How to use the advanced (regulator) ocean thermal energy conversion (OTEC) power plant project finance model

July 10th, 2017 No Comments   Posted in financial models

How to use the advanced (regulator) ocean thermal energy conversion (OTEC) power plant project finance model

(Lord God, bless my website and my readers that they will contribute to my charity fund for the jobless, sickly, needy, homeless, hungry and destitute. God Bless you all my friends for reading my blog and ordering my project finance models. Amen.)

Finding an easy-to-use project finance model for an ocean thermal 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 an ocean thermal power plant. From the preliminary design and cost estimates, the top management would want to know if the business idea of going into ocean thermal 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) = 11,197 $/kW (target cost)

EPC cost portion = 8,013 $/kW (computed by model)

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

fixed O&M cost = 58.11 $/kW/year (target cost) = 327.08 ‘000$/unit/year (computed by goal seek)

variable O&M cost = 1.48 $/MWh (target cost) = 8.81 ‘000$/MW/year (computed by goal seek)

general admin cost = 600.00 ‘000$/year (target cost)

 

Thermal power plant inputs: (not applicable to ocean thermal)

Gross heating value of ocean thermal fuel = 5,198 Btu/lb

Plant heat rate = 13,500 Btu/kWh (25.28% thermal efficiency)

Cost of ocean thermal fuel = 1.299 PhP/kg = 1,299 PhP/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 = 16.00 MW/unit x 5 units = 80.00 MW

 

Plant Availability Factor, %                                    98.68% (computed by goal seek)

Load Factor, %                                                      95.00% (assumed)

Allowance for losses & own use, %                      36.00% (assumed)

Net Capacity Factor after losses & own use, %    60.00% (target net capacity factor)

Degradation rate, %                                               0.2%

 

construction period = 26 months (start 2015)

operating period = 25 years (start 2018)

 

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

Power plant footprint (ha)                                   6.00

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

Land cost, $000 $29.82 100.0%
Equipment Cost ex BOP, Transport ($000/MW) $5,683.03 0.0%
Insurance, Ocean Freight, Local Transport, % of Equipment Cost 10.0% 100.0%
Balance of Plant (BOP), % of Equipment Cost 31.0% 66.0%
Transmission Line Distance (km) 10.00
T/L Cost per km, 69 kV ($000/km) $84.00 100.0%
Switchyard & Transformers ($000) $3,000.00 100.0%
Access Roads ($000/km) $2,200.00 100.0%
Distance of Access Road (km) 10.00
Dev’t & Other Costs (land, permits, etc) (% of EPC) 2.0% 100.0%
VAT on importation (70% recoverable) 12% 100.0%
Customs Duty 0% 100.0%
Initial Working Capital (% of EPC) 1.0% 100.0%
Contingency (% of Total Cost) 7.5% 30.0%

 

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

Uses of Fund:
    Land Cost $30
   EPC (Equipment, Balance of Plant, Transport) $641,046
   Transmission Line Interconnection Facility $840
   Sub-Station Facility $3,000
   Development & Other Costs (Civil Works, Customs Duty) $34,821
   Construction Contingency $50,978
   Value Added Tax $64,590
   Financing Costs $94,045
   Initial Working Capital $6,410
Total Uses of Fund – $000 $895,760
                                 – PhP 000 45,054,130
Sources of Fund:
   Debt $627,032
   Equity $268,728
Total Sources of Fund $895,760

 

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

Local Capital = 33 %

Foreign Capital = 67 %

 

Balance Sheet Accounts:

Receivables = 30 days of revenue

Payables    = 30 days of expenses

Inventory    = 60 days of consumables

 

Imported Capital Equipment:

Customs duty = 0%

Value added tax (VAT) = 12%

VAT recovery = 70% on 5th year of operation

 

Type of input / output VAT = 0 (none)

Type of incentives = 2 (BOI incentives)

 

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) 1.0%
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%
Documentary Stamps Tax (DST) 0.5%
PEZA Incentives (% of gross income) – 0% / 5% 0%
Royalty  0%

 

Capital Structure:

Equity Share = 30% at 16.44% p.a. target equity returns (IRR)

Debt Share = 70% (33% local, 67% 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 pre-tax         11.14%

WACC after-tax      10.03%

WACC                        10.99%

 

Results of Financial Analysis:

 

First year tariff (Feed-in-Tariff) = 17.85986 P/kWh = 0.35509 USD/kWh

(at zero equity NPV)

 

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

Item PhP 000 PhP/kWh
Fuel                      – 0.000
Lubes              17,667 0.002
Var O&M            885,860 0.086
Total            903,527 0.088
MWh net        10,259,712
SRMC            903,527 0.088
Fix O&M        13,857,218 1.351
Capital Cost      168,476,263 16.421
LRMC      183,237,009 17.860

 

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

IRR          = 16.44    % p.a. (target returns)

NPV        = 0.00    ‘000$

PAYBACK = 6.84    years

 

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

IRR          = 12.53        % p.a.

NPV        = (7,627,154)  ‘000$ (negative since IRR < 16.44%)

PAYBACK = 6.22        years

——————————————————————————————-

The above runs were based on goal-seek to make equity NPV = 0 (to meet equity IRR target of 16.44% 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 – Ocean Thermal

 

Download the complete demo model for an ocean thermal power plant in PHP and USD currencies are shown below:

ADV Ocean Thermal Model3_50 MW (USD) – demo5b

OTEC 50 mw Project Finance Model Ver. 3 – in USD and PHP Currency

 

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 (only USD400 for two models), click the link below:

OTEC 50 mw 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 with free guidance on using it. The list price of the ocean thermal model is USD1,400 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

 

Advanced (ADV) Project Finance Models for Conventional, Fossil, Nuclear and Renewable Energy Power Generation Technologies – Price List and Specs

September 28th, 2014 No Comments   Posted in cost of power generation

Advanced (ADV) Project Finance Models for Conventional, Fossil, Nuclear and Renewable Energy Power Generation Technologies – Price List and Specs (offer up to Sep 30, 2014 only)

Your power generation technology selection expert is pleased to make a final call to all project finance and power plant modelers to purchase the Advanced (ADV) Project Finance Models for Conventional, Fossil, Nuclear and Renewable Energy Power Generation Technologies.

The model consists of the following worksheets/tabs: 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 »

Philippine Energy Data Analytics Service Provider – from your energy technology expert

April 25th, 2014 No Comments   Posted in energy data analytics

Philippine Energy Data Analytics Service Provider  – from your energy technology expert

You might be interested to look into the latest power supply and demand outlook (forecast 2014-2020) from the DOE.

It includes the existing 2011 installed capacity, plus constructed 2012-2013, plus committed 2014-2016 projects, then forecast peak demand, total reserves, total supply available.

Aside from the committed, there is also a list of indicative projects as well as future capacity additions for base load, mid-merit and peak load from the power development plan of DOE (from their optimized expansion planning modelling exercise). More »

ERC Approves Feed-in tariff rates

July 28th, 2012 No Comments   Posted in feed-in tariff

ERC Approves Feed-in tariff rates

The Energy Regulatory Commission (ERC), on July 27, 2012, approved the initial Feed-in Tariffs (FITs) that shall apply to generation from renewable energy (RE) sources, particularly, Run-of-River Hydro, Biomass, Wind, and Solar, as follows: More »

Project Finance Models for CLEAN DEVELOPMENT MECHANISM (CDM EDITION)

June 27th, 2012 No Comments   Posted in renewable energy

Project Finance Models for CLEAN DEVELOPMENT MECHANISM (CDM EDITION)

Yes, your energy technology selection and business development expert has developed a low-cost set of project finance models for CDM professionals (engineers, business development, investment bankers, managers) and novice professionals who want to learn and start their career in financial modeling of renewable energy projects.

Just follow this link to order, pay and download your favorite renewable energy project finance model – CLEAN DEVELOPMENT MECHANISM EDITION. More »

Project Finance Models for FEED-IN-TARIFF REGULATOR

June 27th, 2012 1 Comment   Posted in renewable energy

Project Finance Models for FEED-IN-TARIFF REGULATOR

Yes, your energy technology selection and business development expert has developed a low-cost set of project finance models for government feed-in-tariff regulators and novice professionals who want to learn and start their career in financial modeling of renewable energy projects.

Just follow this link to order, pay and download your favorite renewable energy project finance model – FEED-IN-TARIFF REGULATOR EDITION. More »

Project Finance Models for PROFESSIONALS

June 27th, 2012 No Comments   Posted in renewable energy

Project Finance Models for PROFESSIONALS

Yes, your energy technology selection and business development expert has developed a low-cost set of project finance models for professionals (engineers, business development, investment bankers, managers) and novice professionals who want to learn and start their career in financial modeling of renewable energy projects.

Just follow this link to order, pay and download your favorite renewable energy project finance model – PROFESSIONAL EDITION. More »

Project Finance Models for STUDENTS

June 27th, 2012 No Comments   Posted in renewable energy

 Project Finance Models for STUDENTS

Yes, your energy technology selection and business development expert has developed a low-cost set of project finance models for students (college, masteral, PhD) and novice professionals who want to learn and start their career in financial modeling of renewable energy projects.

Just follow this link to order, pay and download your favorite renewable energy project finance model – STUDENT EDITION. More »

CDM Ocean Thermal Model_50 MW2.xls

June 25th, 2012 1 Comment   Posted in renewable energy

CDM Ocean Thermal Model_50 MW2.xls

In addition to the worksheets found in the ADV models of the regulator, 5 additional tabs or worksheets have been added (Capex, Opex, Revenues, Project IRR and Sensitivity) into the CDM model which is a financial evaluation without taxes (that distort the economic and technical performance) and debt (pure equity investment). For the RE project to benefit from CDM credits, the project IRR should not be more than 15% p.a.

Ocean Thermal Energy Conversion or OTEC is most adapted in deep waters near the equator where the temperature difference between the surface (30 deg Celsius) and a depth of 1 km (10 deg Celsius) located within 10 km from the shoreline. More »

CDM Ocean Thermal Model_10 MW2.xls

June 25th, 2012 No Comments   Posted in renewable energy

CDM Ocean Thermal Model_10 MW2.xls

In addition to the worksheets found in the ADV models of the regulator, 5 additional tabs or worksheets have been added (Capex, Opex, Revenues, Project IRR and Sensitivity) into the CDM model which is a financial evaluation without taxes (that distort the economic and technical performance) and debt (pure equity investment). For the RE project to benefit from CDM credits, the project IRR should not be more than 15% p.a.

Ocean Thermal Energy Conversion or OTEC is most adapted in deep waters near the equator where the temperature difference between the surface (30 deg Celsius) and a depth of 1 km (10 deg Celsius) located within 10 km from the shoreline. More »

MTO Ocean Thermal Model_50 MW.xls

June 24th, 2012 No Comments   Posted in renewable energy

MTO Ocean Thermal Model_50 MW.xls

Ocean Thermal Energy Conversion or OTEC is most adapted in deep waters near the equator where the temperature difference between the surface (30 deg Celsius) and a depth of 1 km (10 deg Celsius) located within 10 km from the shoreline.

This 20 deg Celsius thermal gradient is available throughout the year near the equator and diminishes up to 40 deg North latitude and South latitude, beyond which the OTEC is not technically viable for having a much lower thermal gradient. This provides a very high capacity factor of 91% and it only unavailable when it de-couples during a tropical storm and the OTEC power barge transfers to a safer cove to ride the storm.

This MTO first-year tariff model for OTEC makes use of the basic assumptions of the country’s RE regulator for rated capacity (80 MW), capacity factor (91%), plant own use (36%), and transmission line loss (1.82%). More »

MTO Ocean Thermal Model_10 MW.xls

June 24th, 2012 No Comments   Posted in renewable energy

MTO Ocean Thermal Model_10 MW.xls

Ocean Thermal Energy Conversion or OTEC is most adapted in deep waters near the equator where the temperature difference between the surface (30 deg Celsius) and a depth of 1 km (10 deg Celsius) located within 10 km from the shoreline.

This 20 deg Celsius thermal gradient is available throughout the year near the equator and diminishes up to 40 deg North latitude and South latitude, beyond which the OTEC is not technically viable for having a much lower thermal gradient. This provides a very high capacity factor of 92% and it only unavailable when it de-couples during a tropical storm and the OTEC power barge transfers to a safer cove to ride the storm.

This MTO first-year tariff model for OTEC makes use of the basic assumptions of the country’s RE regulator for rated capacity (16 MW), capacity factor (92%), plant own use (36%), and transmission line loss (0.364%). More »

ADV Ocean Thermal Model_50 MW.xls

June 24th, 2012 No Comments   Posted in renewable energy

ADV Ocean Thermal Model_50 MW.xls

Ocean Thermal Energy Conversion or OTEC is most adapted in deep waters near the equator where the temperature difference between the surface (30 deg Celsius) and a depth of 1 km (10 deg Celsius) located within 10 km from the shoreline.

This 20 deg Celsius thermal gradient is available throughout the year near the equator and diminishes up to 40 deg North latitude and South latitude, beyond which the OTEC is not technically viable for having a much lower thermal gradient. This provides a very high capacity factor of 91% and it only unavailable when it de-couples during a tropical storm and the OTEC power barge transfers to a safer cove to ride the storm. More »

ADV Ocean Thermal Model_10 MW.xls

June 24th, 2012 No Comments   Posted in renewable energy

ADV Ocean Thermal Model_10 MW.xls

Ocean Thermal Energy Conversion or OTEC is most adapted in deep waters near the equator where the temperature difference between the surface (30 deg Celsius) and a depth of 1 km (10 deg Celsius) located within 10 km from the shoreline.

This 20 deg Celsius thermal gradient is available throughout the year near the equator and diminishes up to 40 deg North latitude and South latitude, beyond which the OTEC is not technically viable for having a much lower thermal gradient. This provides a very high capacity factor of 92% and it only unavailable when it de-couples during a tropical storm and the OTEC power barge transfers to a safer cove to ride the storm. 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 »

Get Your Project Finance Models the Easy Way – Shopping Cart

Get Your Project Finance Models the Easy Way – Shopping Cart

You can now order on-line your project finance models 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 »

Ocean Thermal Energy Conversion (OTEC) Model – avail of 50% discount now

August 4th, 2011 1 Comment   Posted in Uncategorized

Ocean Thermal Energy Conversion (OTEC) Model- avail of 50% discount now

As promised in my previous blog, I will now deal with the cost of renewable energy technologies (feed-in-tariff). I will be making a special offer for the purchase of the following RE technologies:

1) Biomass Power Model (Direct Combustion, Cogeneration, Gasification of MSW)

2) Mini-Hydro Power Model

3) Ocean Thermal Energy Conversion (OTEC) Model

4) Solar PV Power Model

5) Wind Power Model

6) Renewable Energy Resource Assessment Model (Wind, Solar PV, Mini-Hydro) – Converts wind speed measurement, solar radiation and rainfall data into hourly power output, annual power generation and annual capacity factor) More »

How to use biomass for energy and power

November 18th, 2010 1 Comment   Posted in renewable energy

How to use biomass for energy and power

Here is my reply to an avid reader requesting for advice on how to use biomass effectively in his home town.

—————–

Hi Jeff,
For biomass waste-to-energy and waste-to-power applications, you may utilize biogas from human waste, kitchen, commercial waste, biodegradable industrial wastes and farm and animal wastes. More »