Simple project evaluation spreadsheet model - World Bank
Simple project evaluation spreadsheet model
Africa Electricity Institute Practitioner Workshop
15 November 2011 -- Dakar, Senegal
Chris Greacen
Two very different models...
Used by: What it does:
Excel financial model
"Financers" (also project developers, regulators, researchers)
HOMER
"Engineers"
(also project developers, regulators, researchers)
Models cashflow and return on investment
Optimizes component selection to minimize levelized cost of energy (LCOE) in hybrid minigrids
Simple project viability evaluation model
Inputs Project Inputs Plant Capacity
Capacity Factor Annual Generation # Connections
500
68% 2,978 882
KW Mwh
Generation Costs Generation Soft Costs
Grid Connection Grid Extension Total Investment REA Grants Investment (excl. grants)
USD 000sTSH Mn
1,484 2,226
670
1,005
389
584
596 3,139 441
894 4,709 $662
$2,698 $4,047
47% 21%
12% 19%
Revenues Tanesco
Tsh /kwh
87%
360.0
Business Households & Inst. Average Tariff Carbon Revenues
11% 3%
360.0 100.0 355.8
9.0
Operating Costs USD 000sTSH Mn
Salaries
30
$45
Maintenance
31
$47
Fuel Costs
0
$0
Other Total
0
$0
61.4
92.1
US c/kwh 24.0
24.0 6.7 23.7 0.6 US c /kwh 1.01 1.05
0.00 0.00 2.1
Outputs Project Returns Project IRR
Equity IRR Project NPV Equity NPV
21.1%
38.4% $1,436 $501
Cost recovery Tariff Capital Investments Operating Costs
Output Per Watt Capital Recovery Total
6.28 2.1
5.96 15.35 17.4 261
$ / W c/ kwh
Kwh / W c/ kwh c/ kwh TSH / kwh
Other Inputs Construction Time Collection Efficiency Distribution losses Tariff inflation CPI Terminal value Exchange Rate
1.5 90% 5% 2.0% 6.0% 0.0 1,500
Years
times exit FCF TSH / USD
Capital Structure Equity Share Required returns Loan Rate Loan Grace Period Loan Term WACC***
30% 15% 15%
3 15 11.9%
Equity REA grant Loan
USD 000s TSH Mn Schedule
501
751 Construction
441
662 Operations
2,197 3,296
Other Assumptions
Depreciation period
Corporate Tax rate
Tax holiday
1 67% 0%
2 33% 67%
20 Years 30%
0 Years
3 0% 100%
4 0% 100%
Cash Flow $ '000s
1
2
3
4
5
6
7
Investment
$2,093 $1,046
$0
$0
$0
Increase in WC
$0
$31
$0
$0
$0
Equity
$628
$314
$0
$0
$0
Debt
$1,465 $732
$0
$0
$0
Residual
8
9
10
11
12
13
14
15
Value*
Revenue (c/ kwh) Total Revenues Operating Costs Operating Cash flow
24.3 $0 $0 ($2,093)
24.8 $492 $43 ($597)
25.3 $753 $69 $684
25.8 $768 $73 $694
26.3 $783 $78 $705
26.8 $798 $82 $716
27.3 $813 $87 $726
27.8 $829 $92 $737
28.4 $846 $98 $748
28.9 $862 $104 $758
29.5 $879 $110 $769
30.1 $896 $117 $780
30.7 $914 $124 $790
31.3 $932 $131 $801
31.9 $950 $139 $811
Depreciation
$0
$157 $157 $157 $157 $157
$157
$157
$157 $157 $157
$157
$157 $157 $157
Loan Payments Interest Principal
Loan Balance
$0
$0
$0
$513 $513 $513
$513
$513
$513 $513 $513
$513
$513 $513 $513
$0
$0
$220 $363 $417 $403 $386
$367
$345
$320 $291 $258
$220
$176 $125
$67
$0
$0
($220) ($363) $96 $110 $127
$146
$168
$193 $222 $255
$293
$337 $388 $446
$0
$1,465 $2,417 $2,780 $2,684 $2,574 $2,447 $2,301 $2,133 $1,941 $1,719 $1,464 $1,171 $834 $446
$0
$0
Effective tax Equity CF 38% DSCR
$0 ($628) 0.00
$0 $135 0.00
$49 $635 0.00
$36 $146 1.35
$44 $149 1.38
$52 $151 1.40
$61 $153 1.42
$70 $154 1.44
$81
$93 $106
$121
$137 $156 $176
$0
$154 $153 $150
$146
$140 $132 $122
$0
1.46 1.48 1.50
1.52
1.54 1.56
1.58
0.00
* PV at year 15 for revenues from year 16-25
*** WACC = Equity share * ROE + Debt Share * Loan rate * (1- tax rate)
Questions answered by "Simple project viability evaluation model"
? How does the financial viability of an off-grid or ongrid SPP project vary under diffent assumptions of tariffs, subsidies, and carbon revenues, exchange rates, etc.?
? Internal Rate of Return (IRR)? ? Project IRR ? Equity IRR
? Net Present Value (NPV) ? Project NPV ? Equity NPV
? Does cash flow meet debt service requirements?
Model inputs
Input basic project data (yellow cells)
? Plant Capacity: generation capacity of power plant in kW ? Capacity factor: ratio of actual output to potential annual
output if it operated at nameplate capacity fulltime. ? # Connections: is applicable to systems that sell electricity
to retail customers and receive REA grants of $500 per hookup ? Investment costs: costs to build project (generator, grid connection, grid extension, etc.) ? Operating costs: costs to keep project going (salaries, mainteannce, fuel)
Model inputs (continued)
Input basic project data (yellow cells)
? Construction time: ? Collection efficiency: portion of tariff that can actually be
collected from users. ? CPI = consumer price index ? Terminal value = value of equipment at end of 15 years ? Exchange Rate: value of currency in USD ? Capital structure (% and rates): equity, loan, etc. ? Depreciation period: Number of years before asset has zero
value ? Tax holiday: tax holiday is a temporary elimination of a tax as an
incentive for businesses to invest.
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