Walk me through how you would build a financial model to evaluate the feasibility of a new power generation project.
RoleBusiness Development Associate
DifficultyEasy
TopicTechnical
Asked at
Why This Is Asked
Since no publicly documented interview questions exist for this role, this is grounded in First Gen's need for analysts who can build and interpret financial models for project evaluation, a core duty. It tests quantitative rigor and understanding of feasibility analysis.
General Approach
Outline a structured process: define the objective, list all inputs, build the model with clear assumptions, run sensitivity analysis, and present the output. Emphasize your methodical thinking even if you haven't done this exact task before.
General Answer
Building a financial model to assess a power generation project's feasibility starts with defining the objective, typically whether the project can generate an acceptable return relative to its risk and secure financing. The model needs three main input blocks: revenue assumptions (installed capacity, expected capacity factor or utilization, and the tariff or price under a power purchase agreement, if one exists), cost assumptions (construction capital expenditure, fuel or resource costs, operating and maintenance expenses, and taxes), and financing assumptions (the debt-to-equity ratio, cost of debt, and cost of equity, which together determine the weighted average cost of capital). These feed into a cash flow projection over the project's operating life, from which key outputs are derived: net present value, internal rate of return, payback period, and, for a project-financed deal, the debt service coverage ratio, which lenders use to assess repayment risk. The final step is sensitivity and scenario analysis, testing how returns move if fuel costs, demand, tariffs, or interest rates change, since a feasibility conclusion should be presented as a range of outcomes rather than a single number.
PH Interview Gotcha
Some candidates might say 'Nag-assume lang po ako ng numbers, hindi po ako sure' which sounds unprepared. Instead, say: 'I based my assumptions on industry benchmarks and publicly available data, and I would stress-test the model with different scenarios.'
Sample STAR Answer▾
S
Situation
During my internship at a renewable energy startup, I was tasked with helping to evaluate a potential solar farm.
T
Task
I needed to create a preliminary financial model to assess the project's viability, including IRR and payback period.
A
Action
I first gathered cost estimates for construction and operation, then projected revenue based on expected generation and feed-in tariff rates. Using Excel, I built a dynamic model with assumptions clearly labeled. I ran sensitivity analyses on key drivers like capacity factor and tariff changes.
R
Result
The model showed a positive IRR under base assumptions but highlighted risk if tariffs declined by more than 10%. The team used it to negotiate contract terms.
Key Takeaway
Always validate assumptions and communicate scenarios, not just a single outcome.
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