Enedeal financial engine methodology

How do we calculate LCOE?

LCOE is the discounted net capex plus operating costs divided by discounted PV energy output. Output is discounted at the same rate (WACC) as costs.

LCOE = [ CAPEX_net + Σ_{t=1..N} (OPEX_t + Tax_t) / (1 + WACC)^t ] ÷ Σ_{t=1..N} (E_PV,t / 1000) / (1 + WACC)^t

CAPEX_net is capex after grants. Annual costs include O&M, insurance and income tax. Energy discharged from storage is not new generation, only a shift in time, so it does not increase the denominator. LCOE is not reported for ESCO, because capex sits with the operator.

How do we calculate IRR and NPV?

NPV is the sum of equity cash flows discounted at WACC, with the equity contribution in year 0. IRR is the rate at which the NPV of those flows equals zero.

NPV = Σ_{t=0..N} FCF_equity,t / (1 + WACC)^t,   FCF_equity,0 = −Equity
IRR: Σ_{t=0..N} CF_t / (1 + IRR)^t = 0
FCF_equity,t = EBITDA_t − Tax_t − DebtService_t − Lease_t − Replacement_t
FCF_project,t = EBITDA_t − CIT × max(0, EBITDA_t − Depreciation_t) − Replacement_t
Payback = (k − 1) + |Cum_{k−1}| ÷ FCF_k,   k = first year with Cum_k ≥ 0

Equity IRR uses flows after tax, debt service, lease payments and component replacements. Project IRR uses flows independent of the financing structure, with tax on EBITDA less depreciation. IRR is solved by bisection: if flows never change sign, the engine returns no result instead of an approximation. Payback uses linear interpolation in the break-even year; the discounted variant applies the same WACC. Tax losses are carried forward.

How do we calculate DSCR and why the 1.20 threshold?

DSCR is cash flow available for debt service (EBITDA after tax) divided by interest plus principal in a given year. 1.20 is the minimum DSCR below which the engine marks project finance as unavailable.

DSCR_t = CFADS_t ÷ (Interest_t + Principal_t),   CFADS_t = EBITDA_t − Tax_t

We report minimum and average DSCR over the years with debt service. Debt is repaid in annuity instalments and the last instalment closes the balance. When minimum DSCR drops below 1.20, project finance is marked unavailable in the comparison with the value shown, and the result carries a warning.

How do cash, leasing, project finance and ESCO differ?

All four models run on identical technical and market parameters — only the financing structure differs: equity, debt service and tax treatment.

All-cash purchase

The investor funds the full net capex with equity. Capex is depreciated for tax; there is no debt service.

Operating lease

Operating lease: down payment 10% of net capex, annuity instalment at 7.5% over 7 years, buyout of 1% in the final lease year. Instalments are tax-deductible costs; the investor books no depreciation.

Project finance

Debt of 70% of net capex, 6.5% interest, 12-year tenor, annuity repayment. The model is unavailable when minimum DSCR is below 1.20.

ESCO / OPEX model

Capex and maintenance sit with the operator; the investor gives up 30% of savings and revenue. With no equity at risk, IRR and LCOE are not defined, and the comparison ignores the loss of asset ownership.

Where do market benchmarks come from?

Yield, PV and BESS CAPEX, CIT and inflation for each market come from the benchmark table in the Enedeal database. For each country we show the data status (initial estimate or verified), the source of every value and the date.

What assumptions do we use?

The calculator starts from the defaults below; country-specific parameters (yield, capex, CIT, inflation) come from the market benchmark. Every value can be changed in the calculator.

The calculations are indicative and based on market benchmarks. They do not constitute investment advice or an offer. A precise analysis requires project data.