Africa Green Energy Holdings — Returns & Sensitivity Analysis
The projected investor returns including the 16–19% project IRR and 20–24% equity IRR, the NPV, payback and DSCR profile, and the sensitivity and scenario analysis.
Section 18 · Business Plan
Returns & Sensitivity Analysis
The projected investor returns including the 16–19% project IRR and 20–24% equity IRR, the NPV, payback and DSCR profile, and the sensitivity and scenario analysis.
The Company’s financial returns are presented at three levels:
Project IRR (unlevered, reflecting underlying asset economics), Equity
IRR (post-leverage, post-tax cash returns to sponsors), and
risk-adjusted metrics including NPV, payback and DSCR profile. The
analysis is supplemented by sensitivity tornado and scenario testing
across the key value drivers.
18.1 Base Case Returns Summary
| Returns Metric | Solar PV | Wind | BESS | Portfolio |
|---|---|---|---|---|
| Project IRR (unlevered, post-tax) | 17.8% | 16.5% | 18.2% | 17.4% |
| Equity IRR (levered, post-tax) | 22.4% | 20.8% | 23.6% | 22.1% |
| NPV at 12% WACC (R million) | 1,920 | 1,140 | 880 | 3,940 |
| NPV at 14% WACC (R million) | 1,280 | 740 | 615 | 2,635 |
| Equity payback period (years) | 6.8 | 7.2 | 6.5 | 6.9 |
| Cash-on-cash (cumulative @ Year 12) | 3.4x | 3.1x | 3.6x | 3.3x |
| Average Project DSCR | 1.48x | 1.42x | 1.51x | 1.46x |
| Minimum Project DSCR | 1.32x | 1.28x | 1.35x | 1.30x |
Table 18.1 — Base Case Returns by Asset Class & Portfolio
(Pre-exit)
18.2 DSCR Profile
The DSCR profile demonstrates strong, stable debt-servicing capacity
throughout the loan tenor, with a minimum of 1.30x in FY2030 (the first
full operating year, when interest expense is at its peak) rising to
over 1.85x by Year 10 as principal amortises. This profile materially
exceeds IFC’s 1.20x minimum threshold for utility-scale renewables in
South Africa, providing strong lender headroom and distribution
capacity.
18.3 Sensitivity Analysis
The sensitivity tornado isolates the impact of single-variable shocks
of ±10% (or scenario-defined ranges) on portfolio Equity IRR. The
analysis reveals that AGEH’s returns are most sensitive to:
- Generation yield (P50 vs P90): A shift from P50 to P90 capacity
factor reduces Equity IRR by approximately 320 bps, validating the
importance of robust independent resource assessments and the
conservative use of P90 for debt sizing. - Tariff realisation: A 10% reduction in achieved tariffs (e.g.
through corporate PPA renegotiation or REIPPPP indexation
underperformance) reduces Equity IRR by 280 bps. - Construction cost overruns: A 10% CAPEX overrun reduces Equity
IRR by 220 bps; the EPC contracts include LDs capped at 15% of contract
value, plus owner’s contingency of R185 million provides a meaningful
absorption buffer. - Operating costs: A 20% OPEX escalation reduces Equity IRR by only
110 bps, reflecting the high operating-leverage nature of renewable
generation. - Interest rate stress: A 200 bps increase in JIBAR (broadly
equivalent to the 2022-2023 hiking cycle) reduces Equity IRR by 140 bps;
AGEH plans interest rate swaps covering 75% of senior debt to mitigate
this exposure.
18.4 Scenario Analysis
| Scenario | Equity IRR | Min DSCR | NPV (Rm) | Comment |
|---|---|---|---|---|
| Base case (P50, central tariffs) | 22.1% | 1.30x | 3,940 | Management central case |
| Upside: P50 + 5% tariff outperformance | 25.8% | 1.42x | 5,180 | Higher merchant exposure realised |
| Downside 1: P90 yield, base tariffs | 18.9% | 1.18x | 2,610 | Resource stress; below covenant |
| Downside 2: 10% CAPEX overrun | 19.9% | 1.24x | 3,180 | EPC LDs + contingency partially offset |
| Downside 3: 24-month delay | 17.4% | 1.21x | 2,420 | DSU insurance covers initial 12 months |
| Severe: Combined P90 + 10% CAPEX overrun | 16.2% | 1.10x | 1,825 | Equity cure required; sponsor support triggered |
| Refinancing optimisation (Year 5) | 24.6% | 1.30x | 4,520 | Re-fi senior debt at -75 bps Year 5 |
Table 18.2 — Scenario Analysis Results
The downside scenarios illustrate that AGEH’s structure remains
commercially robust across plausible stress cases. The severe combined
scenario, while triggering covenant cures and equity support, would
still deliver 16.2% Equity IRR — comfortably above sponsors’ 14% hurdle
rate. The refinancing optimisation scenario reflects management’s intent
to refinance the senior debt facility in Year 5 at improved terms,
leveraging the de-risked operating profile.
Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Africa Green Energy Holdings (Pty) Ltd.