Understanding the Cost of Capital

Considering what I know about renewable energy, what are some of the key things I need to be able to explain to a potential funder of my project?

I would need to explain to them exactly how the initially invested capital would be recouped.  This could be in the form of savings, or it could be in actual profits made over time.  For example, the cost of the investment could be recouped simply by not spending that money on other forms of energy.  Or, it could be recouped due to the generation of additional energy which can be sold to the power company.

What finance-based processes would I use to explain our potential for success?

Return on investment is probably the most straightforward financial process I could use to explain to investors our potential for success, especially in terms of justifying capital.  By explaining how their capital could be turned into returns, I would be giving investors an idea of the metric we would use to determine our success.


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