Course 17 of 20 · Hydrogen Desk Academy

Project Finance & Capital Structure

Stage D, Investment case and structuring. Level 8 of 10.

Sizing debt and equity, gearing, cover ratios, construction funding, cost of capital, and turning the contract set into investment case numbers.

123 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 04, Course 15, Course 16

Enrol or enquire See the 123 chapters
How a chapter is delivered

One chapter is one idea taken to the point of use

Each chapter covers one idea to the point where you can use it, and comes two ways: a narrated explainer, and a deep dive audio discussion of around thirty minutes that works the same material at depth.

Self-paced throughout, and the same chapters can be taught as a cohort. Chapters run in order: each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 123 chapters

Open any module for its full chapter list, in teaching order.

M0 From a Signed Contract Set to a Funded Project Ch 1-10
  1. What a Capital Structure Has to Do
  2. Three Seats: Sponsor, Lender and Equity Investor
  3. Why a Hydrogen Plant Is Financed Through a Separate Company
  4. Limited Recourse Means Recourse to the Cash Flow
  5. Corporate Funding and Project Funding Compared
  6. The Working Vocabulary of a Funded Project
  7. What the Contract Alignment Work Already Settled
  8. What the Delivered Cost Stack Already Fixes
  9. The Case That Does Not Close
  10. From Contract Set to Funded Balance Sheet
M1 The Capital Requirement Ch 11-21
  1. Why the Requirement Is Not the Equipment Price
  2. The Owner's Cost Line
  3. Grid Connection and Shared Infrastructure as Funded Cost
  4. Development Cost and Whether It Is Recovered
  5. Contingency and Who Owns It
  6. Interest and Fees Payable Before Any Revenue
  7. Working Capital at Start-Up
  8. Reserves Funded at Completion
  9. Value Added Tax and Duty as a Timing Problem
  10. The Dated Drawdown Schedule
  11. Reading a Sponsor's Capital Budget Critically
M2 The Instruments That Fund a Hydrogen Project Ch 22-32
  1. The Senior Term Facility
  2. Construction Facility and Term Conversion
  3. The Mini-Perm and the Refinancing Assumption
  4. A Bank Club or a Single Lender
  5. Bond Finance and Why It Usually Arrives Late
  6. Mezzanine Debt and Where It Ranks
  7. Shareholder Loans Instead of Share Capital
  8. The Equity Bridge Facility
  9. A Bridge Against an Awarded but Unpaid Grant
  10. Leasing the Electrolyser Rather Than Buying It
  11. Assembling a Tranche Map
M3 Cover Ratios and the Direction They Constrain Ch 33-44
  1. Cash Available for Debt Service
  2. The Debt Service Cover Ratio Period by Period
  3. Minimum and Average Are Different Questions
  4. The Loan Life Cover Ratio
  5. The Project Life Cover Ratio and the Tail
  6. A Tighter Ratio Requirement Reduces the Debt
  7. The Case for a Higher Cover Requirement, and Its Assumptions
  8. The Ratio as a Covenant Rather Than a Sizing Tool
  9. The Lock-Up Test and Who Loses Access to Cash
  10. The Default Level and What Follows It
  11. The Banking Case and Who Owns the Assumptions
  12. Adjustments a Lender Makes to a Sponsor's Forecast
M4 Sizing the Debt Ch 45-55
  1. Two Sizing Constraints and Which One Binds
  2. Gearing as a Share of Funded Cost
  3. Sculpting Repayments to a Target Ratio
  4. Straight Line and Annuity Profiles Compared
  5. Tenor, Offtake Term and the Required Tail
  6. Sizing Against the Take-or-Pay Floor Only
  7. The Uncontracted Volume and How It Is Counted
  8. The Circularity Between Debt Size and Construction Interest
  9. Sizing a Phased Build
  10. A Worked Sizing, From Cash Flow to Debt Amount
  11. The Equity Cheque That Falls Out of It
M5 Funding the Construction Period Ch 56-67
  1. Who Pays First and Why It Matters
  2. The Equity Commitment Letter
  3. Drawing Against Certified Progress
  4. The Cost Overrun and Who Funds It
  5. Standby Equity and Contingent Debt
  6. Capitalising Interest During the Build
  7. Delay and the Cash It Consumes
  8. Liquidated Damages as a Funding Source
  9. The Completion Test a Lender Will Accept
  10. Failing the Completion Test
  11. Insurance the Funding Plan Relies On
  12. Financial Close as a Funding Event
M6 Accounts, Waterfall and Ranking Ch 68-78
  1. The Cash Waterfall in Order
  2. The Accounts the Project Must Keep
  3. The Debt Service Reserve
  4. Maintenance and Stack Replacement Reserves
  5. The Distribution Test
  6. Which Way a Cash Sweep Runs
  7. Sweeps Triggered by Specific Events
  8. Subordination in Practice
  9. The Intercreditor Arrangement
  10. Security Over the Project Company
  11. A Worked Waterfall Over Several Periods
M7 The Cost of Capital Ch 79-89
  1. What the Debt Actually Costs
  2. The Margin Step and What Moves It
  3. Interest Rate Exposure on a Floating Facility
  4. Project Return and Equity Return Are Not the Same
  5. Gearing Raises the Equity Return and the Risk With It
  6. Measures of Return and What Each Hides
  7. Where an Investor's Hurdle Rate Comes From
  8. Building a Weighted Average Cost of Capital
  9. The Discount Rate Argument for a First-of-a-Kind Plant
  10. How Concessional Money Lowers the Blended Cost
  11. Where the Subsidy Belongs in the Numbers
M8 Public, Multilateral and Export Credit Capital Ch 90-99
  1. Why Public Capital Appears in This Sector at All
  2. Multilateral Development Bank Lending
  3. The A and B Loan Structure
  4. National Promotional and Infrastructure Banks
  5. Government Loan Programmes
  6. Export Credit Agency Support and What It Ties
  7. Guarantees, First Loss and Risk Sharing
  8. Political Risk Insurance
  9. State Aid and Subsidy Control as a Funding Constraint
  10. Assembling a Blended Stack
M9 From the Contract Set to Investment Case Numbers Ch 100-111
  1. What a Financial Model Is For
  2. Reading the Offtake Into a Revenue Line
  3. Reading the Power Contract Into a Cost Line
  4. The Load Factor That the Numbers Hinge On
  5. Degradation and Stack Life in the Cash Flow
  6. Tax, Allowances and the Cash They Release
  7. One Variable at a Time
  8. The Switching Point Where the Structure Stops Working
  9. The Offtake Price That a Cover Ratio Requires
  10. Handing a Ratio Requirement Back to the Negotiation
  11. Auditing a Model Before It Is Relied On
  12. The Investment Paper a Committee Will Read
M10 When the Stack Does Not Close Ch 112-123
  1. Recognising a Structure That Will Not Close
  2. More Equity Is Not Always an Answer
  3. Building Smaller Than Planned
  4. Funding From the Balance Sheet Instead
  5. Deferring Rather Than Rejecting
  6. The Limited Recourse Argument for First-of-a-Kind Plant
  7. A Worked Case, Part One: The Contract Set and the Requirement
  8. A Worked Case, Part Two: Sizing and the Gap
  9. A Worked Case, Part Three: Four Routes and the Decision
  10. Refinancing Once the Plant Has a Record
  11. Handing the Remaining Questions Onward
  12. What This Arithmetic Cannot Do

The brochure gives each of these 123 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 17 of twenty

It stands alone, and it is also the entry point to the Hydrogen Desk Academy pathway.

Enrol or enquire See the whole pathway