DCF Financial Model: Assessment of Financial Conditions for Offshore Wind Investment Viability in Brazil

A Discounted Cash Flow (DCF) model developed to technically assess the financial viability of an offshore wind project in Brazil. The model was informed by a combination of technical and financial assumptions, drawn from existing literature and expert interviews, with a focus on the Brazilian energy market, global offshore wind industry and investment finance. The bespoke DCF model was developed in MS Excel, a widely used tool for energy and infrastructure investment analysis. This multi-scenario model enabled dynamic assessment of financial structuring and variability in total investment costs through sensitivity analysis. Calculation of Free Cash Flow to Equity (FCFE) provided insights into the project breakeven point, where cash inflows and outflows are equal. From FCFE, key financial metrics such as the Net Present Value (NPV) and Equity Rate of Return (EIRR) were derived, with NPV establishing overall financial viability and EIRR evaluating project attractiveness from the equity investor’s perspective. This work was supported by the Climate Compatible Growth Programme (#CCG) of the UK's Foreign Development and Commonwealth Office (FCDO). The views expressed in this paper do not necessarily reflect the UK government's official policies.