Feasibility Study Example

Illustrative Project: 25 MW Solar PV Development

Project: 25 MW solar photovoltaic facility
Location: Southern Spain
Total project cost: $25 million
Development stage: Late-stage development
Revenue model: Long-term power purchase agreement (PPA)
Capital requirement: Project financing for construction and development
Illustrative operating life: 25 years

The figures and assumptions below are hypothetical and are provided only to demonstrate the structure of a feasibility study.

Executive Summary

The proposed project is a 25 MW solar photovoltaic facility in southern Spain. Total project cost is estimated at $25 million, including development, construction, and associated project costs.

The project is expected to generate revenue through a long-term PPA with an identified commercial offtaker. The technical concept is based on established solar PV technology, with construction expected to take approximately 14 months.

The financial assessment would evaluate projected electricity production, contracted pricing, operating costs, capital expenditure, and debt-service capacity under both base-case and downside assumptions.

Item	Illustrative Example
Project type	25 MW solar PV facility
Location	Southern Spain
Total capex	$25 million
Revenue source	Long-term PPA
Construction period	Approximately 14 months
Operating period	Approximately 25 years

The executive summary gives the lender the basic project, commercial, cost, and financial picture before the supporting sections.

1. Market Feasibility

The market section establishes who will pay for the project’s output and on what commercial basis.

Example

The project has a proposed 15-year PPA with an industrial electricity buyer. The agreement establishes a contracted price per MWh for electricity delivered under the contract.

The feasibility study would therefore identify:

• the proposed offtaker;
• the contracted pricing mechanism;
• expected electricity volume;
• the duration of the PPA;
• relevant competing generation sources; and
• the basis for any projected merchant or contracted revenue.

Illustrative finding

Market conclusion: The project has an identified commercial buyer and a defined revenue mechanism through the proposed PPA. The financial assessment therefore uses contracted electricity pricing as its principal revenue assumption.

The purpose is not simply to demonstrate that electricity demand exists. The study needs to establish the commercial basis from which the project’s revenue assumptions are derived.

2. Technical Feasibility

The technical section establishes what is being built and whether the proposed project can be constructed and operated as described.

Example

The proposed facility consists of a 25 MW solar PV installation, including photovoltaic modules, inverters, mounting systems, electrical infrastructure, grid connection equipment, and associated site works.

The preliminary engineering assessment estimates:

• Installed capacity: 25 MW
• Construction period: approximately 14 months
• Estimated construction cost: $21 million
• Development and other project costs: $4 million
• Total estimated project cost: $25 million

The technical assessment would also address the proposed site, design basis, technology, expected generation, operating costs, construction schedule, and relevant site studies.

Illustrative finding

Technical conclusion: The proposed technology is established and the preliminary design provides a basis for estimating construction cost, operating requirements, and expected generation. Final engineering and site-related assessments would be required before construction.

The technical section provides the basis for the project’s cost and operating assumptions. Those assumptions subsequently feed into the financial assessment.

3. Financial Feasibility

The financial section translates the market and technical assumptions into a projected financial model.

Example

The illustrative financial model assumes:

• 25 MW installed capacity;
• projected annual electricity generation based on the site’s solar resource;
• contracted PPA pricing;
• operating and maintenance expenses;
• $25 million total project cost; and
• a proposed project-finance debt structure.

For illustration, assume the project generates approximately 42,000 MWh in its first full operating year and receives an average contracted price of $65/MWh.

That would produce approximately:

42,000 MWh × $65/MWh = $2.73 million of annual gross revenue

Operating expenses and other project costs would then be deducted to determine available project cash flow.

The financial assessment would also examine how projected cash flow changes under different assumptions, including lower generation, lower revenue, higher operating costs, or higher capital costs.

Illustrative finding

Financial conclusion: Under the illustrative base-case assumptions, the project produces a defined revenue stream from the PPA and sufficient projected cash flow to permit assessment of debt-service capacity. The final financing structure would depend on the completed financial model and applicable lender requirements.

A feasibility study should therefore show more than project profitability. It needs to demonstrate how the underlying revenue and cost assumptions translate into cash flow and debt-service capacity. The distinction between economic viability and financeability is central to the feasibility assessment.

4. Legal / Regulatory Feasibility

The legal and regulatory section establishes whether the project has the legal rights, approvals, and contractual framework required to proceed.

Example

For the hypothetical solar project, the study would address:

• land ownership or lease rights;
• grid-connection arrangements;
• project permits and approvals;
• the PPA;
• EPC contract arrangements;
• operations and maintenance arrangements; and
• other material project contracts.

An illustrative status summary might look like this:

Item	Illustrative Status
Site control	Secured
Grid connection	Approved
Environmental approval	Granted
Construction permit	Pending
PPA	Executed
EPC agreement	Draft
O&M agreement	Under negotiation

Illustrative finding

Legal/regulatory conclusion: Site control, grid connection, and the principal revenue agreement are established. The construction permit remains pending and the EPC and O&M arrangements require completion before the project can proceed to construction.

The point of this section is to make the project’s legal and regulatory position visible rather than treating permits and contracts as background documentation.

5. ESG Feasibility

The ESG section addresses material environmental and social issues that could affect project development, operation, or financing.

Example

For the hypothetical solar project, the assessment could consider:

• protected habitats or environmental constraints;
• land-use impacts;
• local community considerations;
• labor and construction impacts;
• environmental permitting requirements; and
• any material unresolved environmental or social risks.

Illustrative finding

ESG conclusion: The preliminary assessment identifies no known material environmental or social blocker, subject to completion of the required environmental assessments and regulatory approvals.

The ESG section is therefore not simply an environmental appendix. It provides a high-level view of whether material environmental or social issues could affect the project.

Appendices

The appendices would contain the supporting evidence behind the conclusions in the main feasibility study.

For the illustrative solar project, this could include supporting technical information, detailed financial model outputs, permits and approvals, contracts, site studies, and other source documentation.

The main study should contain the conclusions and material assumptions; supporting evidence can then be provided in the appendices.