AIEM Certified Renewable Energy Financial
Analyst CREFA Exam
**Question 1.** Which unit best describes the instantaneous power output of a solar
photovoltaic plant?
A) kilowatt‑hour (kWh)
B) megawatt (MW)
C) gigajoule (GJ)
D) British thermal unit (BTU)
Answer: B
Explanation: Power is measured in watts; a solar plant’s instantaneous output is expressed in
megawatts (MW) for utility‑scale facilities.
**Question 2.** A capacity factor of 25 % for a wind farm indicates that the farm produces:
A) 25 % of its nameplate capacity over a year
B) 25 % of the maximum possible energy each hour
C) 75 % of its nameplate capacity on average
D) 100 % of its nameplate capacity for 25 % of the time
Answer: A
Explanation: Capacity factor = actual energy produced ÷ (nameplate capacity × hours in period).
25 % means the farm generates 25 % of the energy it would if it ran at full capacity all year.
**Question 3.** In a bifacial PV module, the rear side contributes roughly what percentage of
total energy in a high‑albedo environment?
A) 5 %
B) 10 %
C) 20 %
D) 35 %
Answer: C
, AIEM Certified Renewable Energy Financial
Analyst CREFA Exam
Explanation: Bifacial modules capture reflected sunlight; in high‑albedo (e.g., snow) conditions
the rear side can add about 20 % to total yield.
**Question 4.** What is the primary advantage of offshore wind turbines compared with
onshore turbines?
A) Lower capital cost per MW
B) Higher average wind speeds leading to higher capacity factors
C) Simpler grid interconnection
D) Reduced need for foundation engineering
Answer: B
Explanation: Offshore sites generally have stronger, more consistent winds, resulting in higher
capacity factors despite higher CAPEX.
**Question 5.** Which of the following best describes a pumped‑hydro storage system’s
round‑trip efficiency?
A) 30‑40 %
B) 45‑55 %
C) 70‑80 %
D) 90‑95 %
Answer: C
Explanation: Pumped‑hydro typically achieves 70‑80 % round‑trip efficiency, higher than most
battery chemistries.
**Question 6.** In a Special Purpose Vehicle (SPV) used for project finance, the SPV’s assets
are:
A) Consolidated on the sponsor’s balance sheet
B) Isolated from the sponsor’s other assets and liabilities
, AIEM Certified Renewable Energy Financial
Analyst CREFA Exam
C) Jointly owned by all project lenders
D) Subject to the sponsor’s corporate tax rate only
Answer: B
Explanation: An SPV is a legally separate entity, shielding sponsors from project‑specific risks
and keeping assets off the sponsor’s balance sheet.
**Question 7.** Which component of the capital stack typically has the highest claim on cash
flows?
A) Sponsor equity
B) Mezzanine debt
C) Senior debt
D) Tax equity
Answer: C
Explanation: Senior debt is paid first, followed by mezzanine, then equity; it has the highest
priority claim.
**Question 8.** The Levelized Cost of Energy (LCOE) is most sensitive to which variable for a
solar PV project?
A) Discount rate
B) Fuel price
C) Capacity factor
D) Decommissioning cost
Answer: A
Explanation: Solar has no fuel cost; LCOE is heavily influenced by the discount rate because it
determines the present value of upfront CAPEX and future revenues.
**Question 9.** A project with an IRR of 12 % and a required return of 10 % is:
, AIEM Certified Renewable Energy Financial
Analyst CREFA Exam
A) Undervalued
B) Overvalued
C) Exactly valued
D) Not comparable because IRR cannot be used for evaluation
Answer: A
Explanation: When IRR exceeds the hurdle rate (required return), the project creates value and
is considered undervalued relative to the required return.
**Question 10.** Debt Service Coverage Ratio (DSCR) of 1.2 means:
A) Debt service equals 120 % of cash flow
B) Cash flow is 20 % greater than required debt service
C) The project is insolvent
D) Debt service is 20 % of cash flow
Answer: B
Explanation: DSCR = cash flow ÷ debt service; a DSCR of 1.2 indicates cash flow exceeds debt
obligations by 20 %.
**Question 11.** In a Power Purchase Agreement (PPA), the “take‑or‑pay” clause primarily
protects:
A) The buyer from price spikes
B) The seller from volume risk
C) The grid operator from curtailment
D) The regulator from market manipulation
Answer: B
Explanation: “Take‑or‑pay” obligates the buyer to pay for a minimum amount of energy,
shielding the seller from revenue shortfalls.
Analyst CREFA Exam
**Question 1.** Which unit best describes the instantaneous power output of a solar
photovoltaic plant?
A) kilowatt‑hour (kWh)
B) megawatt (MW)
C) gigajoule (GJ)
D) British thermal unit (BTU)
Answer: B
Explanation: Power is measured in watts; a solar plant’s instantaneous output is expressed in
megawatts (MW) for utility‑scale facilities.
**Question 2.** A capacity factor of 25 % for a wind farm indicates that the farm produces:
A) 25 % of its nameplate capacity over a year
B) 25 % of the maximum possible energy each hour
C) 75 % of its nameplate capacity on average
D) 100 % of its nameplate capacity for 25 % of the time
Answer: A
Explanation: Capacity factor = actual energy produced ÷ (nameplate capacity × hours in period).
25 % means the farm generates 25 % of the energy it would if it ran at full capacity all year.
**Question 3.** In a bifacial PV module, the rear side contributes roughly what percentage of
total energy in a high‑albedo environment?
A) 5 %
B) 10 %
C) 20 %
D) 35 %
Answer: C
, AIEM Certified Renewable Energy Financial
Analyst CREFA Exam
Explanation: Bifacial modules capture reflected sunlight; in high‑albedo (e.g., snow) conditions
the rear side can add about 20 % to total yield.
**Question 4.** What is the primary advantage of offshore wind turbines compared with
onshore turbines?
A) Lower capital cost per MW
B) Higher average wind speeds leading to higher capacity factors
C) Simpler grid interconnection
D) Reduced need for foundation engineering
Answer: B
Explanation: Offshore sites generally have stronger, more consistent winds, resulting in higher
capacity factors despite higher CAPEX.
**Question 5.** Which of the following best describes a pumped‑hydro storage system’s
round‑trip efficiency?
A) 30‑40 %
B) 45‑55 %
C) 70‑80 %
D) 90‑95 %
Answer: C
Explanation: Pumped‑hydro typically achieves 70‑80 % round‑trip efficiency, higher than most
battery chemistries.
**Question 6.** In a Special Purpose Vehicle (SPV) used for project finance, the SPV’s assets
are:
A) Consolidated on the sponsor’s balance sheet
B) Isolated from the sponsor’s other assets and liabilities
, AIEM Certified Renewable Energy Financial
Analyst CREFA Exam
C) Jointly owned by all project lenders
D) Subject to the sponsor’s corporate tax rate only
Answer: B
Explanation: An SPV is a legally separate entity, shielding sponsors from project‑specific risks
and keeping assets off the sponsor’s balance sheet.
**Question 7.** Which component of the capital stack typically has the highest claim on cash
flows?
A) Sponsor equity
B) Mezzanine debt
C) Senior debt
D) Tax equity
Answer: C
Explanation: Senior debt is paid first, followed by mezzanine, then equity; it has the highest
priority claim.
**Question 8.** The Levelized Cost of Energy (LCOE) is most sensitive to which variable for a
solar PV project?
A) Discount rate
B) Fuel price
C) Capacity factor
D) Decommissioning cost
Answer: A
Explanation: Solar has no fuel cost; LCOE is heavily influenced by the discount rate because it
determines the present value of upfront CAPEX and future revenues.
**Question 9.** A project with an IRR of 12 % and a required return of 10 % is:
, AIEM Certified Renewable Energy Financial
Analyst CREFA Exam
A) Undervalued
B) Overvalued
C) Exactly valued
D) Not comparable because IRR cannot be used for evaluation
Answer: A
Explanation: When IRR exceeds the hurdle rate (required return), the project creates value and
is considered undervalued relative to the required return.
**Question 10.** Debt Service Coverage Ratio (DSCR) of 1.2 means:
A) Debt service equals 120 % of cash flow
B) Cash flow is 20 % greater than required debt service
C) The project is insolvent
D) Debt service is 20 % of cash flow
Answer: B
Explanation: DSCR = cash flow ÷ debt service; a DSCR of 1.2 indicates cash flow exceeds debt
obligations by 20 %.
**Question 11.** In a Power Purchase Agreement (PPA), the “take‑or‑pay” clause primarily
protects:
A) The buyer from price spikes
B) The seller from volume risk
C) The grid operator from curtailment
D) The regulator from market manipulation
Answer: B
Explanation: “Take‑or‑pay” obligates the buyer to pay for a minimum amount of energy,
shielding the seller from revenue shortfalls.
