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Mini-Hydro Model with CDM

October 11th, 2013 Posted in mini hydro

Mini-Hydro Model with CDM

Here is a sample of a project finance model for a mini-hydro power plant using the Clean Development Mechanism principles, i.e. no escalation, no taxes and government imposts and around 15% p.a. return on investment, and 100% owners’ equity only (no leveraging with cheap debt).

The CDM analyses the economics purely on the technical and economic performance of the technology (capacity, reliability, availability, efficiency, capital cost, and operating & maintenance costs).

Please confirm your order via email to:

energydataexpert@gmail.com

so I will email you the bank details for the wire/bank transfer.

Once the bank confirms receipt of remittance, I will then email you the spreadsheet model.

Thanks.

 

— Inputs & Assumptions worksheet:

Project Site Name & Location Pasonanca 6 mw
Renewable Energy Source Mini-Hydro
Hours per Year

8760

   
Timing  
  Construction Period (from FC) (months)

12

  Operating Period (Yrs from COD)

20

  Yrs from base year CPI & Forex (2009) for FIT

4

  Yrs from base year CPI (2011) for CAPEX

1

  Yrs from base year CPI (2011) for OPEX

2

   
Construction Sources and Uses of Funds, $000  
  Uses of Fund:  
    EPC (Equipment, Balance of Plant, Transport, Access Roads)

$13,510

    Transmission Line Interconnection Facility

$2,186

    Sub-Station Facility

$520

    Development & Other Costs

$653

    Construction Contingency

$1,264

    Value Added Tax

$1,011

    Financing Costs

$1,035

    Initial Working Capital

$683

  Total Uses of Fund

$20,862

   
  Sources of Fund:  
    Debt

$14,604

    Equity

$6,259

  Total Sources of Fund

$20,862

   
  Construction Unit Costs (US$/kW):  
    EPC Cost

$2,252

    Plant Cost (Excluding VAT, Financing, Working Capital)

$3,022

    All-in Project Cost

$3,477

   
   
Model Check:  
Balance Sheet OK
Foreign Debt Amorization OK
Local Debt Amortization OK
Depreciation OK
Sources and Uses of Funds  OK
Debt-to-Equity Ratio  OK
   
Base Years  
  Base year CPI & Forex for FiT

2009

  Base year CPI for CAPEX

2011

  Base year CPI for OPEX

2011

   
Commercial Operating Date

2013

   

 

     
Technical and EPC Assumptions    
Unit Capacity of Plant (MW/unit)

6.000

 
No. of Units (unit)

1.0

 
Gross Installed Capacity (MW)

6.00

 
     
Plant Availability Factor, %

52.13%

 
Guaranteed Efficiency Factor, %

92.00%

 
Allowance for losses & own use, %

2.00%

 
Net Capacity Factor after losses & own use, %

47.00%

 
Net Electrical Output (MWh in 1st Year)

24,703

 
Plant Degration, % p.a. (1-20 Yrs)

0.20%

 
 

0.6

% LC
Equipment Cost ex BOP, Transport ($000/MW)

$2,189.00

43.0%

Insurance, Ocean Freight, Local Transport

0.0%

100.0%

Balance of Plant (BOP), % of Equipment Cost

0.0%

100.0%

Transmission Line Distance (km)

25.00

 
T/L Cost per km, 69 kV ($000/km)

$84.09

100.0%

Switchyard & Transformers ($000)

$500.00

100.0%

Access Roads ($000/km)

$20.00

100.0%

Distance of Access Road (km)

15.00

 
Dev’t & Other Costs (land, permits, etc) (% of EPC)

2.5%

100.0%

VAT on importation (70% recoverable)

12%

100.0%

Initial Working Capital (% of EPC)

5.00%

100.0%

Contingency (% of Total Cost)

7.5%

50.0%

SET NPV (G28) TO ZERO BY VARYING FIT (F30) – ctrl +e  

0.00

Operating Assumptions   Equity IRR
  Feed-in-Tariff (PhP/kWh)

5.55

16.0%

  Duration of FiT (Yrs)

20

Project IRR
  Tariff post FiT period (PhP/kWh)

7.00

13.5%

  FiT using Asset Base Methodology (PhP/kWh)

6.84

 
  Annual CER Volume (tCO2e/year) and $/tCO2e                –  

$5.00

     
  O&M Cost ($000/unit/year)

$400.00

 
  Spare Parts, Tools & Equipment ($000/MW/yr)

$1.00

 
  O&M + Spares as % of EPC, T/L, S/S

2.47%

 
  Refurbishment Cost (% of EPC)

0%

 
  Timing of Refurbishment (Year from COD)

0

 
  G&A ($000/year)

$1

 
  Fuel Cost (switch for Biomass: 1=yes, 0=no)

0

 
    Average Fuel Cost (PhP/mt)    
    Fuel Rate (kWh/mt)    
    Average Fuel Consumption (mt/year)                  –  
    Average Unit Cost of Fuel (PhP/kWh)               –     
     
  Days Receivable & Payable

30

30

  VAT Recovery

70%

 
  Timing of VAT recovery (Yrs after COD)

5

 
     

 

   
Debt and Equity Assumptions  
Local/Foreign Capital Mix:  
  Local Capital

57.9%

  Foreign Capital

42.1%

   
Debt:  
  Local & Foreign Upfront & Financing Fees

2.00%

  Local & Foreign Commitment Fees

0.50%

  Local All-in Interest Rate excluding tax

10.00%

  Local Debt Payment Period (from end of GP) (Yrs)

10

  Foreign All-in Interest Rate excluding tax

8.00%

  Foreign Debt Payment Period (from end of GP) (Yrs)

10

  Local and Foreign Grace Period from COD (months)

6

  Local and Foreign debt Service Reserve (months)

6

  Debt Ratio

70%

  Total Local Debt ($000) – 30%

$5,812

  Total Foreign Debt ($000) – 70%

$8,792

    Total Debt Amount ($000)

$14,604

   
Equity:  
  Equity Ratio

30%

  Equity Investment

$6,259

  Cost of Equity (Onshore Equity IRR) – Nominal

16.0%

  Cost of Equity (Onshore Equity IRR) – Real

11.5%

   
WACC pre-tax

11.5%

WACC after-tax

10.3%

   
Tax Assumptions  
  Income Tax Holiday (Yrs)

7

  Income Tax Rate % (after ITH)

10%

  Property tax (from COD)

1.5%

  Property tax valuation rate (% of NBV)

80%

  Local Business Tax

1.0%

  Government Share (from COD)

0.0%

  ER 1-94 Contribution (PhP/kWh)

0.01

  Withholding Tax on Interest (Foreign Currency) – WHT

10%

  Gross Receipts Tax on Interest (Local Currency) – GRT

5%

   
Economic Assumptions  
  Base Foreign Exchange Rate (PhP/US$) – 2009

47.8125

  Forward Fixed Exchange Rate (2011)

44.0000

  Base Local CPI – 2009

160.00

  Annual Local CPI

4.0%

  Annual US CPI

2.0%

  Annual Peso Depreciation Rate

2.0%

   
   

 

— Capex worksheet

Capital Cost  MW MW/unit # of units
Gross Installed capacity, MW                          6.00

6.00

1

All-in Construction Cost Breakdown

2012

   
Exchange Rate, PhP/US$

44.00

   
  US$ 000 PhP 000 % of All-in
Land                              59                        2,600

0.28%

EPC Cost      
  Equipment Cost ex Transport & BOP (FOB)                      13,510                   594,424

64.56%

  Transportation Cost to Site (INS, OFRT, LFRT)                                 –                                 –

0.00%

  Balance of Plant (BOP)                                 –                                 –

0.00%

Transmission Line Cost                        2,186                      96,200

10.45%

Switchyard & Transformer Costs                            520                      22,880

2.49%

Project Development & Other Costs                            341                      15,025

1.63%

Access Roads and Infrastructure Costs                            312                      13,728

1.49%

Construction Contingency                        1,264                      55,623

6.04%

Interest during construction                            681                      29,977

3.26%

Upfront Fees and commitment fees                            357                      15,705

1.71%

Total Plant Cost                      19,231                   846,162

91.62%

Initial Working Capital (Pre-Operating Expenses)                            683                      30,051

3.26%

VAT on Imported Equipment                        1,011                      44,479

4.83%

All-in Construction Cost                      20,925                   920,692

99.72%

       
Total Project Cost w/out Interest                      20,244                   890,715  
Total Project Cost                      20,925                   920,692  
PhP Cost per kW                     153,449  
US$ Cost per kW                        3,487    
SENSITIVITY      
Total Project Cost w/out Interest                      20,244                   890,715  
+10%                      22,268                   979,787  
-10%                      18,219                   801,644  
       
       
CER revenues/ 21 years  PhP 000 

138,701

 
%age of CapEx  

15.57%

 

 

 — Opex worksheet

Generation and Operating Costs MW MW/unit # of units
Gross Installed capacity, MW                          6.00

6

1

Generation, Revenue and O&M Cost Breakdown

2012

   
Exchange Rate, PhP/US$

44.00

   
Plant Availability Factor, %

52.13%

47.00%

overall CF
Guaranteed Efficiency Factor, %

92.00%

   
Allowance for losses & own use, %

2.00%

   
Annual operating hours, h/yr                        8,760    
Annual gross generation, MWh/yr                      25,207    
Less: Losses & Own Use, MWh/yr                            504    
Annual net generation (sales), MWh/yr                      24,703    
Electricity tariff (base case), PhP/kWh

8.00

 ORMECO Rate 

5.57

Annual sales (revenue)                   197,624  PhP 0000/yr 

8.00

       
Fuel Cost (for Biomass power plant):      
  Average thermal efficiency, % of GHV

27.09%

   
  Plant heat rate at 100% thermal efficiency, Btu/kWh                        3,412                        3,600

1.05506

  Average plant heat rate, Btu/kWh                      12,598    
  Biomass fuel gross heating value, Btu/lb                        4,000

2.2046

lb/kg
  Biomass fuel gross heating value, Btu/MT                8,818,400                        1,000 kg/MT
  Average fuel rate, kWh/MT                            700    
  Annual gross generation, kWh/yr             25,207,143                        1,000 kWh/MWh
  Annual fuel consumption, MT/yr                      36,010                                 –  
  Average fuel cost, PhP/MT                        1,297    
  Average fuel cost, PhP/kWh                        1.853    
  Annual fuel cost, PhP 000/yr                      46,705 0 Switch for biomass
  Annual fuel cost for this project (wind farm)                                 –  PhP 0000/yr   
       
O&M cost:      
  O&M of wind turbines

400.00

 US$ 000/Unit   
  No. of wind turbine units                                1  # of Units   
  Annual O&M cost for wind turbines                      17,600  PhP 0000/yr 

17,600

       
Spare parts, tools, & equipment cost:      
  Spare parts, tools, & equipment

1.00

 US$ 000/MW   
  Gross installed capacity

6.00

 MW   
  Annual spare parts, tools, & equipment cost                            264  PhP 0000/yr 

264

       
General & Administrative (G&A) cost: (salaries & benefits)      
  G&A cost

1.00

 US$ 000/yr   
  Annual G&A cost                              44  PhP 0000/yr 

44

       
Income Tax:      
  Income Tax Holiday (Yrs)                                7  Years   
  Income Tax Rate % (after ITH)

10.0%

 %   
       
Property tax:      
  Property tax valuation rate, % of book value

80.0%

 %   
  Property tax rate, % of value

1.5%

 %   
       
Local business tax:      
  Local business tax rate, % of previous year’s revenue

1.0%

 %   
       
Government share:      
  Government share of gross income (revenue – cost of goods)

0.0%

 %   
    where cost of goods = fuel cost + O&M cost + spares + depreciation)      
       
ER 1-94 Contribution:      
  ER 1-94 Contribution Rate

0.01

 PhP/kWh   
       
Economic life (depreciation period):      
  Years of economic operation for wind                                4  Years   
       
Financing:      
  Local Capital Ratio

57.98%

 %  Flags:
  Foreign Capital Ratio 

42.02%

 %  0
  Debt ratio

70.00%

 %  0
       
  Local & Foreign Upfront & Financing Fees

2.00%

 %   
  Local & Foreign Commitment Fees

0.50%

 %   
      grace period
  Foreign All-in Interest Rate excluding tax

8.00%

 % p.a.  months
  Foreign Debt Payment Period (from end of GP) (Yrs)

10

 Years  6
  Withholding Tax on Interest (Foreign Currency) – WHT

10.00%

 % p.a.   
  All-in foreign interest rate (base + tax) – with WHT

8.89%

 % p.a.   
      grace period
  Local All-in Interest Rate excluding tax

10.00%

 % p.a.  months
  Local Debt Payment Period (from end of GP) (Yrs)

10

 Years  6
  Gross Receipts Tax on Interest (Local Currency) – GRT

5.00%

 % p.a.   
  All-in local interest rate  (base + tax) – with GRT

10.53%

 % p.a.   
       
       
       
CER revenues/ 21 years  PhP 000 

138,701

 
Total O&M cost  PhP 000 

17,908

 
Years O&M covered  

7.75

 
       
Debt service cost                                 –    
   

0.00%

 

 

— Revenues worksheet

Project revenues        
Size (MW)                              6.00 MW  
Capacity factor  

47.00%

       8,760  
GWh  

24,703

MWh  
kWh  

24,703,000

kWh  
Generation charge/ kWh PhP                            8.00 PhP/kWh  
Income/ yr PhP               197,624,000 PhP/yr  
         
Sensitivity        
+10% PhP               217,386,400    
-10% PhP               177,861,600    
+60% PhP               316,198,400    
         
CDM/ carbon revenues        
1 EUR=PhP PhP

56.17

   
CERs                          11,759    
CER price EUR

10.00

   
GEF  

0.476

   
CER value PhP                   6,604,821    
         
CER revenues/ 21 years PhP               138,701,248    
         
         
+ 10% on tariff PhP                            8.80    
+ 60% on tariff PhP                          12.80    
         

 

— Project IRR worksheet

Project IRR for CDM Pre tax (no escalation)

100.00%

Equity 19.56%
Year (act) Year CapEx
PhP(10^3)
OpEx
PhP(10^3)
TPC
PhP(10^3)
Revenue
PhP(10^3)
EBITDA Interest
PhP (10^3)
Net cash flow (pre-tax)
PhP(10^3)
                 
                 
2011 0              
2012 0         (890,715.39)             (890,715.39)           (890,715.39)                       (890,715.39)
2013 1                 (28,843.61)             (28,843.61)           197,624.00           168,780.39                         –                         168,780.39
2014 2                 (28,147.71)             (28,147.71)           197,624.00           169,476.29                         –                         169,476.29
2015 3                 (25,475.56)             (25,475.56)           197,624.00           172,148.44                         –                         172,148.44
2016 4                 (22,803.42)             (22,803.42)           197,624.00           174,820.58                         –                         174,820.58
2017 5                 (20,131.27)             (20,131.27)           197,624.00           177,492.73                         –                         177,492.73
2018 6                 (17,459.12)             (17,459.12)           197,624.00           180,164.88                         –                         180,164.88
2019 7                 (14,786.98)             (14,786.98)           197,624.00           182,837.02                         –                         182,837.02
2020 8                 (12,114.83)             (12,114.83)           197,624.00           185,509.17                         –                         185,509.17
2021 9                   (9,442.69)               (9,442.69)           197,624.00           188,181.31                         –                         188,181.31
2022 10                   (6,770.54)               (6,770.54)           197,624.00           190,853.46                         –                         190,853.46
2023 11                   (4,098.39)               (4,098.39)           197,624.00           193,525.61                         –                         193,525.61
2024 12                   (1,426.25)               (1,426.25)           197,624.00           196,197.75                         –                         196,197.75
2025 13                     1,245.90                 1,245.90           197,624.00           198,869.90                         –                         198,869.90
2026 14                   3,918.05                 3,918.05           197,624.00           201,542.05                         –                         201,542.05
2027 15                   6,590.19                 6,590.19           197,624.00           204,214.19                         –                         204,214.19
2028 16                   9,262.34                 9,262.34           197,624.00           206,886.34                         –                         206,886.34
2029 17                 11,934.48               11,934.48           197,624.00           209,558.48                         –                         209,558.48
2030 18                 14,606.63               14,606.63           197,624.00           212,230.63                         –                         212,230.63
2031 19                 17,278.78               17,278.78           197,624.00           214,902.78                         –                         214,902.78
2032 20                 19,950.92               19,950.92           197,624.00           217,574.92                         –                         217,574.92
Totals           (890,715.39)           (106,713.08)           (997,428.47)        3,952,480.00        2,955,051.53                      2,955,051.53

 

— Sensitivity worksheet

Sensitivity Analysis     Pre tax (no escalation)

100.00%

Equity
Year Year (CPA) Base case
PhP(10^3)
With CDM
PhP(10^3)
Tariff +10% Tariff runs +60% Tariff -10% CapEx
TPC -10%
CapEx
TPC +10%
O&M +10% O&M -10%
                     
                     
2010 0                          –                            –                            –                             –                            –                            –                            –                            –                            –  
2011 0         (890,715.39)         (890,715.39)         (890,715.39)           (890,715.39)         (890,715.39)         (801,643.85)         (979,786.93)         (890,715.39)         (890,715.39)
2012 1           168,780.39           168,780.39           188,542.79            287,354.79           149,017.99           168,780.39           168,780.39           165,896.02           171,664.75
2013 2           169,476.29           176,081.11           189,238.69            294,655.51           156,318.71           169,476.29           169,476.29           166,661.52           172,291.06
2014 3           172,148.44           178,753.26           191,910.84            297,327.66           158,990.86           172,148.44           172,148.44           169,600.88           174,695.99
2015 4           174,820.58           181,425.41           194,582.98            299,999.81           161,663.01           174,820.58           174,820.58           172,540.24           177,100.93
2016 5           177,492.73           184,097.55           197,255.13            302,671.95           164,335.15           177,492.73           177,492.73           175,479.60           179,505.86
2017 6           180,164.88           186,769.70           199,927.28            305,344.10           167,007.30           180,164.88           180,164.88           178,418.96           181,910.79
2018 7           182,837.02           189,441.84           202,599.42            308,016.24           169,679.44           182,837.02           182,837.02           181,358.32           184,315.72
2019 8           185,509.17           192,113.99           205,271.57            310,688.39           172,351.59           185,509.17           185,509.17           184,297.69           186,720.65
2020 9           188,181.31           194,786.14           207,943.71            313,360.54           175,023.74           188,181.31           188,181.31           187,237.05           189,125.58
2021 10           190,853.46           197,458.28           210,615.86            316,032.68           177,695.88           190,853.46           190,853.46           190,176.41           191,530.51
2022 11           193,525.61           200,130.43           213,288.01            318,704.83           180,368.03           193,525.61           193,525.61           193,115.77           193,935.45
2023 12           196,197.75           202,802.57           215,960.15            321,376.97           183,040.17           196,197.75           196,197.75           196,055.13           196,340.38
2024 13           198,869.90           205,474.72           218,632.30            324,049.12           185,712.32           198,869.90           198,869.90           198,994.49           198,745.31
2025 14           201,542.05           208,146.87           221,304.45            326,721.27           188,384.47           201,542.05           201,542.05           201,933.85           201,150.24
2026 15           204,214.19           210,819.01           223,976.59            329,393.41           191,056.61           204,214.19           204,214.19           204,873.21           203,555.17
2027 16           206,886.34           213,491.16           226,648.74            332,065.56           193,728.76           206,886.34           206,886.34           207,812.57           205,960.10
2028 17           209,558.48           216,163.31           229,320.88            334,737.71           196,400.91           209,558.48           209,558.48           210,751.93           208,365.04
2029 18           212,230.63           218,835.45           231,993.03            337,409.85           199,073.05           212,230.63           212,230.63           213,691.29           210,769.97
2030 19           214,902.78           221,507.60           234,665.18            340,082.00           201,745.20           214,902.78           214,902.78           216,630.65           213,174.90
2031 20           217,574.92           224,179.74           237,337.32            342,754.14           204,417.34           217,574.92           217,574.92           219,570.01           215,579.83
Totals          2,955,051.53        3,080,543.14        3,350,299.53         5,452,031.14        2,685,295.14        3,044,123.07        2,865,979.99        2,944,380.22        2,965,722.84
IRRs  

19.56%

20.19%

21.81%

33.42%

17.92%

21.82%

17.67%

19.35%

19.77%

 

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