Wind Farm Investment Calculator · Methodology

How the wind farm model works

This page documents what the calculator computes, in which order and with which formulas. The wind farm is fictional; every input comes from a public source listed on the sources page, checked on 30 Sept 2026. The numbers below come from the same engine that runs in the calculator.

Illustrative calculation — not investment, tax or legal advice. The wind farm is fictional.

The base case at a glance

Wind farm

5 × 6.3 MW = 31.5 MW in Hesse, outside the Südregion

Energy yield

Site quality (Gütefaktor) 68% → 2,439 full-load hours (P50, net) → 76.8 GWh a year

Tender

Award price (Zuschlagswert) 4.79 ct/kWh, average of the round of 1 Aug 2026 → reference value (anzulegender Wert) 6.30 ct/kWh

Timeline

Financial close 1 Jan 2027 → 18 months of construction → commercial operation 1 Jul 2028 → end of life 1 Jul 2053 (25 years)

Investment

1,814 €/kW net of VAT, €57.1m; total uses including financing costs €58.6m

Debt

KfW programme 270, 5.35% fixed, 20 years from close with 3 grace years, linear repayment 2030–2046; €21.5m (37% of uses)

Tax

GmbH & Co. KG (a GmbH as a switch), trade-tax multiplier (Hebesatz) 400%

1. Principles

• Deterministic and nominal. The same inputs always give the same result. Amounts are nominal euros; unit prices are entered in 2025 or 2026 money and indexed with inflation. Two exceptions are nominal by nature: the reference value (fixed by law for 20 years) and power futures.
• Dated cash flows. Construction runs monthly with cash flows at month end; operations run by calendar year with cash flows at 31 December. The first and the last year count only the days in operation.
• Returns from dates. IRR and NPV use the exact dates with an Actual/365 day count, like XIRR and XNPV in Excel, so a half first year and monthly construction are weighted correctly.
• Two views. The project view (unlevered) shows what the wind farm earns; the owners’ view (levered) shows what reaches the equity after debt service and reserves.

2. Timeline

• Financial close on 1 Jan 2027 is also the valuation date. After 18 months the farm starts commercial operation on 1 Jul 2028, so the first operating year has six months.
• EEG support lasts 20 years from commissioning (§ 25 EEG; for tendered plants it is not extended to the end of the year). It is extended by the time with negative prices (§ 51a EEG): 6.5% of the hours in the base case, so support ends on 19 Oct 2049.
• The operating life is 25 years (30 as a variant); the farm is dismantled at the end, on 1 Jul 2053.
• The KfW loan runs 20 years from the commitment, which the model sets at financial close. The first 3 years are interest-only, then the loan is repaid in equal instalments (2030–2046). KfW collects quarterly; the model uses annual payments.

3. Energy yield

Capacity          P       = turbines × turbine rating
Site yield        h_site  = site quality × reference yield           (Anlage 2 Nr. 7 EEG)
P50, net          h_P50   = h_site × min(1, availability / 98%) × (1 − other losses)
Output            E_y     = P × h_P50 × f_y × (1 − degradation)^n_y
Output sold       E_sold  = E_y × (1 − share of output at negative prices)
P90               E_P90   = E_P50 × (1 − 1.2816 × σ)

• The reference yield of the 6 MW class is 3,623 full-load hours at the 100% reference site (Deutsche WindGuard, 2025). At a site quality of 68% the site yield is 2,464 hours.
• Site quality is an input, not a result: it sets both the output and the correction factor, as the law does. A better site produces more energy but receives a lower reference value.
• By law the site yield already excludes wake losses, up to 2% unavailability, electrical losses and curtailment required by the permit. The model deducts only the availability below 98% (97% in the base case) and optional other losses: 2,439 hours.
• f_y is the share of the year in operation, n_y the full years since commissioning; degradation is 0.2% a year.
• In periods with negative prices the direct marketer curtails the farm and no premium is paid (§ 51 EEG). 5% of the output falls into such periods in the base case.
• Grid curtailment under Redispatch 2.0 is compensated (§ 13a EnWG) and is not deducted.
• P90 uses the standard deviation of the yield: σ = 12.8% for a single year (P90 = 83.6% of P50) and 10.3% for a ten-year average (86.8%).

4. Revenue

Correction factor  KF      = table of § 36h EEG, linear in between
Reference value    AW      = award price × KF                  (fixed in nominal terms)
Base price         B_y     = power futures 2027–2029, then the long-term price (2026 money) × price index
Market value       JW_y    = B_y × wind capture factor         (annual market value of onshore wind)
Market premium     MP_y    = max(0, AW − JW_y)                 (Anlage 1 Nr. 4 EEG)
Market revenue             = E_y × JW_y × support share of the year
Premium revenue            = E_sold × MP_y × support share of the year
After support              = E_y × (JW_y or PPA price) × rest of the year

* 50% applies only in the Südregion; elsewhere the factor stays at 1.42 below 60%. At 68% the factor is 1.316, so the reference value is 4.79 × 1.316 = 6.30 ct/kWh.

• Why the two revenue parts use different volumes. The annual market value averages the price over all wind output, including hours with negative prices. A curtailed farm only gives up zero or negative prices, so output × market value is a cautious estimate of its market revenue. The premium, by law, is zero in negative-price periods, so it applies only to the output sold.
• Annual market value. For awards after 1 January 2023 the premium is based on the annual, not the monthly, market value. The one simplification: the farm’s own capture price equals the market value of all onshore wind.
• Base-case prices. Futures of 128.37 / 98.88 / 82.74 €/MWh for 2027–2029, then 75 €/MWh in 2026 money plus inflation, times a capture factor of 0.80: a market value of 66.2 €/MWh in 2029 and 72.1 €/MWh in 2035. The long-term price is the model’s strongest assumption; the tornado shows its weight.
• The EEG as a floor. The reference value (63.0 €/MWh) stays below the expected market value in every year, so the base case receives no premium. In the downside case, with prices 20% lower, the premium is paid in 11 years — the floor then works as insurance.
• Two-sided premium (switch). Under the EEG 2027 draft the premium can turn negative: when the market value exceeds the reference value, the farm pays the difference back. It is off by default — a 2026 award falls under EEG 2023, and whether the draft will apply to it is not settled.
• Payment timing. The grid operator pays monthly advances based on the previous year’s market value and settles in the following year (§ 26 EEG): the model receives the advance in the year and the rest a year later. Market sales are collected after 30 days.
• After support the farm sells at the market value or, as a switch, under a PPA at a fixed price in 2026 money.

5. Operating costs

Fixed items        = €/kW a year (2025 money) × capacity × price index × f_y
Land lease         = max(10% of revenue, €70,000 per turbine in 2026 money)
Direct marketing   = 0.20 ct/kWh × output sold            (2026 money, indexed)
Municipal payment  = 0.2 ct/kWh × output                    (§ 6 EEG)
Guarantee fee      = 1.25% a year × decommissioning security
Generator grid fee = €/kW a year                              (0 in the base case)

• The municipal payment is voluntary under § 6 EEG and is refunded by the grid operator in the next year’s settlement for quantities that received support — in the model, in years with a positive premium. After support it continues as a plain cost (switch).
• The decommissioning security follows the Hessian rule — hub height × €1,000 per turbine — and is provided by a bank guarantee.
• Decommissioning costs 50 €/kW in 2026 money at the end of life. The cash is set aside in equal instalments over the last 5 years.
• Inflation follows the Bundesbank projection for 2026–2028 (2.9% / 2.7% / 1.9%) and then the ECB target of 2%.

6. Investment and funding

• Costs are Deutsche WindGuard’s 2025 levels for projects commissioned in 2025–2028, without escalation to financial close; turbine prices were stable in 2026.
• VAT of 19% is paid with each invoice and refunded 2 months later. A VAT bridge loan at the senior rate plus 0.85 percentage points funds the gap; its interest, including the months after commissioning, is part of the uses.
• Financing costs during construction: an upfront fee of 1% of the loan at close; a commitment fee of 0.15% a month on the undrawn amount from month 7 (the KfW rule); interest on drawn debt. KfW charges only interest in the grace years, so this interest is paid in cash and funded like capex rather than added to the loan.
• The debt service reserve account (DSRA) is funded at commissioning with 3 months of the next year’s debt service.
• Debt and equity are drawn pro rata each month (equity first as a switch).

Uses    = capex + upfront fee + commitment fee + interest during construction
          + VAT-loan interest + initial DSRA
Sources = senior debt + equity                                   check: sources − uses = 0

In the base case the uses of €58.6m are capex €57.1m, financing costs €1.1m and the initial DSRA €0.3m; they are funded by debt of €21.5m and equity of €37.1m.

7. Debt sizing

German lenders size a wind-farm loan on the revenue they can plan with. In the bank case only the guaranteed floor counts during support — output sold × reference value — and base prices after it (a switch sizes on base prices throughout). Cash flow available for debt service (CFADS) is after tax.

Debt service per euro of loan   a_y   (known in advance for linear or annuity repayment)
Loan from the DSCR targets      D_DSCR = min over y of  min( CFADS_y[bank, P50] / (1.20 × a_y),
                                                           CFADS_y[bank, P90 1-year] / (1.00 × a_y) )
Loan                            D      = min( D_DSCR, 80% × uses )

• Circularity. Taxes depend on the interest, and the uses depend on the loan through fees, interest during construction and the DSRA. The model iterates until the loan changes by less than €0.50.
• Variants. Annuity repayment uses the same formula with annuity instalments. Sculpted repayment sets each year’s debt service to the lower of CFADS / target DSCR for P50 and P90 and sizes the loan as its present value at the loan rate.
• Base case. The binding constraint is the P90 DSCR on the EEG floor: debt of €21.5m, 37% of uses. Community wind farms financed at lower rates and higher award prices show 79–90% debt in their prospectuses; at 5.35% and a floor of 6.30 ct/kWh the debt capacity is far lower. In September 2026 a group of 18 banks warned of rising equity requirements for wind projects.

8. Taxes

EBT           = EBITDA − depreciation − interest − increase of the decommissioning provision
Add-back      = 25% × max(0, interest + 50% × land lease − €200,000)           § 8 Nr. 1 GewStG
Trade income  = EBT + add-back − loss carry-forward (€1m in full, 60% above)     § 10a GewStG
                rounded down to €100, less €24,500 for a partnership              § 11 GewStG
Trade tax     = 3.5% × trade income × multiplier (Hebesatz)
Corporate tax = rate_y × (EBT − loss carry-forward: €1m in full, above it
                70% to 2027, 60% from 2028)            GmbH only; § 23 KStG, § 10d EStG
                rate_y: 15% to 2027; 14 / 13 / 12 / 11% in 2028–2031; 10% from 2032
Solidarity    = 5.5% × corporate tax

• Depreciation. The base is capex plus the capitalised financing costs. All wind-farm assets are depreciated straight-line over 16 years (the German depreciation table; BFH IV R 46/09); the first year counts from the month of commissioning. Declining-balance depreciation (3 × straight-line, at most 30%: 18.75%) is a switch that applies only to assets commissioned between 1 July 2025 and 31 December 2027 — not to the base case — and changes to straight-line once that is higher.
• Decommissioning provision. For tax, the obligation is accrued pro rata over the operating life at today’s prices and discounted at 5.5% (§ 6 EStG); its increase reduces taxable profit. The cash reserve is separate.
• Taxes are not deductible (§ 4 (5b) EStG), so the tax calculation itself has no circularity. Taxes are paid in the year they arise.
• Legal form. A GmbH & Co. KG pays only trade tax; income tax falls on its partners and is not modelled. The equity IRR of the KG is therefore before the partners’ taxes and is not directly comparable with the GmbH, which also pays corporate tax and the solidarity surcharge.
• Trade tax goes to the municipality where the turbines stand (§ 29 GewStG), so one multiplier applies. The checks flag a multiplier below the legal minimum of 280% from 2027 and interest above the €3m threshold of the interest barrier (§ 4h EStG).

9. Cash waterfall

CFADS           = EBITDA − change in working capital − taxes
− interest − principal
± DSRA          top up to 3 months of next year’s debt service, release the excess, draw on a shortfall
− reserve       equal instalments for decommissioning in the last 5 years
  lock-up       if DSCR < 1.10 during the loan term, the year’s cash stays in the company
                until the DSCR is back above the threshold
= distribution to the owners

In the final year the DSRA, any trapped cash and the reserve are released and decommissioning is paid. If cash falls short, the owners fund the gap (a negative distribution). The cash balance may never be negative — one of the checks.

10. Results

11. Scenarios, sensitivity and bid calculator

The base case sizes the loan. P90 and Downside keep that loan and its repayment schedule — the lender’s view after financial close.

Tornado. Each driver is moved to its low and high value with the loan re-sized — the view before financial close — and the drivers are sorted by the swing of the chosen measure.

Bid calculator. It finds the lowest award price at which the equity IRR reaches a target, re-sizing the loan at every step. The IRR is not monotonic in the award price: a higher floor allows more debt at 5.35%, which can lower the equity return. So the search scans a 0.25 ct grid for the first crossing and then bisects within that step. In the base case, an equity IRR of 8% needs 7.46 ct/kWh (reference value 9.82 ct/kWh) — above the 2026 ceiling of 7.25 ct/kWh.

12. Checks

Every recalculation runs 15 checks; the calculator shows their status.

• Sources of funds equal uses
• Balance sheet balances at COD
• Loan repaid at maturity
• Loan matures within the operating life
• No negative cash balance
• DSCR at or above the covenant in every year
• Gearing within the maximum
• Balance sheet balances at every year end
• Debt sizing converged
• Equity IRR exists and is unique
• Award price within the tender ceiling
• Loan matures before the EEG support ends
• Trade-tax multiplier at or above the legal minimum
• Declining-balance depreciation is allowed
• Interest below the interest-barrier threshold

13. Verification

• Automated tests cover the financial maths (against Microsoft’s published XIRR and XNPV examples), the § 36h table, taxes and depreciation, the model and its scenarios, the bid calculator and the Excel export.
• A spreadsheet built from the written specification — not from the code — recomputes the base case in Microsoft Excel. All 20 key figures and twelve annual lines agree to the cent, and the workbook finds both convergence points (uses and loan) on its own. A negative control with a different trade-tax multiplier moves exactly the tax-dependent lines.
• The source code, including the tests, is public on GitHub.

14. Limitations

• Operations are annual; output is spread evenly over the year (winter is in fact windier).
• The farm’s capture price equals the market value of all onshore wind.
• The partners’ income tax of a KG is not modelled; taxes are paid in the year they arise.
• One senior loan: no tranches, shareholder loans, refinancing or cash sweep.
• Uncompensated grid curtailment (a draft of the grid package) and generator grid fees (the regulator’s AgNes process) are not in the base case; the fee is available as an input.
• The Excel export contains values, not formulas.
• The wind farm is fictional and the results are illustrative.