Article
Before a plant earns anything, the model has to answer three questions: how much money, from whom, and when.
Riverbend's R650m capital cost is drawn over 18 months, from financial close on 1 September 2027 to COD on 1 March 2029, on an S-curve peaking at R99.8m a month.
Every draw is funded 25% equity and 75% debt, pro rata. Then the financing costs stack up:
| Interest on drawn debt at 11.04%, capitalised to COD | R41.8m |
|---|---|
| Arrangement (1.5%) and commitment (0.75% on the undrawn balance) fees | R11.7m |
| Six-month DSRA, cash-funded at COD | R36.3m |
Sources and uses at COD:
Two mechanics sit under those numbers.
The first is circular. IDC and fees depend on the debt, and the debt depends on the cost it funds. The engine solves the loop by iteration; the workbook carries the solved result, so Excel shows no circular reference.
The second is timing. The returns are dated from financial close, month by month as the money goes in. Book all of the spend at COD instead, and the equity IRR reads 24.9% rather than 21.6%; project IRR 16.5% rather than 14.6%. Those 3.3 points are a return the equity never earns: its money goes in, on average, about 9 months before COD.
Next: three tests, one loan.
Riverbend Solar is an illustrative case study: a fictional deal with no real counterparty.