Financial models

Last modified: 19 Dec 2024

A financial model is a mathematical tool that consists of formulas and assumptions to represent a company's operations in the past, present, and forecasted future. Financial models are used for decision-making and financial analysis.

Example

Financial models can be used to

estimate the costs and project the profits of a proposed new project
model feed-in tariffs, investment subsidies, current power purchase agreements, or market price structures

In mc Assetpilot you create all of your organization’s financial models on the organization level. In the organization settings you can view, create, and maintain the financial models for your entire organization.

Financial models and forecasts

A financial model on the organization level is some sort of a basic framework for the forecasts you create on the asset levels. It does not contain any specific values, but only variables and placeholder parameters. The real data, that is individually different to your specific asset, is only entered later when you create forecasts. This eliminates the need for multiple spreadsheets for each asset, for example.

The basic workflow for financial models and forecasts is as follows:

Create a financial model

Prerequisites for the whole process

You are the organization owner or an admin.

0) Enter basic data

Steps

Navigate to the organization level and select Settings > Financial models.
Select + New financial model.
Give the model and Name. You can also add a Description if desired.
Enter a Currency.

Caution

Be aware of any secondary currencies that are assigned to the asset levels the financial model should be used at. See also Currencies.

Select Proceed to parameters.

Example

Create the financial model:

Energy sales financial model with the currency EUR

1) Define types of project phases

To build your financial model, you must specify types of project phases that represent the phases of a project's financial lifetime. Create phases specific to your company's standards. You only add specific dates to the phase at a later stage when you create forecasts. See Forecasts.

Steps

In the Phases area, select +New phase.
Enter a phase Name and add a Description if desired.
Select Add. The phase will be added to your list of phases.

Further actions

Add additional phases in the same manner if needed.
Delete or Edit your phases with the respective icons.

Example

Create the phases:

Planning phase
Construction phase
Operation phase

2) Define types of parameters

The next step in creating a financial model is to create the parameters you will need. Each parameter you create must have a unique name. The type, parameter group, and unit are also mandatory. You only add specific values to each parameter at a later stage when you create forecasts. See Forecasts.

Learn more about the different parameter types you can choose from

The parameter type you choose here, will affect the input field(s) that appear later when entering specific values to the parameters while creating a forecast.

Parameter type	Description	📗 Examples
Number	When your forecast is created, the parameter values will be represented by a single value for the asset's entire lifetime.	Asset size in MW: will not change from month to month or year to year Construction costs per MW: only needed once
Number
Monthly values for one year	When your forecast is created, the parameter values will be represented in months over one year. For changes that take place over a year and which you want to view in months.	Annual PV yield forecast in MWh: yield in summer is higher than in winter
Monthly values for one year
Monthly values for lifetime	When your forecast is created, the parameter values will be represented in months throughout the entire lifetime (the default value is 30 years). For changes that take place throughout an entire lifetime and which you want to view in months.	For a PV system that operates for 30 years, you can predict electricity costs per month
Monthly values for lifetime
Annual values for lifetime	When your forecast is created, the parameter values will be represented in years throughout the entire lifetime (the default value is 30 years). For changes that take place throughout an entire lifetime and which you want to view in years.	For a PV system that runs for 30 years, you can predict electricity costs per year
Annual values for lifetime

Learn more about the input groups you can create

You must organize parameters into input groups that you define according to your needs. Input groups themselves are not used for calculations: They help you find and enter parameters into your calculations. They also structure the process where you add specific data to the parameters later in the forecast as these input fields will be grouped by the input groups you create here.

📗Examples Here are some examples of how you can organize your parameters:
Input group	Grouped parameters
Grid feed-in	Feed-in revenue Cost per kWp
System parameters	Cost in € Size in MWp Area in m² Build time
Operations and maintenance	Different maintenance costs

Learn more about the parameter units you can enter

As a user, you define the units for each parameter. You can enter any unit of your choice.

Examples

Possible units you can use: €, $, m2, kW, MW, kWh, and MWh

Caution

When defining currency units, be aware of any secondary currencies that are assigned to the asset levels the financial model should be used at. See also Currencies.

Steps

In the Parameters area, select +New parameter.
Enter a parameter Name and add a Description if desired.
Select parameter Type, Input group, and enter a Unit. To learn more about these data fields, see descriptions above.
Select Add. The parameter will be added to your list of parameters.

Further actions

Add additional parameters in the same manner if needed.
Delete or Edit your parameters with the respective icons.

Example

Create the parameters:

Surface area: m2
Yield per square meter: MWh/m2
Power purchase agreement (PPA): €/MWh

3) Define intermediate calculation formulas

An intermediate calculation is a formula that may be used as a basis for the other calculations, but is not assigned to a cashflow category, and as such is not part of the forecast results on its own. It is an optional step in creating a calculation formula and can be later used as a variable in the latter.

Steps

In the Intermediate calculations area, select +New intermediate calculation.
Enter an intermediate calculation Name and add a Description if desired.
For the Calculation rule, enter a formula.
- Type a Hashtag # to display the available parameters you created before.
- Use the following standard operators:
  - Plus +
  - Minus -
  - Multiplication *
  - Division /
  - Round parentheses ( ) may also be used
Select Add. The intermediate calculation will be added to your list of intermediate calculations.

Example

Define the intermediate calculation formula:

System size in MW =
Surface area * Yield per square meter

Further actions

Add additional intermediate calculations in the same manner if needed.
Delete or Edit your intermediate calculations with the respective icons.

4) Define calculation formulas

Calculations are the final formulas that will be used to create the financial model and forecasts. They are assigned to a cashflow category and can be carried out in different project phases.

Steps

In the Calculations area, select +New calculation.
Enter a calculation Name and add a Description if desired.
For the Calculation rule, enter a formula.
- Type a Hashtag # to display the available parameters and intermediate calculations you created before.
- Use the following standard operators:
  - Plus +
  - Minus -
  - Multiplication *
  - Division /
  - Round parentheses ( ) may also be used
Select a cashflow Category. The dropdown lists the categories to which bank transactions have been mapped, for example energy sales, capital expenses, etc.
For the Frequency select an interval at which the calculation should be performed.
- This will depend on the type of calculation you are creating. In the example, we are calculating monthly revenue.
- If you carry out a calculation Once, it will be executed at the start date of the selected project phase, or at the beginning of the project lifetime if no project phase is selected.

Example

Define the calculation formula:

Revenue in € in the cashflow category Energy sales with a monthly calculation frequency while in operation phase

If desired, select the phase in which you want the calculation to be Active in.
- The calculation will only consider the period between the start and end dates of the phase. In the example, it is active in the operation phase, in other words, when the asset is up and running and generating revenue.
Select Add. The calculation will be added to your list of calculations.

Further actions

Add additional calculations in the same manner if needed.
Delete or Edit your calculations with the respective icons.

5) Finish financial modelling

Steps

When you are done with defining all of the above, select Finish in the upper right corner to finish your financial model. The financial model will be added to your list of financial models.

Note

If your new financial model does not appear on your dashboard, try reloading the page in your browser or logging out and back in again.

Further actions

You can now create forecasts for your asset using the model you created. See Forecasts.

Duplicate a financial model

You can duplicate a financial model if you want to change specific parameters.

Example

Duplicate a financial model if you want to use an existing financial model in a forecast for an asset with a different currency. Therefore change all currency settings in the duplicated financial model.

Steps

Navigate to the organization level and select Settings > Financial models.
Select the Options menu for the financial model you want to duplicate > Duplicate.
The financial model is duplicated in the list.
In the duplicated financial model, select the Options menu > Edit parameters and edit the necessary parameters. Or select Edit basic information.

Delete a financial model

Note

You can not delete financial models that are in use in a forecast.

Steps

Navigate to the organization level and select Settings > Financial models.
Select the Options menu for the financial model you want to delete > Delete.