We're now going to spend some time talking through the assumptions and getting used to them so that we can use them later on. Individual tabs, we're gonna start a wind farm here.

And firstly we've got some macroeconomic information.

So we've got an inflation rate.

Because renewable projects are very long, and you can see this goes on for something like 20 years inflation is a major force.

And so some models that you may be used to from non renewables may ignore inflation, but renewable projects really do need to take those into mind because they're so long term.

We've then got a section which will drive a lot of flags as we call them.

When we've got very complex timing, like in this model, flags will be very useful for us and they'll be driven from these years.

So for example, we're later going to build a flag to say when CapEx is happening and that flag will be driven from here, we'll have another flag saying, okay, operations have started and that will be driven from here.

Moving down, you can see the next section is all about capacity.

It's about figuring out how much capacity we're building when we're building it.

And it's also got some information about days, months, years outage and that kind of thing. They'll be useful for a variety of purposes.

We are going to sell energy to two off-takers and these will have a PPA with us.

They're going to commit to buying and we are going to commit to selling and that's going to de-risk the project a great deal.

And as part of that, they're also going to commit to covering some of our costs that you can see down here.

Any electricity that we've got left after selling to our off takers, we're going to sell to this nebulous group here, industrial merchant.

Okay, so a wider group of businesses.

And it's important that we keep these separate from each other because they may have different pricing.

They could have different slices of capacity that they're going to be buying.

And like I said, in renewables, it's typical that the off-takers would cover some of our costs, if not all of them.

And we've got that down here.

So they're going to be covering all of our debt service.

Lucky us, they're not gonna be covering all of our fixed costs.

It's normal to have something like 50 to 70%.

And so we've put about 60% here.

And so we do have some risk in the project.

It is possible to make a loss.

We can't just throw all of our costs the way of our off-takers that would perhaps be a bit too lucky for us.

And down here you can see what I mentioned earlier, which is the different pricing.

The pricing would be negotiated.

And so it would be down to the kind of power play between us and our customers.

We then have very simplified costs in this model.

If you were to drive a real renewables model, this would probably expand into all sorts of costs, maintenance, fuel, consultancy, auditing, accountancy, all sorts of costs.

And they would have detailed drivers variable and fixed.

Now we've simplified that because the focus, focus of the model is elsewhere.

Down here you can see that we've got some phasing of CapEx, so we're not gonna build it all in one go.

And the CapEx is also complicated by the fact that we're going to be buying our equipment from abroad.

Our project appears to be in UK and we're going to be buying our equipment from the US and so we're subject to another macroeconomic force fx, which is very tricky.

And that means we need an FX rate, which we need to forecast into the future.

Thankfully, because all of our CapEx is in the near term, okay, we don't have to forecast an FX for 20 years time, that that would be perhaps very inaccurate.

Down here we've got tax and tax is gonna get quite complicated, and that's because of the NOLs and thin cap rules.

So we'll come to that later.

It is worth mentioning that if tax were significant to any project you are working on, I would expect you to take specialist advice because tax is moving all the time and is very, very specific to the country and the area that you're in.

And so I'd always recommend that you get some advice if it's very significant to your project.

Okay, down here you can see some cash flows that will be not captured by the P&L our working capital.

This would represent our receivables, payables, that kind of thing.

It could also be things like fuel. Okay? But we've simplified here. Down here you can see debt and we've got quite a complex view.

We've got two tranches of debt.

What's going to happen is there is a repayment schedule and you can see that there are differing expectations around when you get repaid.

Senior is gonna be wanting to be repaid a bit before junior.

You can see also we've got different rates and we've modeled this as a variable rate around something like SOFR.

You can see that the senior debt is a lot cheaper than the junior debt, which makes sense given the risk profile.

And then down here you can see that we've got these targets.

Okay? So we've got these targets which will lead to those breaches that we looked at a bit earlier.

They're going to be a critical test for the success of our financing package and project.

Now we've then got dividends and we've got the distributions to the shareholders.

We're going to assume that all cash that's available, we're going to pay out.

We could toggle that, but we've got it a hundred percent.

We're only gonna do that if the lenders feel safe.

So they've negotiated a covenant. That means we can't just pay out all cash.

There needs to be a quite a comfort level for the lenders, for them to be happy, for us to pay out a dividend.

And then that dividend is going to represent return to the shareholders.

And there is a hurdle rate of 12% for this to be seen as a success.

And that hurdle rate, along with the breaches, will lead to our output tables.

What we're going to try and find is the sweet spot where the lenders from a P90 point of view, so, So they're very conservative, okay? The lenders would be happy because there would be no breaches.

And then we would be happy from a P50 point of view, the shareholders with the return.

And so it's almost like a combination of these two tables that will eventually be analyzing.