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Financial Model

The aim of this tool is to assist both parties, an owner -the buyer- and a technology provider -the seller- to find a sweet point for a win-win deal. The model is based on the widely used net-present value (NPV) financial criterion and asks the user for the basic elements of the financial proposal, such as the cost, the advance payment and the duration of any financial obligations, e.g. installments. The model asks also for the weighted-average cost of capital of both the buyer and the seller, as it will be used as the discount factor in the NPV calculation.

Besides the financial input, the user is requested to provide technical data, such as the installed power, cost of fuel, consumption, etc. as the model estimates the emitted carbon in CO2 terms and its price. As there is no price for CO2 emissions, a price arbitrary provided by the user is considered. The model needs this price as a split of savings is envisaged. Should no split be considered, e.g. all carbon benefits are for the owner, then in the respected cell the value of 100% should be inserted. However, modern shared economy models imply a split of savings or benefits between the buyer and the seller of technologies, as this sharing motivates both sides to achieve higher decarbonization results.

The model yields the NPV for both the owner and the technology provider. The NPV should be positive for both parties for a win-win business case.

Moreover, sensitivity analysis is performed for the ratio of NPV_owner/NPV_tech_provider for the following parameters: advance payment, carbon price, fuel price, savings. The higher the ratio the ‘sweeter’ the deal for both sides. Cells in red imply negative NPV for one party, so these deals are not mutually win-win. The tables of the sensitivity analysis show the regions of win-win results given the input provided.

Please contact the team for a detailed explanation of the model!