal security position for lenders.

Who This Course Is For

• Investment banking analysts working in infrastructure, power, or project finance teams
• Development finance professionals at DFIs, export credit agencies, or multilateral lenders
• Private equity and infrastructure fund associates evaluating greenfield or brownfield projects
• Corporate finance professionals at energy companies, utilities, or EPC contractors
• MBA students and finance professionals preparing for project finance or infrastructure roles
• Anyone who has completed an LBO modelling course and wants to understand how infrastructure assets are financed

Prerequisites

A solid understanding of the three financial statements is strongly recommended.

Familiarity with LBO modeling concepts—leverage, debt schedules, cash sweeps, and IRR—provides an excellent foundation as the mechanics are closely related.

Completion of the Sutras course on LBO modeling is ideal but not required.

Advanced Excel skills are not assumed — every formula is taught step by step.

Level: Advanced

Format: PDF Study Guide + Excel Model (Before/After)

Q&A Bank: 40 Interview Questions with Full Model Answers

Case Study: SolarPlus Energy Ltd. — 200MW Solar | $480mm | DSCR ~1.35x | Equity IRR ~13.5%