How to use the advanced (regulator) nuclear PHWR power plant project finance model

July 26th, 2017 No Comments   Posted in financial models

How to use the advanced (regulator) nuclear PHWR power plant project finance model

Finding an easy-to-use project finance model for a nuclear PHWR (pressurized hot water reactor) 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 nuclear PHWR power plant. From the preliminary design and cost estimates, the top management would want to know if the business idea of going into nuclear PHWR 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:

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Here are the summary of inputs:

all-in capital cost (overnight cost) = 5,530 $/kW (target cost)

EPC cost portion = 3,256 $/kW (computed by model)

refurbishment cost = 5% of EPC cost on the 15th year (overhaul)

fixed O&M cost = 93.28 $/kW/year (target cost) = 111,436.79 ‘000$/unit/year (computed by goal seek)

variable O&M cost = 2.14 $/MWh (target cost) = 10.88 ‘000$/MW/year (computed by goal seek)

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

 

Thermal power plant inputs:

Gross heating value of nuclear fuel = 1,676,708,808 Btu/lb

Plant heat rate = 10,268 Btu/kWh (33.23% thermal efficiency of steam cycle)

Energy content of nuclear fuel = 3,900 GJ/kg

Electricity generation per kg = 360,000 kWh/kg

Cost of nuclear fuel = 365 (fuel) + 400 (fabrication) = 765 $/kg = 765,000 $/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 = 1,330.00 MW/unit x 1 unit = 1,330.00 MW

 

Plant Availability Factor, %                                    96.67% (computed by goal seek)

Load Factor, %                                                     98.00% (assumed)

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

Net Capacity Factor after losses & own use, %    90.00% (target net capacity factor)

Degradation rate, %                                               0.5%

 

construction period = 60 months (start 2014)

operating period = 30 years (start 2019)

 

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

Power plant footprint (ha)                                   50.00

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

Land cost, $000 $248.52 100.0%
Equipment Cost ex BOP, Transport ($000/MW) $2,594.07 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 $249
   EPC (Equipment, Balance of Plant, Transport) $4,329,885
   Transmission Line Interconnection Facility $40
   Sub-Station Facility $786
   Development & Other Costs (Civil Works, Customs Duty) $765,110
   Construction Contingency $199,215
   Value Added Tax $379,079
   Financing Costs $1,203,247
   Initial Working Capital $477,586
Total Uses of Fund – $000 $7,355,197
                                 – PhP 000 369,945,067
Sources of Fund:
   Debt $5,148,638
   Equity $2,206,559
Total Sources of Fund $7,355,197

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 = 11.98% p.a.

WACC after-tax = 8.38% p.a.

 

Results of Financial Analysis:

 

First year tariff (Feed-in-Tariff) = 7.59514 P/kWh = 0.15101 USD/kWh

(at zero equity NPV)

 

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

Item PhP 000 PhP/kWh
Fuel        32,825,596 0.11251
Lubes            338,460 0.00116
Var O&M        32,718,776 0.11214
Total        65,882,832 0.22581
MWh net      291,765,159
SRMC        65,882,832 0.22581
Fix O&M      301,344,116 1.03283
Capital Cost    1,848,769,523 6.33650
LRMC    2,215,996,471 7.59514

SRMC = 0.22581 PHP/kWh (variable O&M + fuel + lubes)

LRMC = 7.59514 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 = 8.68 years

 

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

IRR          = 10.96          % p.a.

NPV        = (58,478,322)  ‘000$ (negative since IRR < 14.00%)

PAYBACK = 6.73           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 – Nuclear PHWR

 

Download the complete demo model for a nuclear PHWR power plant in PHP and USD currencies are shown below:

ADV Nuclear PHWR Model3 – demo5b

ADV Nuclear PHWR 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:

Nuclear 1330 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

 

The Alternatives to Nuclear Power and Expensive Renewable Energy Technologies

September 8th, 2016 No Comments   Posted in cost of power generation, Uncategorized

The Alternatives to Nuclear Power and Expensive Renewable Energy Technologies

Talks about using nuclear energy and reviving the Bataan Nuclear Power Plant (BNPP) and to use rapidly getting cheaper renewable energy such as solar PV and wind are all long-shots in making Philippine electricity cheaper and more reliable.

What the country needs are safe, indigenous and base load power plants.

The nuclear option is a long-way to go as the country needs to develop and upgrade its nuclear regulatory framework (our Philippine Atomic Energy Commission is a research agency, not a nuclear regulator), the BNPP has to be technically, environmentally, geologically and economically studied to see if it is safe, its components are still in good working order or needs to be replaced and upgraded, the country is equipped to handle any nuclear mishaps, accidents, terrorist attacks, and the additional $1 billion to upgrade and make operational and cost of nuclear fuel rods will still allow BNPP to make electricity below grid rate of 5-6 P/kWh. We can’t reduce power costs unless we introduce power plants that are cheaper to build, more efficient to run, environmentally and geologically compliant, and have secure and cheaper sources of fuels. More »

Nuclear Energy Project Finance Model Template (Financials Tab) – free demo

April 17th, 2016 No Comments   Posted in power generation

Nuclear Energy 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 a nuclear power generation technology. 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.

Nuclear Energy stored on the earth’s crust during its creation, and its extraction and concentration using various methods such as chemical extraction and centrifuging has provided a great transition fuel for mankind as the world bids time to shift form fossil fuels that have limited life times (e.g. oil to be exhausted in 60 years, natural gas also in the same life time as oil, and coal to be consumed in 250 years) to unlimited renewable energy from the sun (solar PV, solar thermal, hydro, pumped storage, wind, ocean thermal, wave energy). The use of nuclear power has provided many countries with a cheap source of energy and power, though a number of safety issues and actual nuclear mishaps has occurred, notable of which is the Chernobyl in USSR and Fukushima in Japan.

More »

Why the Philippines is Lacking in Power Supply Always and is Expensive Compared to its Asian Neighbors

September 24th, 2014 No Comments   Posted in cost of power generation

Why the Philippines is Lacking in Power Supply Always and is Expensive Compared to its Asian Neighbors

Following is the outline of my power point presentation on “Why the Philippines is Lacking in Power Supply Always” and  why the Philippines has one of the highest power rate in Asia and the World.

If you need the pdf version, please email me so I could respond to your request.

 “Why the Philippines is Lacking in Power Supply Always”

By: Marcial T. Ocampo

        Energy Technology Selection and Optimization Consultant at

        OMT Energy Enterprises More »

Summary of inputs and results for project finance models for various power generation technologies – up to Sep 30, 2014 only

September 14th, 2014 No Comments   Posted in cost of power generation

Summary of inputs and results for project finance models for various power generation technologies – up to Sep 30, 2014 only

Dear Friends,

You only have up to September 30, 2014 to purchase the advanced project finance models for conventional, fossil, nuclear and renewable energy power generation technologies.

Beginning Oct 1, 2014, I will be working full-time with a major IPP in the country and I will take a leave in providing project finance models and Feasibility Study and Market Study preparations for a while.

So don’t dilly dally. Order now before I shut down this website for selling such models.

Cheers,

Energy Technology Selection Expert More »

Get Your Energy Technology Articles the Easy Way – Shopping Cart

June 19th, 2012 No Comments   Posted in energy technology expert

Get Your Energy Technology Articles the Easy Way – Shopping Cart

You can now order on-line your energy technology articles the easy way – via the Shopping Cart.

Once you have decided to purchase, proceed to order via the shopping cart and pay thru PayPal thru your bank account or your credit card and download immediately the models. 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 »

Energy Technology Articles and Project Finance Models

December 16th, 2010 No Comments   Posted in energy technology expert

 Energy Technology Articles and Project Finance Models

 This Christmas, give your self the greatest gift – the energy technology selection articles and project finance models for conventional, nuclear, storage and renewable energy technologies.

Jump start your career in energy and power generation consultancy and use the best models that will support your project feasibility studies.

Get your models from a leading expert in the preparation of energy and power plant feasibility studies.

To order, please email the expert for payment details and how to receive the articles and models.

Regards,

Marcial Ocampo

mars_ocampo@yahoo.com

energydataexpert@gmail.com

More »

ENERGY & CLIMATE CHANGE: A Complete Review of Power Generation Technologies and Impact on Climate Change

July 15th, 2010 5 Comments   Posted in energy & climate change

For:    ________________________ (name of suggested speaker/presentor, discussant/reactor, contributor/donor, exhibitor, participant)

From:  Marcial T. Ocampo

former Executive Director, Philippine Council for Industry & Energy Research & Development (PCIERD)

Department of Science & Technology (DoST)

Republic of the Philippines

Subject: Invitation to Conference on Energy & Climate Change as Speaker/Presentor, Discussant/Reactor, Contributor/Donor, Exhibitor, Participant (top management by invitation)

————————————-

Dear Sir/Madam:

In view of the need to provide stakeholders’ input into the development of a new energy strategy of the incoming administration of President Aquino towards sustainable development, I would like to invite you to solicit your interest and participation on the proposed conference on

ENERGY & CLIMATE CHANGE:  A Complete Review of Power Generation Technologies and Impact on Climate Change

Date: tentative September-October 2010

Venue: To be arranged More »

Road Map for Pres. Obama : Preparing for the future energy economy is the quickest way out of the global financial crisis – low carbon, hydrogen, nuclear and breeder economy

June 29th, 2010 14 Comments   Posted in cost of nuclear power

Road Map for Pres. Obama : Preparing for the future energy economy is the quickest way out of the global financial crisis – low carbon, hydrogen, nuclear and breeder economy

It seems that the stimulus package is not working for the USA.  A simple analysis reveals that it will never work because it is simply perpetuating and delaying the economic correction in the US which the Asian countries have done during the 1996 Asian Financial Crisis – they allowed big corporations to fail and recapitalize on their own accord, with government undertaking painful but necessary economic and fiscal reforms, and government leading the private sector in the right direction of energy efficiency (green homes and green buildings, smart grids, advanced and optimized manufacturing and logistics, optimal load dispatch, higher transport mileage, hybrid and electric vehicles), renewable energy (biomass, mini-hydro, wind, solar, ocean thermal energy conversion or OTEC), alternative fuels (biodiesel, bioethanol) and clean energy technologies (clean coal CFB, IGCC).

All of these initiatives, if undertaken on a global scale, will lead to sustainable development that mitigates global warming and climate change risks.  And sustainable development will always lead to greater customer confidence in the future, leading to willingness on the citizenry to spend their money in new and energy efficient technologies – the necessary ingredients for long-term economic growth.

This is what the US Pres. Obama and the US Congress should provide leadership so that the whole world will follow in unison towards a common goal of eradicating permanently global poverty through sustainable economic development.  Conserving expensive fossil fuels to prolong its economic lifetime while the world gradually shifts to a low-carbon economy is the heart of this paradigm shift. 

This article will explain how it can be done.  Please read on and give me your comments and suggestions, and if possible, email it to US Pres. Obama and the members of the US Congress.

The world’s ever growing population requires that massive energy and power projects be developed to keep pace with the socio-economic needs of the more technologically advanced offsprings of civilization.

Mankind has never seen before the exponential growth of energy demand as technological innovations lead to a more wired and electrically dependent society.

So the current scenario of a high carbon energy diet has raised alarm bells  throughout the world and this is being relentlessly being pursued by no less than former US President Al Gore and the new “Inconvenient Truth”. More »