Energy Transition · Solar

What flows through a solar farm — and how it pays

Sunlight hits the panels; the DC power runs through the array to an inverter station, then onto the grid. Generation rides the sun (it peaks at midday and varies with the weather), and revenue splits between price-stabilised contracted (CfD/PPA) income and volatile merchant sales. Near-zero running cost means very high margins — but cash flow depends on irradiance and the power price.

100%
£75
70%
LIVE
Generation power flowing to grid Contracted £ CfD / PPA (stable) Merchant £ wholesale (volatile) Operating cost
Flows — annualised from current assumptionsper year
Revenue p.a.
£0
£0 / hr
EBITDA p.a.
£0
0% margin
Revenue / MWh
£0
blended capture price
Generation p.a.
0
100% irradiance
Stocks — what the flows accumulate intolive
Output now
0
live, of 350 MW capacity
EBITDA banked · session
£0
accumulating in real time
Implied enterprise value
£0
at 11× EBITDA
The two tills — contracted vs merchant Total £0 p.a.
Contracted
Merchant
Why investors watch the split: contracted revenue (a CfD or corporate PPA) is price-stabilised and low risk; merchant revenue rides volatile wholesale power prices — more upside but more risk. The contracted share is the core risk/return dial, and generation depends on the sun.
Revenue streams£0 p.a.
Operating costs£0 p.a.
Investment case — should you buy it?DCF returns

Year-1 financials flow live from the simulation above: revenue £0 and EBITDA £0 p.a. Set your deal terms below — the unlevered IRR (asset return) and levered IRR (return to equity, after debt) recompute instantly.

Operating

%
%
%
%
%
%

Valuation & hold

×
×
y

Financing

×
%
%
Unlevered IRR
—
asset / project return
Levered IRR
—
return to equity
Equity multiple
—
MOIC over hold
Equity gain
—
exit equity − invested
Equity cash-flow profile£m · ■ invested   ■ returned
Projection — £m per year

Illustrative model. Represents a ~350 MW solar farm at an ~11% capacity factor. Revenue = generation × price, with a contracted share sold at an indexed CfD/PPA strike (~£55/MWh) and the balance sold merchant at the wholesale power price. Near-zero running cost; opex is largely fixed (O&M, land lease, transmission, insurance). EBITDA = revenue − operating costs. The investment case is a simplified DCF: unlevered IRR discounts free cash flow to the firm (EBITDA − cash tax − capex) plus an exit on the EV/EBITDA multiple; levered IRR is the equity cash flow after debt. The day/night cycle in the diagram is illustrative; financials use the annual-average capacity factor. For illustration only — not investment advice, and not any specific asset.