ADV biomass gasification power plant model (ver. 4) July 21, 2022

ADV biomass gasification power plant model (ver. 4) July 21, 2022

UPDATED July 21, 2022

Click the following link to know more about biomass gasification technology (pdf):

biomass-energy

A quick user guide on how to use the 3 model versions may be found in the documents below

_How to run the Advanced Project Finance Models of OMT (ver 4)

The document below also shows the tables (***) that could not be displayed properly by LinkedIn:

ADV biomass gasification power plant model (ver. 4)

Yes, your energy technology expert has updated its advanced biomass gasification-fired power plant from its current capability of 5 years (60 months) and 30 years, based on an actual request by a model purchaser.

Here are the minimal starting inputs to develop your initial model, for further refinements as your study gets more up to date data:

construction period = 2 years x 12 = 24 months

operating period = 20 years (economic life)

gross capacity = 50.000 x 1 unit = 50.000 MW

net capacity factor = % availability x % load factor x (1 - % own use)

= 97.08% x 95% x (1 – 7.85%) = 83%

fist year annual generation (net) = 50.000 x 365 x 24 x 83%

= 363,540 MWh/yr

Plant capacity degradation rate = 0.2% per year

Capital cost buildup inputs and % Local Cost (LC) composition: (table found in the doc file):

*** Table

all-in capital cost = 4,114 $/kW

total capital cost = 4,114 x 50.000 x 1,000 = 205,700,000 USD

fixed O&M = 3% p.a. of total capital cost = 3%/yr x 205,700,000 USD / (50.000 x 1,000 kW)

= 123.42 USD/kW/yr

variable O&M = 1% p.a. of total capital cost = 1% x 205,700,000 USD / (363,540 MWh)

= 5.66 USD/MWh

fixed G&A (general and admin costs) = (20,000 / 53 USD/mo) x 1.30 fringe x 13 mo/yr x 10 engineers = 63,770 USD/yr

biomass fuel cost = 30% x 1,998 PHP/MT bagasse + 70% x 1,000 PHP/MT rice husk

= 1,998 PHP/MT / 53.00 PHP/USD =24.52 USD/MT

biomass fuel energy to electricity efficiency = 28.00 % GHV

plant heat rate = 3,412 / 28.00% = 12,186 Btu/kWh

GHV of biomass fuel = 30% x 4,095 Btu/lb bagasse + 70% x 5,670 Btu/lb rice husk

= 5,198 Btu/lb = 2,888 kcal/kg = 12,089 kJ/kg

Lube consumption = 5.4 g/kWh

Density of lube oil = 0.98 kg/L

Lube oil rate = (5.4 /1000) / (0.98 kg/L) = 0.0055 L/kWh

Lube oil cost = 200 PHP/L

Capital structure:

30% equity with 16.44% p.a. target IRR

70% debt with:

54% local debt = 10% p.a. interest, 10 years term,

46% foreign debt = 8% p.a. interest, 10 years term

local and foreign upfront financing fees = 2.0% one time

local and foreign commitment fees = 0.50% p.a. on undrawn loan

local and foreign loan grace period = 6 months

local and foreign loan debt service reserve (DSR) = 6 months

depreciation rate = 1 / economic life = 1/20 per year

days receivables = 30 days

days payables = 30 days

days fuel inventory = 60 days

refurbishment (overhaul cost) = 10% of original cost, on the 10th year

salvage value = 10% of original cost

With Board of Investments (BOI) incentives tax regime (1 = none, 2 = BOI, 3 = PEZA): 2

income tax holiday (ITH) = 7

income tax rate after ITH = 10% of taxable income

property tax rate from COD for RE = 1.5% of 80% valuation of net book value (NBV) of properties (equipment, building), land is not depreciated while equipment and building are depreciated

VAT on imported equipment = 12% (70% of which is recoverable on the 5th year)

Customs Duty on imported equipment = 0% (none)

Recovery rate of VAT =70% on 5th year after COD

LGU tax = 1% of last year's revenues

Gov't share (for RE projects) = 1% (0% for fossil and non-RE projects)

ER 1-94 contribution = 0.01 PHP/kWh sold

Withholding tax on interest (foreign currency) = 10%

Gross receipts tax on interest (local currency) = 1%

Based Foreign Exchange Rate = 53.00 PHP/USD

Forward Fixed Exchange Rate = 53.00 PHP/USD

Inflation Rate:

Local CPI = 0.0% p.a. (OPEX) = 4.02% p.a. (CAPEX)

Foreign CPI = 0.0% p.a. (OPEX) = 2.0% p.a. (CAPEX)

With the above information and using the Discounted Cash Flow Internal Rate of Return (DCFIRR) method, you can determine the equity and project returns (IRR, NPV, PAYBACK, DSCR) and all financial ratios, show income and expense statement, balance sheet and cash flow.

It is now available too in 3 versions: deterministic (fixed inputs), sensitivity (varying set of inputs or scenario) and stochastic or probabilistic inputs (randomly changing set of inputs) that will help you as project developer to identify project risks.

Following are the results for Deterministic model:

% Local Component (funded by local debt) = 54%

% Foreign Component (funded by foreign debt) = 46%

Capital cost buildup results: (table found in the doc file):

*** Table

First year tariff (LCOE, LRMC) to hit target equity IRR = 7.84101 PHP/kWh

= 0.14794 USD/kWh

Levelized tariff (NPV of asset value / NPV of generation), discounted at pre-tax WACC

= 7.60750 PHP/kWh = 0.14354 USD/kWh

SRMC = 1.86865 PHP/kWh = 0.14794 USD/kWh

Pre-tax WACC =11.56% p.a.

After-tax WACC = 10.40% p.a.

WACC = (30% x 16.44% p.a.) + 70% (54% x 10% p.a. + 46% x 8% p.a.) = 11.29% p.a.

Equity IRR = 16.44% p.a.

Equity NPV = 0.0

Equity PAYBACK = 7.22 years

Project IRR = 13.17% p.a.

Project NPV = -1,555,737 ‘000 PHP

Project PAYBACK = 6.25 years

Debt Service Cover Ratio (DSCR) min = 1.11

Debt Service Cover Ratio (DSCR) ave = 1.50

Debt Service Cover Ratio (DSCR) max = 2.02

Benefits to Cost (B/C) Ratio, discounted at pre-tax WACC = 0.684

Financial Ratios (liquidity ratios, solvency ratios, efficiency ratios, profitability ratios, market prospect ratios) = see bottom of the Financials worksheet)

How to run the deterministic models:

Update first the blue inputs

Calibrate the model to meet the targets (run macro 2, ctrl + f):

1. NCF target = 83%
2. Local component of project cost target = 54% (46% foreign component)
3. All-in capital cost target = 4,114 $/kW
4. Fixed O&M target = 123.42 $/kW/yr
5. Variable O&M target = 5.66 $/MWh
6. Fixed G&A target = 63.77 ‘000 $/yr
7. Set the project NPV (100% equity, 0% debt) to zero (run macro 3, ctrl + d)
8. Set the equity NPV (30% equity, 70% debt) to zero (run macro 1, ctrl + e)

View the results:

1. Inputs & Assumptions: shows all the inputs and the outputs summary so you will see immediately the impact 0f changing any input. It also shows the current values of the LCOE (levelized cost of energy) or LRMC (long run marginal cost = annualized capital and fixed costs + SRMC) and SRMC (short run marginal cost consisting of variable costs and fuel and lube costs)
2. Tariff Breakdown
3. Sensitivity Analysis (copy paste value of each run into the case column)
4. Construction Period (view the total investment cost breakdown, annual capital cost drawdown)
5. Operating Period (view the annual operating data: capacity, generation, tariff, revenue, exchange rate, fuel cost, lube oil cost, fixed O&M cost, variable O&M cost, refurbishment or overhaul cost, G&A cost, land lease, land value, depreciation cost, net book value, property tax, LGU tax, gov’t share, ER 1-94 contribution, income tax, working capital or receivables, payables, inventory, input/output VAT, initial working capital and other assets, other assets like VAT recovery expense, foreign debt and local debt amortization tables)
6. Financials: (income & expense statement, retained earnings and capital, cash flow statement, required debt service reserve (DSR) balance, balance sheet, equity IRR and PAYBACK, project IRR and PAYBACK, debt service cover ratio (DSCR), benefits and costs analysis ratio, and other financial ratios like liquidity ratios, solvency ratios, efficiency ratios, profitability ratios and market prospect ratios)
7. Asset Base FiT (calculates the NPV of total assets, annual generation and levelized cost using the pre-tax WACC as discounting rate)

50% discount (600 USD) till July 31, 2022. Hurry. Limited Offer Only.

Advanced Biomass Gasification Project Finance Model (ver. 4)

Marcial Ocampo

63-967-3143774 (globe mobile, Viber, WhatsApp)

marcial.ocampo (Skype)

We can have a one-on-one seminar thru Microsoft Teams or Google Met.