Financial modeling to determine the economic viability of wind based renewable power projects
Student name: Mr Arunim Datta
Guide: Dr Rajiv Seth
Year of completion: 2011
Host Organisation: TATA Consultancy Services
Supervisor (Host Organisation): Mr Prabir Chetia
Abstract: With the onset of the growing awareness about global warming and talks about sustainable
development, global corporations and governments are laying out more and more stress on
cleaner technologies with the common objective of preserving the environment, the ecology and
the society. The three pillars of sustainability – people, planet and profit which constitute the
triple bottom line is what corporations today are looking into.
Today is the era of upcoming companies which are providing consultancy in the realms of
business sustainability and helping out corporations in going green. Investments are being made
in clean technologies around the world. Renewable energy sector is one such area where a lot of
investments are being made and which is likely to grow at a rapid rate in the future.
Companies are reaching out to these green consultants, and seeking consultation on renewable
power projects which they wish to undertake. While providing solutions to clients regarding
various renewable technologies available, it is imperative to look at the costs and profitability
aspects of the project also. We all know, that until a project looks economically viable it is not a
good and sound investment, unless the project is being done as a social good, as a CSR practice.
To this date, project appraisal of such renewable power projects are done on a one to one basis
and no such tool exists which helps in easily evaluating the financial feasibility of such power
projects. The purpose of this report is to address this problem and coming up with a tool that will
help in financial modeling of wind based renewable power projects in India. The tool developed
should be able to assess the economic feasibility of wind power projects and easily be able to
generate a complete and holistic output in the form of capital investment made, revenue
generation, power generation, cash flow statement, profit & loss account along with a detailed
financial analysis which would clearly bring out the project IRR, NPV and Payback period.
The tool thus developed, would be an MSOffice excel based tool which would be easy to
comprehend by the user. The model, at first would be looking forward to specific parameters
only. For instance, plant details, initial capital costs, O&M costs and basic financials such as debt
equity ratio, DSCR etc. Please note that this is a basic model, and on successful data validation
of the tool, it can be extended out to incorporate more complex variables thereby broadening the
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scope of the tool. Also, the tool can be later on be adjusted to assess other renewable power
projects also such as solar power and bio-gas power plants.
