How to use the advanced (regulator) natural gas OCGT power plant project finance model

July 25th, 2017 No Comments   Posted in financial models

How to use the advanced (regulator) natural gas OCGT power plant project finance model

Finding an easy-to-use project finance model for a natural gas OCGT (open cycle gas turbine, also known as simple cycle gas turbine) power plant with built-in data is sometimes difficult as some models don’t have the sophistication of a regulator template model as well as the ease of using the model and viewing immediately the results of a sensitivity change in the inputs to the model.

This is now made easy because the Input & Assumptions worksheet (tab) has combined all the input and output information in a single worksheet and placing the reports in other worksheets such as Tariff Breakdown, Construction Period, Operating Period, Financial Reports and Levelized Tariff.

Following is a sample case study on a natural gas OCGT power plant. From the preliminary design and cost estimates, the top management would want to know if the business idea of going into natural gas OCGT power development, construction and operation is worth the effort – is it feasible and what are the economic and financial returns for risking capital.

Here are the inputs and outputs of the advanced template model from OMT ENERGY ENTERPRISES:

——————————————————————————————-

Here are the summary of inputs:

all-in capital cost (overnight cost) = 973 $/kW (target cost)

EPC cost portion = 575 $/kW (computed by model)

refurbishment cost = 5% of EPC cost on the 12th year (overhaul)

fixed O&M cost = 7.34 $/kW/year (target cost) = 474.49 ‘000$/unit/year (computed by goal seek)

variable O&M cost = 15.45 $/MWh (target cost) = 40.44 ‘000$/MW/year (computed by goal seek)

general admin cost = 10.00 ‘000$/year (target cost)

 

Thermal power plant inputs:

Gross heating value of natural gas OCGT fuel = 22,129 Btu/lb

Plant heat rate = 10,850 Btu/kWh (31.45% thermal efficiency)

Cost of fuel per mmBtu = 9.103 $/mmBtu

Cost of natural gas fuel = 8.628 $/GJ = 444.10 $/MT

 

Lube oil consumption rate = 5.4 gram/kWh

Density of lube oil = 0.980 kg/Liter

Cost of lube oil = 200.00 PhP/Liter

 

capacity = 85.00 MW/unit x 1 unit = 85.00 MW

 

Plant Availability Factor, %                                    33.24% (computed by goal seek)

Load Factor, %                                                           95.00% (assumed)

allowance for losses & own use, %                           5.00% (assumed)

Net Capacity Factor after losses & own use, %    30.00% (target net capacity factor)

Degradation rate, %                                                  0.2%

 

construction period = 36 months (start 2014)

operating period = 30 years (start 2017)

 

Capital cost estimation assumptions and % local cost (LC):

Power plant footprint (ha)                                   20.00

Cost of purchased land (PhP/sqm)                    25.00 (no land lease)

Land cost, $000 $49.70 100.0%
Equipment Cost ex BOP, Transport ($000/MW) $479.89 11.4%
Insurance, Ocean Freight, Local Transport, % of Equipment Cost 4.5% 100.0%
Balance of Plant (BOP), % of Equipment Cost 21.0% 100.0%
Transmission Line Distance (km) 1.00
T/L Cost per km, 69 kV ($000/km) $40.00 100.0%
Switchyard & Transformers ($000) $786.21 100.0%
Access Roads ($000/km) $181.82 100.0%
Distance of Access Road (km) 1.00
Dev’t & Other Costs (land, permits, etc) (% of EPC) 15.0% 100.0%
VAT on importation (70% recoverable) 12% 100.0%
Customs Duty 3% 100.0%
Initial Working Capital (% of EPC) 11.0% 100.0%
Contingency (% of Total Cost) 4.0% 49.4%

 

Capital cost breakdown (‘000$): (computed values)

Uses of Fund:
   Land Cost $50
   EPC (Equipment, Balance of Plant, Transport) $51,192
   Transmission Line Interconnection Facility $40
   Sub-Station Facility $786
   Development & Other Costs (Civil Works, Customs Duty) $9,226
   Construction Contingency $2,395
   Value Added Tax $4,484
   Financing Costs $8,887
   Initial Working Capital $5,646
Total Uses of Fund – $000 $82,707
                                 – PhP 000 4,159,909
Sources of Fund:
   Debt $57,895
   Equity $24,812
Total Sources of Fund $82,707

 

Local and Foreign Cost Components (from individual cost item):

Local Capital = 49 %

Foreign Capital = 51 %

 

Balance Sheet Accounts:

Receivables = 30 days of revenue

Payables    = 30 days of expenses

Inventory    = 60 days of consumables

 

Imported Capital Equipment: (fossil fuel)

Customs duty = 3%

Value added tax (VAT) = 12%

VAT recovery = 0% on 5th year of operation

 

Type of input / output VAT = 1 (with VAT)

Type of incentives = 1 (NO incentives)

 

Tax Assumptions:

Income Tax Holiday (yrs) 0
Income Tax Rate % (after ITH) 30%
Property tax (from COD) 2.0%
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 1%
Documentary Stamps Tax (DST) 0.5%
PEZA Incentives (% of gross income) – 0% / 5% 0%
Royalty 0%

 

Capital Structure:

Equity Share = 30% at 14.00% p.a. target equity returns (IRR)

Debt Share = 70% (49% local, 51% foreign)

 

Debt Terms:

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 (mos) 6
Local and Foreign debt Service Reserve (mos) 6

 

Foreign Exchange Rate:

Base Foreign Exchange Rate (PhP/US$) – 2013            48.0000 (construction)

Forward Fixed Exchange Rate (PhP/US$) – 2014           50.2971 (operating)

 

Escalation (CPI):

Annual Local CPI – for OPEX      0.0%            4.0%     for CAPEX (to model construction delay)

Annual US CPI – for OPEX           0.0%            2.0%     for CAPEX (to model construction delay)

 

Weighted Average Cost of Capital:

WACC = 10.49% p.a.

WACC pre-tax = 11.99% p.a.

WACC after-tax = 8.39% p.a.

 

Results of Financial Analysis:

 

First year tariff (Feed-in-Tariff) = 9.58605 P/kWh = 0.19059 USD/kWh

(at zero equity NPV)

 

Short run marginal cost (SRMC) and Long run marginal cost (LRMC):

Item PhP 000 PhP/kWh
Fuel        34,026,803 5.22921
Lubes                7,548 0.00116
Var O&M          5,315,159 0.81683
Total        39,349,510 6.04720
MWh net          6,507,059
SRMC        39,349,510 6.04720
Fix O&M          2,630,382 0.40424
Capital Cost        20,397,131 3.13462
LRMC        62,377,023 9.58605

SRMC = 6.04720 PHP/kWh (variable O&M + fuel + lubes)

LRMC = 9.58605 PHP/kWh (capital cost + fixed O&M + regulatory + SRMC)

 

Equity Returns: (30% equity, 70% debt)

IRR          = 14.00    % p.a. (target returns)

NPV        = 0.00     ‘000$

PAYBACK = 10.05 years

 

Project Returns: (100% equity, 0% debt)

IRR          = 11.60          % p.a.

NPV        = (570,157)  ‘000$ (negative since IRR < 14.00%)

PAYBACK = 7.29           years

——————————————————————————————-

The above runs were based on goal-seek to make equity NPV = 0 (to meet equity IRR target of 14.00% p.a.).

You can perform sensitivity analysis and save the results in a case column (copy paste value).

You can breakdown the tariff ($/kWh) into its capital ($/kW-month) and variable cost recovery ($/kWh) portions.

You can prepare all-in capital cost breakdown showing interest cost during construction and does model the impact of project construction delays.

You can show the evolution of capacity and generation (degradation) during the operating period and show other revenues, expenses and balance sheet accounts as they change over time during operation years.

You can show the income & expense statement.

You can show the cash flow statement.

You can show the balance sheet.

You can show the debt service cover ratio (DSCR) as it computes the cash flow available for debt service.

It also computes the benefits to cost ratio (B/C) of the project.

Finally, it computes the other financial ratios such as:

LIQUIDITY RATIOS

SOLVENCY RATIOS

EFFICIENCY RATIOS

PROFITABILITY RATIOS

MARKET PROSPECT RATIOS

 

Download the sample file below:

Model Inputs and Results – Natural Gas Simple Cycle GT

 

Download the complete demo model for a natural gas OCGT power plant in PHP and USD currencies are shown below:

ADV Natgas Simple Cycle Model3 – demo5b

ADV Natgas Simple Cycle Model3 (USD) – demo5b

If you have actual data from your OEM and EPC suppliers, kindly share the data with me or simply enter your live data into the above models and see how the results will change immediately before your eyes. Please email me back the updated demo model with your new data so you may share it will all our readers of this blog.

 

To purchase the PHP and USD models at a discount, click the link below:

Natural Gas-fired OCGT 85 mw Power Project Finance Model Ver. 3 – in USD and PHP Currency

 

You may place your order now and avail of a package for the unlocked model and I will give you one-hour free for assistance in putting your input data into the model (via telephone or email or FB messenger).

Your energy technology selection expert.

Email me for more details and how to order off-line:

energydataexpert@gmail.com

Visit our on-line digital store to order on-line

www.energydataexpert.com

www.energytechnologyexpert.com

 

How to use the advanced (regulator) natural gas CCGT power plant project finance model

July 25th, 2017 No Comments   Posted in financial models

How to use the advanced (regulator) natural gas CCGT power plant project finance model

Finding an easy-to-use project finance model for a natural gas CCGT (combined cycle gas turbine) power plant with built-in data is sometimes difficult as some models don’t have the sophistication of a regulator template model as well as the ease of using the model and viewing immediately the results of a sensitivity change in the inputs to the model.

This is now made easy because the Input & Assumptions worksheet (tab) has combined all the input and output information in a single worksheet and placing the reports in other worksheets such as Tariff Breakdown, Construction Period, Operating Period, Financial Reports and Levelized Tariff.

Following is a sample case study on a natural gas CCGT power plant. From the preliminary design and cost estimates, the top management would want to know if the business idea of going into natural gas CCGT power development, construction and operation is worth the effort – is it feasible and what are the economic and financial returns for risking capital.

Here are the inputs and outputs of the advanced template model from OMT ENERGY ENTERPRISES:

——————————————————————————————-

Here are the summary of inputs:

all-in capital cost (overnight cost) = 917 $/kW (target cost)

EPC cost portion = 575 $/kW (computed by model)

refurbishment cost = 5% of EPC cost on the 12th year (overhaul)

fixed O&M cost = 14.13 $/kW/year (target cost) = 6,916.62 ‘000$/unit/year (computed by goal seek)

variable O&M cost = 3.60 $/MWh (target cost) = 26.87 ‘000$/MW/year (computed by goal seek)

general admin cost = 370.00 ‘000$/year (target cost)

 

Thermal power plant inputs:

Gross heating value of natural gas CCGT fuel = 22,129 Btu/lb

Plant heat rate = 7,050 Btu/kWh (48.40% thermal efficiency)

Cost of fuel per mmBtu = 9.103 $/mmBtu

Cost of natural gas fuel = 8.628 $/GJ = 444.10 $/MT

 

Lube oil consumption rate = 5.4 gram/kWh

Density of lube oil = 0.980 kg/Liter

Cost of lube oil = 200.00 PhP/Liter

 

capacity = 620.00 MW/unit x 1 unit = 620.00 MW

 

Plant Availability Factor, %                                    96.40% (computed by goal seek)

Load Factor, %                                                     95.00% (assumed)

allowance for losses & own use, %                         5.00% (assumed)

Net Capacity Factor after losses & own use, %    87.00% (target net capacity factor)

Degradation rate, %                                               0.2%

 

construction period = 36 months (start 2014)

operating period = 25 years (start 2017)

 

Capital cost estimation assumptions and % local cost (LC):

Power plant footprint (ha)                                   20.00

Cost of purchased land (PhP/sqm)                    25.00 (no land lease)

Land cost, $000 $99.41 100.0%
Equipment Cost ex BOP, Transport ($000/MW) $458.10 11.4%
Insurance, Ocean Freight, Local Transport, % of Equipment Cost 4.5% 100.0%
Balance of Plant (BOP), % of Equipment Cost 21.0% 100.0%
Transmission Line Distance (km) 1.00
T/L Cost per km, 69 kV ($000/km) $40.00 100.0%
Switchyard & Transformers ($000) $786.21 100.0%
Access Roads ($000/km) $181.82 100.0%
Distance of Access Road (km) 1.00
Dev’t & Other Costs (land, permits, etc) (% of EPC) 15.0% 100.0%
VAT on importation (70% recoverable) 12% 100.0%
Customs Duty 3% 100.0%
Initial Working Capital (% of EPC) 11.0% 100.0%
Contingency (% of Total Cost) 4.0% 48.7%

 

Capital cost breakdown (‘000$): (computed values)

Uses of Fund:
   Land Cost $99
   EPC (Equipment, Balance of Plant, Transport) $356,450
   Transmission Line Interconnection Facility $40
   Sub-Station Facility $786
   Development & Other Costs (Civil Works, Customs Duty) $63,157
   Construction Contingency $16,437
   Value Added Tax $31,222
   Financing Costs $61,034
   Initial Working Capital $39,316
Total Uses of Fund – $000 $568,542
                                 – PhP 000 28,596,013
Sources of Fund:
   Debt $397,979
   Equity $170,563
Total Sources of Fund $568,542

 

Local and Foreign Cost Components (from individual cost item):

Local Capital = 49 %

Foreign Capital = 51 %

 

Balance Sheet Accounts:

Receivables = 30 days of revenue

Payables    = 30 days of expenses

Inventory    = 60 days of consumables

 

Imported Capital Equipment: (fossil fuel)

Customs duty = 3%

Value added tax (VAT) = 12%

VAT recovery = 0% on 5th year of operation

 

Type of input / output VAT = 1 (with VAT)

Type of incentives = 1 (NO incentives)

 

Tax Assumptions:

Income Tax Holiday (yrs) 0
Income Tax Rate % (after ITH) 30%
Property tax (from COD) 2.0%
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 1%
Documentary Stamps Tax (DST) 0.5%
PEZA Incentives (% of gross income) – 0% / 5% 0%
Royalty 0%

 

Capital Structure:

Equity Share = 30% at 14.00% p.a. target equity returns (IRR)

Debt Share = 70% (49% local, 51% foreign)

 

Debt Terms:

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 (mos) 6
Local and Foreign debt Service Reserve (mos) 6

 

Foreign Exchange Rate:

Base Foreign Exchange Rate (PhP/US$) – 2013            48.0000 (construction)

Forward Fixed Exchange Rate (PhP/US$) – 2014           50.2971 (operating)

 

Escalation (CPI):

Annual Local CPI – for OPEX      0.0%            4.0%     for CAPEX (to model construction delay)

Annual US CPI – for OPEX           0.0%            2.0%     for CAPEX (to model construction delay)

 

Weighted Average Cost of Capital:

WACC = 10.48% p.a.

WACC pre-tax = 11.97% p.a.

WACC after-tax = 8.38% p.a.

 

Results of Financial Analysis:

 

First year tariff (Feed-in-Tariff) = 4.81729 P/kWh = 0.09578 USD/kWh

(at zero equity NPV)

 

Short run marginal cost (SRMC) and Long run marginal cost (LRMC):

Item PhP 000 PhP/kWh
Fuel      391,742,442 3.39778
Lubes            133,745 0.00116
Var O&M        21,841,145 0.18944
Total      413,717,332 3.58838
MWh net      115,293,514
SRMC      413,717,332 3.58838
Fix O&M        23,045,754 0.19989
Capital Cost      118,638,864 1.02902
LRMC      555,401,951 4.81729

SRMC = 3.58838 PHP/kWh (variable O&M + fuel + lubes)

LRMC = 4.81729 PHP/kWh (capital cost + fixed O&M + regulatory + SRMC)

 

Equity Returns: (30% equity, 70% debt)

IRR          = 14.00    % p.a. (target returns)

NPV        = 0.00     ‘000$

PAYBACK = 9.87    years

 

Project Returns: (100% equity, 0% debt)

IRR          = 11.41          % p.a.

NPV        = (4,243,735)  ‘000$ (negative since IRR < 14.00%)

PAYBACK = 7.35           years

——————————————————————————————-

The above runs were based on goal-seek to make equity NPV = 0 (to meet equity IRR target of 14.00% p.a.).

You can perform sensitivity analysis and save the results in a case column (copy paste value).

You can breakdown the tariff ($/kWh) into its capital ($/kW-month) and variable cost recovery ($/kWh) portions.

You can prepare all-in capital cost breakdown showing interest cost during construction and does model the impact of project construction delays.

You can show the evolution of capacity and generation (degradation) during the operating period and show other revenues, expenses and balance sheet accounts as they change over time during operation years.

You can show the income & expense statement.

You can show the cash flow statement.

You can show the balance sheet.

You can show the debt service cover ratio (DSCR) as it computes the cash flow available for debt service.

It also computes the benefits to cost ratio (B/C) of the project.

Finally, it computes the other financial ratios such as:

LIQUIDITY RATIOS

SOLVENCY RATIOS

EFFICIENCY RATIOS

PROFITABILITY RATIOS

MARKET PROSPECT RATIOS

 

Download the sample file below:

Model Inputs and Results – Natural Gas Combined Cycle GT

 

Download the complete demo model for a natural gas CCGT power plant in PHP and USD currencies are shown below:

ADV Natgas Combined Cycle Model3 – demo5b

ADV Natgas Combined Cycle Model3 (USD) – demo5b

If you have actual data from your OEM and EPC suppliers, kindly share the data with me or simply enter your live data into the above models and see how the results will change immediately before your eyes. Please email me back the updated demo model with your new data so you may share it will all our readers of this blog.

 

To purchase the PHP and USD models at a discount, click the link below:

Natural Gas-fired CCGT 620 mw Power Project Finance Model Ver. 3 – in USD and PHP Currency

 

You may place your order now and avail of a package for the unlocked model and I will give you one-hour free for assistance in putting your input data into the model (via telephone or email or FB messenger).

Your energy technology selection expert.

Email me for more details and how to order off-line:

energydataexpert@gmail.com

Visit our on-line digital store to order on-line

www.energydataexpert.com

www.energytechnologyexpert.com

 

Combined Cycle and Simple (Open) Cycle Gas Turbine Project Finance Model Template (Financials Tab) – free demo

April 17th, 2016 No Comments   Posted in power generation

Combined Cycle and Simple (Open) Cycle Gas Turbine Project Finance Model Template (Financials Tab) – free demo

This is the latest project finance model template (financials tab or worksheet) that your energy technology selection expert has developed for the various natural gas-fired power generation technologies. Familiarize with the template and if interested, get the full unlocked version for your immediate use. I can also provide data input service or customize further the model.

Natural gas is a clean fuel that may be used in simple cycle (open cycle or Brayton cycle) gas turbines such as those used in jet engines, or when the waste heat is recovered in a heat recovery boiler (Rankin cycle). This two cycles (Brayton and Rankin) combine to raise the overall thermal efficiency from 33% to over 54%.

More »

AG&P plans big power plant

August 23rd, 2013 No Comments   Posted in Energy Supply, Uncategorized

AG&P plans big power plant

By Alena Mae S. Flores | Posted on Aug. 17, 2013 at 12:01am

http://manilastandardtoday.com/2013/08/17/agp-plans-big-power-plant/

Atlantic, Gulf and Pacific Company of Manila Inc. will build a 2,400-megawatt combined cycle gas turbine power plant project inside the PNOC AFC Industrial Estate in Bataan.

AG&P is an industrial process outsourcing company providing fabrication and assembly, modularization and asset management services to the oil and gas, mining, power and civil infrastructure sectors.

The industrial estate, meanwhile, is owned by PNOC Alternative Fuels Corp., formerly known as PNOC Petrochemical Development Corp. until its articles of incorporation was amended on July 13, 2006. More »

HOW TO PLAN AND OPTIMIZE THE ENERGY, OIL, GAS, POWER AND TRANSMISSION INFRASTRUCTURE OF THE PHILIPPINES

HOW TO PLAN AND OPTIMIZE THE ENERGY, OIL, GAS, POWER AND TRANSMISSION INFRASTRUCTURE OF THE PHILIPPINES

My sincerest thanks to the readers, government officials, private investors, power developers, funding institution and non-government organizations that will respond positively to this conversation that I started recently as part of my functions as Senior Power Generation Engineer at SKM.

It is my fervent hope that this conversation will be continued as a result of your endorsement to the right parties and that timely coordination and meetings are done soonest as time is of the essence in having an integrated and optimized energy master plan for the country before year end 2013.

 

More »

Energy and Climate Change Projects of MARCIAL OCAMPO

May 18th, 2012 1 Comment   Posted in Energy and Climate Change

Energy and Climate Change Projects of MARCIAL OCAMPO

A)    International Consultancy on Renewable Energy, Fuel Cell Bus, Climate Change and GHG Inventory

1)      External Evaluation of ESMAP 2007-2011

January 6-19, 2012 completed (Manila, Philippines)

The Baastel Consulting Group has been contracted by the World Bank to carry out an
independent review of the outcomes and achievements of ESMAP for the last five
years.  ESMAP (Energy Sector Management Assistance Program) is a global knowledge and technical assistance partnership administered by the World Bank. ESMAP’s primary mission is to assist low and middle-income countries to increase know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. More »

Shopping Cart for my Power Generation and Fuel Cycle Technology Power Pt Presentation and Articles – new price list

August 13th, 2011 No Comments   Posted in power generation

Shopping Cart for my Power Generation and Fuel Cycle Technology Power Pt Presentation and Articles – new price list

Due to the tremendous interest and response from avid readers to this blog, your energy technology selection and business development expert is now automating the order taking, payment and downloading of its various power generation power pt presentable and articles as well as project finance models.

Here is the new price list for my energy data base, power plant emission, feed-in-tariff, renewable energy resource assessment and project finance models for conventional, renewable and nuclear energy.

If you are investing in energy and power generation projects in the Philippines or any other country, please email me so you could outsource to me the gathering of all energy, oil and power consumption, demand and projections to support the market study of your feasibility studies. More »