What investors expect from bankable LCOH models

Most investors will read the LCOH headline, then immediately ask what is underneath. A bankable model is not just a spreadsheet with assumptions. It is a set of transparent inputs, sensitivities, and governance practices that make the economics defensible under scrutiny. If the model cannot survive a credit committee, it will not survive a financing process.

Start with a traceable base case

Every assumption should be sourced, dated, and linked to a primary document. Power prices need a market source, CAPEX needs vendor quotes or benchmark ranges, and operating data needs a clear operational basis. Investors dislike black boxes because they cannot challenge them. A clean base case should show the exact path from input to output and allow a reviewer to test alternatives without breaking the model.

The sensitivities lenders care about

There are many drivers, but seven usually determine whether a hydrogen project is financeable. These should be visible, editable, and tied to cash flow.

• Power price: Show both average and volatility impact, and include sensitivity to negative price events.
• Capacity factor: Demonstrate what happens when utilisation drops due to curtailment or outages.
• Stack replacement schedule: Include timing, cost, and performance recovery assumptions.
• CAPEX range: Present vendor range cases, not a single point estimate.
• Financing terms: Discount rate, debt tenor, and grace periods drive LCOH as much as CAPEX.
• Offtake price and volume: Show how contract shape and minimum take-or-pay clauses affect cash flow.
• O&M and water costs: Smaller items still matter in downside cases and must be visible.

Structure scenarios, not just sensitivities

Investors want to see a coherent base, downside, and upside case. A downside case should not just be the base case with a higher power price; it should reflect a realistic combination of risks such as lower utilisation, delayed commissioning, and shorter stack life. This is where the model stops being a pricing tool and becomes a risk tool.

Connect LCOH to cash flow metrics

LCOH is a useful benchmark, but finance decisions are made on cash flow, debt service coverage, and equity return. A bankable model links LCOH to project cash flow, showing how each input moves DSCR, payback, and IRR. If the model cannot answer, in one view, how LCOH and DSCR change together, it will be rewritten by the lender.

Allocate risk to the right contracts

A robust LCOH model is aligned with the contract stack. If you assume fixed power costs, you need a PPA or hedge that supports that assumption. If you assume high utilisation, you need a credible offtake schedule. Contracts are not just legal documents; they are economic inputs that define which sensitivities matter most.

Governance and auditability

Version control, change logs, and locked inputs are the unglamorous details that turn a model into a bankable asset. Investors want to know which version was used for the board pack, which assumptions were updated after vendor discussions, and who approved the changes. A disciplined model process reduces friction and signals professional execution.

Communicate like an investor, not an engineer

Even the best model can fail if the summary is unclear. Provide a one-page overview with the key drivers, base and downside LCOH, and the three most important sensitivities. Keep charts simple and repeatable. The goal is to show that the project team knows which levers matter and has a plan to manage them.

Key takeaways

• Bankable LCOH models are traceable, auditable, and grounded in source data.
• Sensitivity tables must be paired with realistic downside scenarios.
• LCOH should be linked to cash flow and debt coverage, not treated as a standalone metric.
• Contracts and governance are part of the model, not separate from it.