ADV biomass WTE pyrolysis power plant model (rev. 4)

ADV biomass WTE pyrolysis power plant model (rev. 4)

UPDATED OCTOBER 20, 2024

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

Blue inputs at the Inputs & Assumptions worksheet or tab:

1.????? Time period inputs

Hours per year = 24 * 365 = 8760 hours/year

Construction period (cell C8) = 2 years x 12 = 36 months

Operating period (cell C9) = 30 years (economic life)

Years from base year CPI for FIT / Tariff (cell C10) = ROUND(C8 / 12,0) = 3

Years from base year CPI for CAPEX (cell C11) = 0

Years from base year CPI for OPEX (cell C12) = 0

Base year CPI & Forex for FiT (cell C45) = 2022

Base year CPI for CAPEX (cell C46) = 2023

Base year CPI for OPEX (cell C47) = 2023

Commercial Operating Date COD (cell C48) = C10 + C11 + C46 = 3 + 0 + 2023 = 2026

2.????? Installed (Gross) capacity

Unit plant capacity (cell F5) = 28.500 MW/unit

No. of units (cell F6) = 1 units

Gross capacity (cell F7) = =F5 * F6 = 28.500 x 1 unit = 28.500 MW

3.????? Target net capacity factor (NCF)

Target net capacity factor (cell F11) = % availability x % load factor x (1 - % own use)

= F8 F9 (1 - F10) =76.58% x 95% x (1 – 5%) = 69.11%

4.????? First year annual generation

Net Electrical Output (MWh in 1st year) (cell F12) = F7 F11 C5= 28.500 x 69.11% x 8760

172,547 MWh/year

5.????? Capacity degradation rate

Plant capacity degradation rate (cell F13) = 0.2% per year

6.????? Capital cost buildup (cost per unit, no. of units, % local component (LC)

Capital cost buildup inputs and % Local Cost (LC) composition: TABLE

7.????? Target all-in capital cost, fixed O&M, variable O&M and fixed admin expenses

Target all-in capital cost (cell T34) = 2,700 $/kW (determined from goal seek with fuel cost zero with target tariff set at say 0.055 $/kWh.

Total capital cost (cell W34) = 2,700 x 28.500 x 1,000 = 76,950 USD

Target fixed O&M (cell X39) = 3% p.a. of total capital cost = 3% x 76,950 USD / (28.500 x 1,000 kW) = 81.00 USD/kW/year

Target variable O&M (cell X40) = 1% p.a. of total capital cost = 1% x 76,950 USD / (87,250MWh) = 4.46 USD/MWh

Target fixed G&A (general and admin costs, cell X37) = (50,000 / 53 USD/month) x 1.30 fringe x 13 months/year x 10 engineers = 159.430 ‘000 USD/year

8.????? Biomass fuel cost, thermal efficiency and GHV

biomass fuel cost (cell F67) =1,2994 / 53 / 1000 = 0.02452 USD/kg

biomass fuel energy to electricity efficiency (cell F57) = 3,412 / 13,648 = 25.00 % GHV

Plant heat rate (cell F61) = 13,648 Btu/kWh

GHV of biomass fuel (cell F53) = 5,198 Btu/lb biomass

9.????? Lube oil rate, density, consumption and cost

Lube consumption (cell F69) = 5.4 g/kWh

Density of lube oil (cell F68) = 0.98 kg/L

Lube oil rate (cell F70) = (5.4 /1000) / (0.98 kg/L) = 0.0055 L/kWh

Lube oil cost (cell F71) = 200 / 53.00 = 3.7736 USD/L

10.? Capital structure (equity, debt)

Capital structure:

Target IRR (cell J23) = 16.44% p.a.

Debt (cell J18) = 70% with 16.44% p.a. target IRR

Equity (cell J24) = 100% – 70% = 30% equity with 16.44% p.a. target IRR

70% debt with:

Target local component or local debt (cell G27) = 45.0%

45% local debt = 10% p.a. interest (cell J12), 10 years term (cell J13),

56% foreign debt (cell J7) = 100% - 45% = 55% at 8% p.a. interest (cell J14), 10 years term (cell J15)

11.? Local and foreign debt financing (upfront fees, commitment fees, grace period, DSR)

local and foreign upfront financing fees (cell J10) = 2.0% one time

local and foreign commitment fees (cell J11) = 0.50% p.a. on undrawn loan

local and foreign loan grace period (cell J16) = 6 months

local and foreign loan debt service reserve (DSR) (cell J17) = 6 months

12.? Depreciation and balance sheet accounts (receivables, payables, inventory)

depreciation rate = 1 / economic life = 1 / 30 per year

days receivables (cell F48) = 30 days

days payables (cell G48) = 30 days

days fuel inventory (cell G50) = 60 days

13.? Refurbishment (overhaul cost) at half life and salvage value at end of life

Refurbishment (overhaul cost) = 10% of original cost (cell F39), on the 15th year (cell F40)

Salvage value (cell F35) = 10% of original cost

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

= 2 (cell F51) with BOI incentives

With and without Input VAT = 0 (cell F52) no input / output VAT (for RE)

14.? Tax and incentives regime

Income tax holiday (ITH) (cell J33) = 7 years (for RE)

Income tax rate after ITH (cell J34) = 10% of taxable income (for RE)

Property tax rate from COD for fossil fuel = 1.5% (cell J35) of 80% (cell J36) valuation of net book value (NBV) of properties (equipment, building), land is not depreciated while equipment and building are depreciated (for RE)

VAT on imported equipment = 12% (cell F24) (70%) cell F49) of which is recoverable on the 5th year F50) (for RE)

Customs Duty on imported equipment (cell F25) = 0% (for RE)

Recovery rate of VAT =70% (cell F49) on 5th (F50) year after COD

LGU tax = 1% (cell J37) of last year's revenues

Gov't share (for RE projects) = 1% (cell J38) (0% for fossil and non-RE projects,1% for RE)

ER 1-94 contribution = 0.01 / 53.00 = 0.0002 USD/kWh sold (cell J39)

Withholding tax on interest (foreign currency) = 10% (cell J40)

Gross receipts tax on interest (local currency) = 5% (cell J41)

Documentary tax = 0.5% (cell J42) – not used

PEZA incentives = 0% (cell J43) – none since no incentives

Royalty = 0% (cell J44) – not used

15.? Economic assumptions (currency used, exchange rate, local and foreign CPI (OPEX, CAPEX), depreciation rate

Currency used = USD (cell J45)

Based Foreign Exchange Rate = 1.00 USD/USD (cell J46)

Forward Fixed Exchange Rate = 1.00 USD/USD (cell J47)

Inflation Rate:

Base Local CPI (2022) = 160.00 (cell J48) – not used

Local CPI = 0.0% p.a. (OPEX) (cell J49) = 4.00 % p.a. (CAPEX) (cell L49)

Foreign CPI = 0.0% p.a. (OPEX) (cell J50) = 2.0% p.a. (CAPEX) (cell L50)

Annual depreciation rate (cell J51) = (1 + J49) / (1 +J50) – 1 = 0.0% p.a. (no inflation local OPEX)

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.

Following are the results for Deterministic model:

% Local Component (funded by local debt) = 45.08% (cell J5)

% Foreign Component (funded by foreign debt) = 54.92% (cell J6)

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

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

= 0.1374 USD/kWh (cell G34)

SRMC = 0.05590USD/kWh (cell O26)

LRMC = 0.15404 USD/kWh (cell F30, O27) x 53.00 = 8.16 PHP/kWh (cell F28)

Duration of FIT or tariff contract (cell F31) = 20 years

Tariff after FIT or tariff contract year (cell F32) = 5 / 53.00 = 0.0943 USD/kWh

Pre-tax WACC = J30/(1-J34) =11.38% p.a.

After-tax WACC =J12 (1- J34) (J18-J7) + J14 (1-J34) J7 + J26 * J24 = 10.24% p.a.

WACC = =(J6*J12+J7*J14) J18+J23J24 = 11.16% p.a.

Equity IRR = 16.44% p.a. (cell G30)

Equity NPV = 0.0 (cell G28)

Equity PAYBACK = 6.71years (cell C50)

Project IRR = 12.64% p.a. (cell G32)

Project NPV = -12.646 ‘000 USD (cell G33)

Project PAYBACK = 6.12 years (cell C51)

Debt Service Cover Ratio (DSCR) min = 1.20 (cell L43)

Debt Service Cover Ratio (DSCR) ave = 1.60 (cell L44)

Debt Service Cover Ratio (DSCR) max = 2.09 (cell L45)

Benefits to Cost (B/C) Ratio, discounted at pre-tax WACC = 0.867 (cell Ll47)

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 = 69.11%
2. Local component of project cost target = 45% (55% foreign component)
3. All-in capital cost target = 2,700 $/kW (or given tariff, use model to estimate CAPITAL cost)
4. Fixed O&M target = 81.00 $/kW/year
5. Variable O&M target = 4.46 $/MWh
6. Fixed G&A target = 159.43 ‘000 $/year
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).

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Date? : October 20, 2024, Manila PHILIPPINES

By?? ??? : Marcial T. Ocampo

Email : [email protected]

IF YOU NEED A COPY OF MY EXCEL PROJECT FINANCE MODELS THAT HAVE THE SAME INPUT DATA AS ABOVE, PLS MESSAGE ME FOR A DEMO (LOCKED REPORTS) COPY (60 USD) OR A REAL (UNLOCKED REPORTS) COPY (600 USD) AND USER GUIDE AND WE CAN ARRANGE A VIRTUAL (ON-LINE) TRAINING ON HOW TO USE EFFECTIVELY MY MODELS FOR EACH POWER GENERATION TECHNOLOGIES TO SUPPORT YOUR FEASIBILITY STUDIES.

YOU MAY VARY THE TARIFF INPUT TO WESM AND GENERATION OFFER AND SEE HOW IT AFFECTS YOUR PLANT ECONOMICS (IRR, NPV, PAYBACK).

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