Example 1

FINANCE KPI BASE IMPROVEMENT CHANGE
Construction 142.46mUSD 138.66mUSD -3.8mUSD
IDC 3.8mUSD 2.56mUSD -1.24mUSD
Total,CAPEX 146.26mUSD 141.22mUSD -5.04mUSD
IRR 15.73% 17.12% 1.39%
EXAMPLE:

60MW wind farm – MEM project team in contracting phase to improve project plan commercial contracting and payment milestones

SUCCESS CRITERIA:

MEM team improved levered IRR to above 16% requirement

DRIVES:

Optimised crane sequencing, negotiate EPC cash flows from front end to back end loading

 

Example 2

FINANCE KPI BASE REGRESSION CHANGE
1st year availability 97% 76% -21%
1st year revenues USD 22.6m USD 17.7m USD -4.9m
IRR 14.39% 12.78% -1.61%
EXAMPLE:

50MW wind farm affected by quality issues during first year of operations (engineering and construction defects in foundations). Investors did not have: callable securities (bonds from Chinese EPC contractor held by Chinese state owned bank). Experienced Owner’s Engineer during design review and on site during construction.

RESULT:

USE 4.9m loss of revenue (reduction in IRP of 1.61%), not including cost of repairs which were paid by shareholders.

Note: above reflects loss of revenue and does not include cost of repairs, which were paid 100% by project investors.

 

Example 3

FINANCE KPI BASE REGRESSION CHANGE
1st year availability 100% 75% 25%
1st year revenues USD 15.41m USD 12.81m USD 2.6m
IRR 13.28% 13.16% -0.12%
EXAMPLE:

50MW phase one of a 220MW solar farm (totalling four construction phases over a two year period) affected by design defects (power quality issues due to low quality inverters).

RESULT:

Three month delay grid interconnect while power quality issues were rectified. This resulted in a loss of USD 2.6m loss of revenue (reduction in IRR 2.23%), not including USD 550k cost to shareholder to correct the quality problem.