Context of this report

The Metals-as-a-Service (MaaS) circular business model is designed to address the constraints of the current linear metals system, which relies on continuous primary extraction. In the MaaS model, metals are owned and retained on the balance sheet of a dedicated “Asset Owner” and provided as a service to a “Lessee” through a leasing operation. This approach allows metals to be reused across multiple cycles, incentivises recovery, and turns material flows into traceable assets. In sectors like wind energy, where material intensity is high, MaaS offers a method to combine circularity with bankability, reducing upfront capital needs and improving supply security.

Key metrics to manage total risk and systematic risk

The analysis utilises four primary financial measures to quantify risk-adjusted performance. The Sharpe Ratio measures excess return per unit of total risk, while the Modigliani–Modigliani Alpha (M² Alpha) adjusts performance to the same total risk level as a market benchmark, such as the MSCI ACWI. The Treynor Measure isolates returns relative to systematic risk, which is the unavoidable risk of the overall economy. Finally, Jensen’s Alpha measures the return an investment delivers above or below what is predicted given its exposure to market risk. These metrics are essential to quantify whether the MaaS model reduces volatility and improves efficiency.

The lessee’s perspective

To illustrate the mechanics of MaaS, the report compares a status quo non-MaaS wind project with a MaaS-enabled project where the developer rents metals from a Special Purpose Vehicle (SPV). The model assumes a 400 MW onshore wind project with 200 turbines and a 20-year fixed Power Purchase Agreement (PPA) at $0.144 per kWh. In the MaaS-enabled scenario, the sponsor transfers expenses from capital expenditure (CAPEX) to operating expenditure (OPEX). This shift results in a MaaS-enabled internal rate of return (IRR) of 19.94%, compared to 15% in the traditional model. The average Debt Service Coverage Ratio (DSCR) also improves from 3.18 to 4.02, indicating a higher ability to repay debt.

Risk-adjusted performance

MaaS-enabled sponsors achieve more stable returns, with the Sharpe ratio improving by 14% and the Treynor ratio increasing by approximately 14%. However, the model introduces higher exposure to cash-flow volatility because project costs are incurred as OPEX over time rather than being financed through long-tenor debt. This results in a higher standard deviation of returns and a higher beta. Despite this increase in volatility exposure, the risk-adjusted returns remain superior to the traditional CAPEX-based model. Unsystematic risk increases by about 3%, reflecting additional contractual and operational liabilities borne by the lessee when metals are leased rather than owned.

Sensitivity analysis

Ten scenarios were explored to test the resilience of the MaaS-enabled project. The analysis identified a breakeven point at a PPA price of $0.089 per kWh and a capacity factor of 22%, where the minimum DSCR falls to 1x in year one. Beyond this point, both the DSCR and Equity IRRs improve. The model remained resilient across various capital structures, even in worst-case scenarios where the onshore wind project’s capacity factor was pegged at 22% over the 20-year lifetime of the MaaS contract.

LCOE analysis

Comparing the two project structures revealed that MaaS is capable of facilitating the clean energy transition by lowering the levelised cost of energy (LCOE). A reduction in CAPEX of about 22% led to a 15% reduction in LCOE for the MaaS-enabled onshore wind project. This suggests that renewables, such as wind, competing with fossil fuels could ultimately gain a further competitive edge when their project sponsors enter into MaaS contracts.

The lessor’s perspective

The SPV acts as the lessor, absorbing metal price risk and ensuring it receives a guaranteed return. The model assumes a 50% equity and 50% debt capital structure for the SPV. Depreciation of the metal assets (approximately USD 11.2 million annually over 20 years) generates tax shields for investors. Three fee structures were considered for different SPV vehicles: an LLC (1.5% fee), a Master Limited Partnership (MLP, 1.25% fee), and an Exchange-Traded Fund (ETF, 1% fee). The SPV produces an IRR between 8.68% and 9.0% and exhibits a negative beta between -0.23 and -0.27, providing diversification benefits as it tends to outperform when broader markets underperform.

Risk management

The SPV manages price risk through delta hedging, targeting net-zero exposure by using short futures contracts to offset long positions in physical metal. Counterparty risk is addressed through 1.1x overcollateralisation, requiring $206.69 million in collateral against a metal value of $187.9 million. Sensitivity analysis on asset recovery indicates that even if 50% of the wind towers are destroyed in a natural disaster, the equity IRR remains between 5.49% and 5.91%. Parametric insurance is suggested as an additional protection layer to cover extreme recovery shortfalls or climate-related disruptions at the lessee level.