EnergyDirect Wind Farm Case

ICBC Finance Practice

Constraints - 3 Hour Time Limit

Dec 2025

This case assessed the economic and strategic feasibility of EnergyDirect’s proposed Baring Head wind farm in New Zealand. The analysis combined discounted cash flow modeling with regulatory, political, and market considerations, focusing on whether the project created value once financing and interest rate risk were incorporated. While the site quality and strategic rationale were strong, the financial analysis showed persistently negative equity returns under realistic capital structures. The recommendation concluded that the project was not economically viable without structural support such as subsidies or alternative financing, emphasizing that qualitative appeal cannot override fundamentally negative cash flow economics.

Title slide of a presentation titled 'Blown Away or Built to Last?' presented to a confidential client by Ivan & Edina from Team F1, dated December 31, 1994.
Slide titled 'Agenda' with points discussing analysis coverage, including recommendation, who, what, why, industry, market, personal tensions, economic analysis, scenario analysis, wider context, discount rate, risks, and implementation. Names Ivan a
A presentation slide discussing the economic infeasibility of the Baring Head wind farm, citing reasons such as poor maintenance, low power needs, and economic factors.
Slide presentation titled 'Who EnergyDirect is' explaining that EnergyDirect is a business that distributes and resells electricity through a network, importing from ECNZ, not a power plant owner, with team member names Ivan & Edina.
Slide with the title 'Where's the industry at today?' showing a wind turbine icon and three points about the industry: (1) over 25,000 turbines globally, (2) US and Australia operate commercial-scale wind, (3) proven technology with low operational r
Slide titled 'New Zealand Landscape' with points about New Zealand's low electricity prices, hydro and geothermal dominance, and near-zero generation cost for incumbents, featuring a map of New Zealand with the UK flag overlay and four stars.
Slide titled 'Two methodologies' compares 'The Wider View' and 'The Economics View' with bullet points for each. 'The Wider View' includes council rejection, protests, reputational and regulatory fallout, reliance on government. 'The Economics View'
Slide presentation titled 'TotalEnergies' Ideal Wind Farm' describing a small, focused wind farm project with details about site selection in Baring Head, including existing access roads, a transmission line, and remote land use. The physical scope d
Slide titled 'Market Position for EnergyDirect.' It includes three points about energy projects, with a graphic of a wind turbine below. The slide credits Ivan & Edina, Team F1, Slide 9.
Slide titled 'The economics behind the plant' listing economic considerations for a power plant, including construction costs, maintenance, installation time, lifespan, and generator stability, with a note on the importance of proper execution and ma
Slide titled 'Pricing Deck utilized' with a comparison of summer and winter prices, showing summer price as 4.6 cents and winter price as 4.9 cents. A section with supplemental information lists prices for summer day and night, winter day and night,
Slide presenting an estimate of $6 million annual revenue from 47 planned turbines, producing 15 MWH per hour, with a yearly kilowatt production of 131.4 million and a kilowatt-hour price of 4.7 cents, resulting in about $6.2 million yearly revenue.
Slide showing information about installing wind turbines to reduce bird collisions, with an install cost of $3,000 for 47 turbines, aiming to protect reputation and deliver clean energy, authored by Ivan & Edina.
Slide comparing two financial scenarios for a wind farm: Scenario 1 is all debt with a $33 million debt price and 12% interest; Scenario 2 is half debt, half cash, with $16.5 million for cash and debt each, and 12% interest.
Slide titled 'Discount rate' comparing two approaches: 'Build Up Approach' and 'WACC'. The slide features a table with values, a bar chart illustrating the discount rate ranges, and mentions target rates and optimal blended approach for discount rate
Slide presenting a financial analysis with a bar graph showing the Net Present Value (NPV) of UFCE from 1995 to 2014, highlighting an inflated NPV from depreciation and its decline with flat, volatile production. Extra notes mention a 15-year payback
A slide from a presentation showing a bar chart of Full Cable Finance Expenses (FCFE) from 1995 to 2014, illustrating negative values each year, with text indicating full debt financing leads to negative FCFE and the project bleeding money once fundi
Bar chart showing cash flow and net present value from 1995 to 2014, indicating a positive cash flow in the first years and negative cash flow from 2001 to 2005, with a gradual increase afterward, titled "Under half cash, cash flows are positive in 2
A presentation slide showing a bar graph of debt schedule breakdown from 1994 to 2012, with interest and principal components. Text highlights that interest is higher than principal for the first 8 years and debt is paid off in 19 years. Additional n
A presentation slide discussing cash flow sensitivity analysis, showing tables comparing firm NPV and equity under different interest rates and prices per KWH, with red and green highlights indicating performance metrics.
Slide showing graph of long-term interbank borrowing rate from 1984 to 1994, highlighting a rise from 2.4% in 1993 to 2.5% in 1994, with notes about increased leverage, credit spreads, and interest rate environment.
Line graph showing total debt payments exceeding EBITDA for 7 years, with a highlighted area indicating the period from 1995 to 2000, and a note stating that EBITDA in 7 years is less than total payments, suggesting staged purchases do not help.
Slide titled 'Wider view tells the same story' discussing mitigating risks by adding project costs. Lists risks like protests, seagulls safety, and regulators' pushback, with resulting additional costs such as shared royalties, field surveys, and con
A PowerPoint slide titled 'Implementation' with a flowchart outlining a renewable energy exploration process. The flowchart includes steps: 'Wait & See,' 'Consider other sources,' 'Consider other prjs,' and 'Consider other regions,' with notes about
Slide titled 'Risks & Mitigation' showing a table of three risks: Unproductive Cash, Electricity input costs increase, Missed opportunity, with corresponding mitigation strategies. Top right text reads 'Ivan & Edina, Team F1, Slide 25.'
Slide titled 'The Wind Farm is not economically feasible' with reasons and solutions listed related to wind farm project at Baring Head, highlighting economic challenges and market impact.
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