HOW TO MODEL A GEOTHEMAL POWER PLANT (6,236 $/kW cost, 92% NCF, 10% TE, 12.76 PHP/kWh, 2.154 USD/GJ steam cost, 14% p.a. EIRR)

ADV Geo Thermal Power Plant Model (ver. 4)2

Updated Nov 3, 2023

To learn more about geothermal energy, click on the technology brief (pdf)

geothermal-energy

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) = 4 years x 12 = 48 months

Operating period (cell C9) = 20 years (economic life)

Years from base year CPI for FIT / Tariff (cell C10) = ROUND(C8 / 12,0) = 4

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 = 4 + 0 + 2023 = 2027

1. Installed (Gross) capacity

Unit plant capacity (cell F5) = 50.000 MW

No. of units (cell F6) = 2 units

Gross capacity (cell F7) = 50.000 x 2 units = 100.000 MW

1. Target net capacity factor (NCF)

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

= F8 * F9 * (1 - F10) = 99.84% x 97% x (1 – 5%) = 92.00%

1. First year annual generation

Fist year annual generation (net) (cell F12) = F7 * F11 * C5 = 100.000 x 92% x 8760

= 805,920 MWh/year

1. Plant Capacity degradation rate

Plant capacity degradation rate (cell F13) = 0.5% per year

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

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

?Plant Degradation, % p.a. (1-20 yrs)0.5%% LC?Land cost, $000$94.34100.0%?Equipment Cost ex BOP, Transport ($000/MW)$3,046.7910.0%?Insurance, Ocean Freight, Local Transport, % of Equipment Cost4.5%100.0%?Balance of Plant (BOP), % of Equipment Cost21.0%60.0%?Transmission Line Distance (km)10.00??T/L Cost per km, 69 kV ($000/km)$40.00100.0%?Switchyard & Transformers ($000)$786.21100.0%?Access Roads ($000/km)$181.82100.0%?Distance of Access Road (km)10.00??Dev't & Other Costs (land, permits, etc) (% of EPC)15.0%100.0%?VAT on importation (70% recoverable)12%100.0%?Customs Duty0%100.0%?Initial Working Capital (% of EPC)11.0%100.0%?Contingency (% of Total Cost)4.0%43.0%

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

Target all-in capital cost (cell T34) = 6,236 $/kW (determined from goal seek with fuel cost zero with an initial tariff estimate for CAPEX recovery

Target total capital cost (cell W34) = 6,236 x 100.000 x 1,000 = 623,600 USD

Target fixed O&M (cell X39) = 3% p.a. of total capital cost = 3% x 623,600 USD / (300.000 x 1,000 kW) = 187.08 USD/kW/year

Target variable O&M (cell X40) = 1% p.a. of total capital cost = 1% x 623,600 USD / (805,920MWh) = 7.74 USD/MWh

Target fixed G&A (general and admin costs, cell X37) = (20,000 / 53.00 USD/month) x 1.30 fringe x 13 months/year x 10 engineers = 63.770 ‘000 USD/year

1. Geothermal steam fuel cost, thermal efficiency and GHV

Geothermal steam cost (cell F66) = 2,164 USD/GJ

Geothermal steam genset energy to electricity efficiency (cell F57) = 3,412 / 34,121 = 10.00% GHV

Plant heat rate (cell F61) = 34,121 Btu/kWh

GHV of Geothermal steam (cell F53) = 1,104 Btu/lb Geothermal steam

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

1. Capital structure (equity, debt)

Capital structure:

Target IRR (cell J23) = 14.00% p.a.

Debt (cell J18) = 70% with 14.00% p.a. target IRR

Equity (cell J24) = 100% – 70% = 30% equity with 14.00% p.a. target IRR

70% debt with:

Target local component or local debt (cell G27) = 43.0%

43% local debt = 10% p.a. interest (cell J12), 10 years term (cell J13),

57% foreign debt (cell J7) = 100% - 43% = 57 % at 8% p.a. interest (cell J14), 10 years term (cell J15)

1. 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

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

Depreciation rate = 1 / economic life = 1 / C9 = 1 / 30 per year

Days receivables (cell F48) = 30 days

Days payables (cell G48) = 30 days

Days fuel inventory (cell G50) = 60 days

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

Refurbishment (overhaul cost) = 5% 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) BOI incentives (for RE)

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

1. Tax and incentives regime

Income tax holiday (ITH) (cell J33) = 7

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

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 = 70% (cell F49) (5th year) cell F50) of which is recoverable on the 5th year) (for RE)

Recovery rate of VAT =12% (cell F24) on 5th year after COD

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

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

Gov't share (for RE projects) = 0% (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

1. 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.

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) = 42.59% (cell J5)

% Foreign Component (funded by foreign debt) = 57.41% (cell J6)

Capital cost buildup results:

Construction Sources and Uses of Funds, $000100 MW?Uses of Fund:????Land Cost$94???EPC (Equipment, Balance of Plant, Transport)$382,372???Transmission Line Interconnection Facility$400???Sub-Station Facility$786???Development & Other Costs (Civil Works, Customs Duty)$59,174???Construction Contingency$17,709???Value Added Tax$37,188???Financing Costs$84,564???Initial Working Capital$42,061?Total Uses of Fund - $000$624,348????????????????????????????????- USD 000624,348?Sources of Fund:????Debt$437,044???Equity$187,304?Total Sources of Fund$624,348

First year tariff (LCOE, LRMC) to hit target equity IRR = 0.24081 USD/kWh (cell O26)

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

= 0.2173 USD/kWh (cell G34)

SRMC = 0.08978 USD/kWh (cell O26)

LRMC = 0.24081 USD/kWh (cell F30, O27) x 53.00 = 12.76 PHP/kWh (cell F28)

Duration of FIT or tariff contract (cell F31) = 25 years

Tariff after FIT or tariff contract year (cell F32) = 5 / 53.00 = 0.0934 USD/kWh

Pre-tax WACC = J30/(1-J34) =10.52% p.a.

After-tax WACC =J12 * (1- J34) * (J18-J7) + J14 * (1-J34) * J7 + J26 * J24 = 9.47% p.a.

WACC = =(J6*J12+J7*J14) *J18+J23*J24 = 10.40% p.a.

Equity IRR = 14.00% p.a. (cell G30)

Equity NPV = 0.0 (cell G28)

Equity PAYBACK = 8.54 years (cell C50)

Project IRR = 11.09% p.a. (cell G32)

Project NPV = -92.491 ‘000 USD (cell G33)

Project PAYBACK = 6.66 years (cell C51)

Debt Service Cover Ratio (DSCR) min = 1.12 (cell L43)

Debt Service Cover Ratio (DSCR) ave = 1.46 (cell L44)

Debt Service Cover Ratio (DSCR) max = 1.78 (cell L45)

Benefits to Cost (B/C) Ratio, discounted at pre-tax WACC = 0.856 (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 = 92%
2. Local component of project cost target = 43% (57% foreign component)
3. All-in capital cost target = 6,236 $/kW (or given tariff, use model to estimate CAPITAL cost)
4. Fixed O&M target = 187.08 $/kW/year
5. Variable O&M target = 7.74 $/MWh
6. Fixed G&A target = 6.77 ‘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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AVAIL OF THE 50% DISCOUNT THIS JULY 1-31, 2023 AND PURCHASE AND DOWNLOAD THIS EASY-TO-USE MODEL FOR ONLY 600 USD. CLICK ON THE LINK BELOW TO ORDER AND PAY THRU PAYPAL AND IMMEDIATELY DOWNLOAD YOUR DOCX USER GUIDE AND XLSM MODEL WITH 3 AUTOMATED EASY MACRO 2 (ctrl + f) to calibrate model to meet targets for net capacity factor or generation, % local and % foreign composition, all-in capital cost $/KW, and fixed O&M ($/KW/YEAR) and variable O&M ($/MWH) and fixed admin costs ($/year). Determine equity (30% equity, 70% debt) MACRO 1 (ctrl + e) and project (100% equity, 0% debt) MACRO 3 (ctrl +d) IRR, NPV, PAYBACK PERIOD, or first year tariff, short run marginal cost (SRMC), long run marginal cost (LRMC) and levelized cost of energy (LCOE).

Here is the link to download demo (locked reports) xlsm model to show its functionality:

DEMO Geo Thermal Model4 (USD) v3

Here is the link to download the docx file and xlsm model

https://energydataexpert.com/shop/power-generation-technology/adv-geo-thermal-power-plant/

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