This intensive hands-on course will provide a comprehensive analysis of issues associated with independent electric power projects ranging from economic analysis of PPA contracts to the financial modelling of projects. In working through the analysis of projects, a mixture of case studies, lectures and analytical exercises will be used to evaluate electricity price forecasts, debt structuring, technology choice, cost of capital and the architecture of financial models.
The course will feature:
- Policy and risk analysis of Merchant Power versus PPA contracts
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Independent power and analysis of technology choice
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Debt structuring and project finance analysis of power projects
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Tariff design in purchase power agreements
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Economic analysis of reasonable tariff levels
- Financial modelling of power projects
Analysis of Independent Power Plants Course Overview
Analysis of Independent Power Plants can involve a variety of economic, financial, policy and legal subjects ranging from assessing the price of power purchase agreements to negotiating covenants, debt size and the repayment structure of a term sheet. By attending this hands-on course you will come away with a comprehensive set of analytical skills as well as an understanding of underlying theory behind the variety of issues that can arise in developing, financing and contracting for Independent Power Projects.
Case studies from different areas of the world will be used to illustrate regulatory policy issues, economic analysis of different technology options, risk premiums associated with power contracts, appropriate hurdle rates and cost of capital and debt capacity.
Analysis of Independent Power Plants Teaching Methodology
The course is delivered using a mixture of hands-on analytical exercises, case studies and lectures in order that participants can learn from each other as well as from the course leader. In addition to development of skills in the course, you will receive a series CD containing a range of relevant models, business cases, articles and documents for further reference.
As a participant in the course, you will create a variety of exercises including a project finance model from A to Z that includes working through economic assumptions, developing alternative construction scenarios, evaluating tariff components and constructing a cash flow waterfall. The case studies are also used to demonstrate how break-even analysis, scenario analysis, tornado diagrams, time series equations and Monte Carlo simulation can be used to analyse risk with project finance models of independent power projects.
In creating analyses, some participants will be particularly interested in adding excel features such as VBA with macros, flexible graphs, alternative circularity resolution, vintage depreciation and indirect functions to their project finance models. To accommodate people who are interested in technical programming subjects, added sessions will be held after at the end of the first and second days of the course.
Who should attend
The course will be of value to professionals in the following areas:
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Corporate Finance / Corporate Treasury
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Capital Markets
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Audit / Product Control / Risk Management / ALM
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Research & Analysis
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Sales & Trading
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Investment Management
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Origination
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Securitisation / Syndication
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Structured Finance
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Money Markets / Repo
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Systems Programming
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Funding
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Government / Agency Funding & Investment
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Regulation / Compliance / Documentation
Day 1
Independent Power in the Context of Alternative Electric Power Policy
- Definition and History of Independent Power
- Review of key terms
- Historical evolution of IPP’s and PPA Contracts
- Current areas of IPP activity
- IPP’s in the Context of Alternative Electricity Policy Options
- State-owned power utilities
- Vertically owned regulated systems
- Single Buyer and power contracts
- Merchant Power and retail competition
- Arguments For and Against Different Policies
- State owned systems and power outages, inefficient plants, high losses
- Vertically owned systems, regulatory costs, nuclear power in the U.S.
- Merchant power systems, California crisis, merchant meltdown and price increases
- Purchase power contracts, Philippines, Pakistan, Indonesia
Case studies of Philippines
- Context of Power Shortages
- Structure of PPA Contracts
- Selected Plant Case Studies
- Postscript
Day 2
Project Finance Terms and IPP Transaction Structure
- Overview of Selected Project Finance Terminology
- Importance of Phases in Risk Analysis, Accounting and Modelling Project Finance
- Role of Contracts and Integration of Contracts in Project Finance
- Risk Analysis in Project Finance
- Theory of Using Project Finance in Investment Decisions versus Traditional Project Financial Analysis using NPV and WACC
- Use of Debt Capacity to Measure Risk
- Lessons on Benefits and Problems in Project Finance from Non-Electric Case Studies (Ras Laffan, Eurotunnel, Eurodisney)
- Project Finance Model PPA versus Merchant Plants
- Importance of Cost of Capital in Electricity Generation
- Construction of Model with Alternative Plant Inputs
- Effect of Cost of Capital on Technology Choice
- Effect of PPA on Capital Structure of Off-taker
- Effect of PPA on Cost of Capital and Debt Capacity in Project Finance Model
- Cost of PPA with and without Capital Structure Penalty
- Effect of PPA on Technology Choice
- Debt Structure of IPP with and without PPA Contract
- Case Study: Evaluation of Alternative Possible Contract Structures
- Architecture of Project Finance Models with Comprehensive Debt Structure
- Programming Different Phases in Project Finance Model
- Programming Sources and uses of funds statement during the construction period
- Computation of Cash Flow, Waterfall, Tax Payments and Financial Statements
- Equity IRR with Different Debt Structure in PPA Case – Level versus Annuity versus Debt Sculpting
- Computation of Debt Capacity and IRR with Alternative Repayment Structures – Direct and Indirect Effect
- Nuances in Structuring Debt and Modelling Projects
- Problems with IRR and Re-investment of Dividends
- Cash Flow Sweeps Merchant Projects
- Debt Service Reserves and Cash Trap Covenants
- Alternative measurements of DSCR
- PPA and tariff design
- Theory and Practice of PPA Pricing – A,B,C, and D components for coverage of fuel cost, variable O&M cost, fixed O&M cost and capital recovery
- Capacity charge in PPA agreement versus capacity price in market model
- Tolling versus PPA Prices
- Case Study of computing and evaluating PPA Tariffs: Enron Dahbol
- Project Finance Model with PPA components
- Optimisation
Day 3
Project Finance Terms and IPP Transaction Structure(continued)
- Economic Analysis of PPA Prices Relative to Merchant Prices
- Review of Merchant Prices in Different Markets
- Simulation of Short-run and Long-run Marginal Costs
- Carrying charge rates for PPA projects versus merchant projects
- Profitability of merchant plants and computation of implied capital capacity payment per kW
- Non-Price Provisions in PPA Agreements
- Delay Provisions and Liquidated Damages
- Availability Tests and Penalties
- Termination Clauses and Compensation
- Political Risk Insurance
- Other
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Documents and Finance Sources
- Coordination of PPA with Other EPC, O&M and Loan Agreement
- Default and other Provisions in Loan Agreements
- Equity support agreement
- Interest rate swaps in project finance
- Bonds versus Commercial Banks
- Insurance and International Financial Institutions
- Credit Enhancements and Security
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Ed Bodmer
Edward Bodmer has created innovative forward pricing, productivity measurement and investment valuation software for consulting clients throughout the United States. He has taught energy economics and finance throughout the world, and formulated significant government policy and corporate strategy in the U.S.
Mr. Bodmer's consulting clients include investment banks, commercial banks, research institutions and government agencies on a wide variety of complex valuation and advisory matters. He has constructed a unique framework for electricity price forecasting and valuation using production cost modelling techniques combined with option price theory and Monte Carlo simulation.
Mr. Bodmer is also an adjunct professor at leading University where he teaches courses in microeconomics. Along with his practical experience that covers a multitude of major advisory projects, he has taught specialised courses in financial modelling, electricity pricing, option valuation, mergers and acquisitions and contracting to investment banks, commercial banks, industrial corporations and electric utility companies.
Mr. Bodmer was formerly Vice President at the First National Bank of Chicago where he directed analysis of energy loans and also created financial modelling techniques used in advisory projects. He has used the models in providing expert testimony on subjects ranging from capital structure to investments in multi-billion dollar nuclear plants to complex valuation of new investments.
Mr. Bodmer received an MBA degree specialising in econometrics (with honours) from the University of Chicago and a BS degree in finance from the University of Illinois (with highest university honours). He has written many articles and is in the process of completing a textbook on valuation of electricity assets.
Courses run by this instructor
Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.
10-13 Jul 2012 (London, UK)
This intensive four-day course will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
Each session focuses on a particular aspect of modelling and applies it to the case model.
11-14 Sep 2012 (Singapore, Singapore)
This intensive four-day Financial Modelling in Excel for the Power Sector course will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques. Each session focuses on a particular aspect of modelling and applies it to the case model.
26-28 Mar 2012 (Hong Kong, Hong Kong)
24-26 Sep 2012 (Hong Kong, Hong Kong)
This Fundamentals of Developing an Independent Power Project course will provide you with a greater understanding of: 1. The necessary conditions (legal, regulatory, market/commercial, technical, financial) for the successful development of IPPs including renewable energy projects; 2. The risk management tools and
techniques available to maximise value and to understand, calculate and manage risk in IPPs including
renewable energy projects; 3. The requirements of lenders necessary to be met to secure project financing for IPPs including renewable energy projects.
22-25 May 2012 (New York, United States)
This intensive four-day will shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques. Each session focuses on a particular aspect of modelling and applies it to the case model.
29-31 May 2012 (Paris, France)
19-21 Nov 2012 (Paris, France)
This intensive three day hands-on course will provide a
comprehensive analysis of issues associated with independent electric power projects ranging from economic analysis of PPA contracts to financial modelling of projects. In working through analysis of projects, a mixture of case studies, lectures and analytical exercise will be used to evaluate electricity price forecasts, debt structuring, technology choice, cost of capital, and architecture of financial models.
20-21 Aug 2012 (Singapore, Singapore)
This Traded Electricity Markets course is a comprehensive and systematic introduction to traded electricity markets. The course will detail why and how electricity – the most challenging of all commodities – presents complexities more acute than in other traded market sectors, and how to understand, model and manage these demanding conditions. Case studies will illustrate how companies have resolved these issues, including Centrica, one of very few companies to have made a successful entry into this most difficult of markets.
25-26 Jun 2012 (London, UK)
10-11 Dec 2012 (London, UK)
This Traded Electricity Markets course is a comprehensive and systematic introduction to traded electricity markets. The course will detail why and how electricity – the most challenging of all commodities – presents complexities more acute than in other traded market sectors, and how to understand, model and manage these demanding conditions.
21-24 Aug 2012 (Lagos, Nigeria)
Many business models fail due to poor planning,
haphazard development, inherent errors and lack
the ability to provide clear financial analysis. This course shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
8-11 May 2012 (Rio de Janeiro, Brazil)
Many business models fail due to poor planning, haphazard development, inherent errors and lack the ability to provide clear financial analysis. This course shows delegates how to build a power model from a skeleton model incorporating a range of Excel and applied financial techniques.
16-18 Jul 2012 (Singapore, Singapore)
This intensive three day hands-on course will provide a
comprehensive analysis of issues associated with independent electric power projects ranging from economic analysis of PPA contracts to financial modelling of projects. In working through analysis of projects, a mixture of case studies, lectures and analytical exercise will be used to evaluate electricity price forecasts, debt structuring, technology choice, cost of capital, and architecture of financial models.
This course has now expired please email us to find out when the course will next be running.