Renewables Investment Assessment
Context
A mid-market firm sought to improve its operational margin and hedge against volatile energy costs by investing in in-house energy generation. Leadership sought to evaluate a capital expenditure program into a distributed energy resource (DER) asset. The mandate was to conduct a rigorous appraisal of the project's financial viability and its potential for return generation on a risk-adjusted basis, moving beyond preliminary analyses to a full-spectrum investment evaluation.
Solution
The engagement involved a full-spectrum capital budgeting and allocation analysis to formulate a data-driven recommendation on capital deployment. A dynamic discounted cash flow (DCF) model was engineered to assess the project's return profile, incorporating multi-variate sensitivity and scenario modeling. The financial model's compelling return profile prompted a strategic upsizing of the project's initially planned capacity. The advisory scope was subsequently expanded to include support on the commercial negotiations, securing the scaled-up asset under favorable terms while conducting granular due diligence on Tier-1 component suppliers to mitigate operational risk.
Outcomes
Secured client approval for a larger capital allocation than initially planned, based on a compelling, data-driven investment recommendation.
Demonstrated a robust return profile with a projected 34% IRR and a 1.9x Cash-on-Cash multiple over a 5-year investment horizon.
Forecasted and achieved rapid payback period of just 3.3 years, ensuring a swift return of the initial capital investment and de-risking the project.
Guaranteed significant long-term operational benefits, including an estimated ~80% reduction in utilities expenses and an enhanced sustainability profile.
Deliverables
