Free project finance tool

DSCR and indicative debt capacity calculator.

Use annual CFADS, your target coverage ratio, interest rate and tenor to get a quick sense of how much level debt service the project could carry.

How the screen gets from cash flow to debt

The relationships below show the calculation in the same order a first-pass debt screen is usually read: cash available, affordable debt service, principal capacity and the coverage on the debt amount you propose.

1 · Cash availableCFADS = Contracted revenue − Operating costs − Other pre-debt deductions
2 · Affordable debt service
Maximum annual debt service=CFADSTarget DSCR
At a 1.30x target, 1.30 of CFADS supports 1.00 of annual debt service.
3 · Principal capacityDebt capacity = PV(Level annual debt service, interest rate, tenor)This converts the affordable annual debt service into the principal amount it can support today.
4 · Proposed-debt coverage
DSCR=CFADSProposed annual debt service
  • It assumes one annual period and level debt service.
  • It does not sculpt debt to a changing CFADS profile.
  • It does not model construction draws, IDC, reserve accounts, tax shields, fees, covenants or refinancing.
Use this for an early debt screen. A financing case should still be built from the project’s period cash flows, contract terms, lender assumptions, reserves and downside cases.

Go deeper

Coverage is only useful when you know what sits inside CFADS.

For a real renewable energy financing, the next step is to build the period-by-period cash flow and check the weakest year, not just an annual average. Generation, tariff escalation, operating costs, tax, reserves and payment delays can all change the debt service the project can safely carry.

Read the CFADS and DSCR guide or inspect the public solar IPP model.

Use your actual model

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Send the workbook, financing assumptions and the decision you are working towards.

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