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Solar PV-Diesel Hybrid Project finance Model with Resource Assessment – now available

March 21st, 2012 Posted in financial models

Solar PV-Diesel Hybrid Project finance Model with Resource Assessment – now available

Analyzing the economics of a solar PV-diesel hybrid power plant
(as well as other RE-diesel hybrid systems such as wind-diesel, biomass-diesel,
mini-hydro-diesel) has now become simple with the new solar PV-diesel project
finance model that makes use of the PVSYST V5.4 solar energy model. Avoid the
time consuming hassle by purchasing this latest product offering from your
energy technology selection expert.

1) Solar energy resource assessment

Renewable Energy (RE) assessment is first conducted on a given location
(latitude, longitude, elevation) using an RE assessment tool such as PVSYST
V5.4 solar energy simulation model which provides monthly horizontal global
irradiation (kWh/m2/month) and using a particular solar panel model and
inverter, estimates the solar energy injected to the grid:

solar PV(month) = specific production(kWh/peak kW) x panel
output(peak kW)

By summing up the 12 months of kWh output, the annual kWh
generation is determined and the annual capacity factor of the solar PV model
is calculated:

ave CF of solar PV = sum[solar energy(month)] / (solar PV rated kW
x 24 x 365)

2) Monthly energy demand profile

The annual energy demand (kWh/year) is then converted to monthly
energy demand (kWh/month) by considering the seasonality of the demand.

3) Balance monthly diesel generation

By subtracting the monthly output of the solar PV from the monthly
demand, the balance monthly diesel generation is calculated:

diesel output(month) = demand(month) – solar PV output(month)

By summing up the 12 months kWh output, the annual kWh generation
is determined and the annual capacity factor of the diesel genset is
calculated:

ave CF of diesel = sum[diesel output(month)] / (diesel rated kW x
24 x 365)

4) Running the solar PV model

This model calculates the all-in capital cost of solar PV farm
(installed equipment, transmission line & substation, taxes & licenses,
project development, working capital, financing costs during construction),
fuel & lubes costs, operating & maintenance costs (variable, fixed,
regulatory), depreciation (20 year economic life), interest expense, income
before tax (IBT), income tax (10% of IBT with 7 year income tax holiday), and
income after tax (IAT). Then add-back depreciation and subtract principal
repayment to arrive at net cash flow (NCF).

It then assumes 30% equity (at 16% p.a. IRR) and 70% debt (at 10%
p.a. loan interest) to determine the weighted average cost of capital (WACC).

By comparing the all-in project cost with the discounted net cash
flow, the model calculates the project IRR, project NPV and project payback
period.

By comparing equity portion of the all-in project cost with the
discounted net cash flow, the model calculates the equity IRR, equity NPV and
equity payback period.

By applying the annual capacity factor to estimate annual gross
generation and net generation (gross – substation loss & own use – transmission
loss), we arrive at the first year tariff needed to meet the equity IRR of the
project (minimum returns of the investors).

5) Running the diesel genset model

The model calculates the all-in capital cost of the diesel gensets
(peaking and base load units needed to backup the intermittent wind energy
output), fuels (diesel & fuel oil) & lubes costs, operating &
maintenance costs (variable, fixed, regulatory), depreciation (20 year economic
life), interest expense, income before tax (IBT), income tax (10% of IBT with 7
year income tax holiday), and income after tax (IAT). Then add-back
depreciation and subtract principal repayment to arrive at net cash flow (NCF).

It then assumes 30% equity (at 16% p.a. IRR) and 70% debt (at 10%
p.a. loan interest) to determine the weighted average cost of capital (WACC).

By comparing the all-in project cost with the discounted net cash
flow, the model calculates the project IRR, project NPV and project payback
period.

By comparing equity portion of the all-in project cost with the
discounted net cash flow, the model calculates the equity IRR, equity NPV and
equity payback period.

By applying the annual capacity factor to estimate annual gross
generation and net generation (gross – substation loss & own use – transmission
loss), we arrive at the first year tariff needed to meet the equity IRR of the
project (minimum returns of the investors).

6) Optimizing the solar pV-diesel hybrid configuration for grid
stability

The peaking units and diesel units must ideally be in the 1:3
rated capacity ratio to ensure that the high-speed peaking units could follow
the intermittency of the wind farm output, e.g. 2 MW peaking and 6 MW base load
units for a total of 8 MW of diesel genset capacity.

Ideally, the peaking units must be loaded around 50% while the
baseload units should be loaded not more than 75%. This means that if the
engine size of the peaking and baseload units have been set, the modeler will adjust
the number of peaking and baseload units so that it will meet the above load
factors.

7) Solar PV penetration limits and peaking/baseload parameters

The solar PV farm must only displace 15% of the kW and the balance
85% to be carried by the combined peaking and base load diesel gensets.
Likewise, the peaking units will carry 10-20% of the kWh while the base load
units will carry 80-90% of the kWh demand, which when sized and configured
correctly will result in a 50% annual capacity factor for the peaking units and
75% annual capacity factor for the base load units (gensets).

8) Determining the first year tariff of the solar PV-diesel hybrid
power plant

The generation of the solar PV and diesel gensets (peaking and
baseload units) are blended to arrive at the weighted average tariff to be
charged to the customer buying power from the hybrid power plant.

Alternatively, the income and expense as well as balance sheet
items for each solar PV and diesel models are aggregated to arrive at the hybrid
model. And instead of obtaining the first year tariff, the revenue will consist
of the following:

TOTAL TARIFF = CAPACITY TARIFF + O&M TARIFF + FUEL TARIFF

Order now and save valuable time for your solar PV-diesel hybrid
project finance model. Similar models for biomass-diesel hybrid, wind-diesel
hybrid and mini-hydro-diesel hybrid are available or could be customized for
your particular project.

Email me now:

energydataexpert@gmail.com

2 Responses to “Solar PV-Diesel Hybrid Project finance Model with Resource Assessment – now available”

  1. Theodora Kurtenbach Says:

    Thanks for the post Jason. It’s a good read. I own an ix-2 for my home lab. It’s great for what I need it for which is testing out vSphere Configs and learning. I wonder what the benefits would be of replacing the default ix-2 drives with a couple 2 TB WD Caviar Black Drives.



  2. Leslie Says:

    I have read so many articles or reviews regarding the blogger lovers
    however this piece of writing is truly a nice article, keep it up.



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