Decision Support Tool for Offshore Wind Parks in the Context of Project Financing

Offshore wind energy has developed rapidly in the last 20 years. However, the development of the technical aspects has been in the foreground for most of the time. Due to high costs of more than billion the majority of the realized projects has been implemented within the framework of corporate finance. Further goals concerning the expansion of renewable energies have been set by governments in various countries. In this context the importance of the economic viability of alternative financing concepts like project financing is becoming increasingly evident. This paper provides a decision support tool (DST) for analyzing and evaluating the project value of offshore wind energy projects within the framework of project financing. The DST is based on a cash-flow model in which the project value is calculated by applying the discounted cash-flow (DCF) method. A Monte Carlo-simulation is used to take the project risks into consideration. In the course of that the cash-flow-at-risk (CFaR), an adjustment of the value-at-risk (VaR) approach, is used to quantify the influence of risk factors and the effects on the project value. In order to be able to consider the requirements of debt capital providers in the context of project financing key figures like the debt service cover ratio (DSCR) are calculated. Therefore, a data base that supports decisions of many project participants is provided. Finally, a case study for a fictitious offshore wind park in the German North Sea is conducted. It is shown that in the framework of the existing feed-in tariff in Germany an offshore wind park project generates adequate returns for investors and provides sufficient debt service coverage.