Cogen 3 Technical Financial Analysis Model

EC-ASEAN COGEN Programme Phase III
Proven, Clean & Efficient Biomass, Coal, Gas Cogeneration
COGEN 3
Technical Financial Analysis Model
2004 Cogeneration Week in Malaysia
8 July 2004, Puteri Pan Pacific Hotel, Johor Bahru
Niels Beck-Larsen
Biomass Expert

Technical Financial Analysis (TFA) model

Calculation model for technical,
financial & environmental analysis of
cogeneration projects
Simple database for guidance:
Cogeneration system efficiencies, fuel
data, national economic data etc.
Excel standard spreadsheet:
Transparent & open model structure
Developed by COGEN 3.
Available for all & free
2

TFA user requirements

TFA requires knowledge of:
Energy streams in energy plants
Basic financing principles
Use of Excel (or similar spreadsheet programme)

TFA model

Interaction TFA model - user

Cogeneration Project Development
Development of cogeneration project
Technical Financial
Analysis model
Construction
Operation

Facilitation of cogeneration project development:
Services to project developers & end-users

Technical / Financial / Environmental Analysis
Advice on technology selection & investment decissions
Financial packaging
Announcement of identified cogeneration projects in ASEAN
Tools for development & evaluation of cogeneration projects
Technical Financial Analysis model (ver. 2) for free distribution
Several advanced tools for advisory services

Facilitation of cogeneration project development:
Services to project developers & end-users

Technical / Financial / Environmental Analysis
TFA model used

by COGEN 3
Advice on technology selection & investment decissions
Financial packaging
Announcement of identified cogeneration projects in ASEAN
Tools for development & evaluation of cogeneration projects
Technical Financial Analysis model (ver. 2) for free distribution
Several advanced tools for advisory services
TFA model used

by stakeholders

Project Development & TFA
Technical Financial
Analysis model
Construction
Operation
TFA model principles

10

Conventional energy supply
11

Cogeneration energy supply
12

TFA model principles (1)
13

TFA model principles (2)
=
14

TFA model overview (1)
15


Input & Calc.
User's inputs & assumptions. Nearly all input from the user is made here. The combination of
input & calculations to ensure physical consistency in comparison of cogeneration project &
baseline/current energy supply.
Sum.Financial
Summary of financial results. Read only worksheet.
Sum.Input & Calc.
Summary of input data, technical results, and cost and revenue calculations. Read only
worksheet.
Sum.Figure
Summary figure giving overview of major energy streams and technical data. Read only
worksheet.
Cash Flow
Cash flow sheet.Calculation of cash flows and financial performance of the project in the
currency chosen by the user. Read only worksheet.
Income
Income statement. Read only worksheet.
Balance
Balance sheet. Read only worksheet.
Sensitivity
Sensitivity analysis with variation of selected parameters. Read only worksheet except for
variation percentages. Please note the "Make / update ..." button
Emissions
Calculation of emission of Green House Gasses (GHG). Read only worksheet, except for
own emission factors.
16

17


TS DIAGRAM
600
Isobar
Iso enthalpy
500
3600 KJ/kg
Saturation
Proces
1000
700
500
400
300
250
200
Proces points
Temperature [C]
400
3400
3200
150
125
100
80
300
3000
50
35
25
200
15
10
8
2800
5
2
100
1
0,5
0,2
0
0.00
18
600
1.00
2.00
800
1000
3.00
1200
1400
1600
4.00
5.00
Entropy [kJ/kg/C]
1800
6.00
2000
0,07
2200
7.00
2600
2400
8.00
9.00


TS DIAGRAM
Isobar
600
Iso enthalpy
3600 KJ/kg
Saturation
500
Proces
1000
700
500
400
300
250
200
150
125
100
80
50
35
25
15
108
Temperature [C]
Proces points
400
300
200
19
3200
3000
2800
5
2
100
0
0.00
3400
600
1.00
2.00
800
1000
3.00
1200
1400
1600
4.00
5.00
Entropy [kJ/kg/C]
1800
6.00
0,5
0,2
2000
0,07
2200
7.00
2600
2400
8.00
9.00

TFA uses & benefits

TFA for calculations for cogeneration projects of:
Financial performance (IRR, NPV, pay back time)
Green House Gas emission (reduction of CO2 eq. emission)
TFA facilitates:
Consistency of energy uses
Comparison with electricity purchase & boiler for steam/hot water
TFA basic principles:

Modelling of energy streams & cash flows on yearly basis
Black box approach to cogeneration systems
20

TFA limitations & assumptions

Limitations in use for detailed technical design due to:
Modelling of energy streams & cash flows on annual basis
Black box approach to cogeneration systems
Assumptions:
Generation of electricity and steam/hot water correspond with
requirements in facility and export obligations
Energy streams & unit costs constant in lifetime
All investments are in construction period
21

TFA limitations
22

TFA limitations
Cooling
Heating
23

TFA example
Rice husk fired cogeneration project
Planned steam turbine and boiler cogeneration plant
Planned size of steam turbine
No. of operating hours
Assumed investment
Rice husk price (transport and handling)
3
5,000
1,500
1,000
MW
electric
hours/year
EURO/kW electric
Baht/Ton
Current supply of electricty from grid.

Current electricty purchase
Purchase rate electricity
13,500 MWh/year
3.0 Baht/kWh
Current supply of steam from diesel boiler.

Current steam consumption (2 bar) for drying of rice paddy
Purchase rate diesel oil for steam boiler
Operating cost current diesel boiler per year
The rice husk is burned in open burning today.
No export of electricity or thermal energy.
Current boiler will be kept as backup boiler.
24
8.3
5,000
10,000
800,000
Ton / hour
hours/year
Baht/Ton
Baht

Rice husk fired cogeneration project
Planned steam turbine and boiler cogeneration plant
Planned size of steam turbine
Assumed investment
Rice husk price (transport and handling)
3
5,000
1,500
1,000
MW electric
hours/year
EURO/kW electric
Baht/Ton
Current supply of electricty from grid.

Current electricty purchase
Purchase rate electricity
13,500 MWh/year
3.0 Baht/kWh
Current supply of steam from diesel boiler.

Current steam consumption (2 bar) for drying of rice paddy
Purchase rate diesel oil for steam boiler
Operating cost current diesel boiler per year
The rice husk is burned in open burning today.
No export of electricity or thermal energy.
Current boiler will be kept as backup boiler.
25
8.3
5,000
10,000
800,000
Ton / hour
hours/year
Baht/Ton
Baht

PROJECT IDENTIFICATION
Company:
Rice husk Cogeneration
Case:
Base case
Project description:
Calculation done by: COGEN 3
Other identification:
SUMMARY FINANCIAL RESULTS

Pre-tax Project IRR
20.0%
Pre-tax project nominal Internal Rate of Return (IRR)
Pre-tax Project NPV
189,235 ('000) Baht
3,895 ('000) EURO
Pre-tax Net Present Value (NPV)
Post-tax Project IRR
20.0%
Post-tax nominal project Internal Rate of Return (IRR)
Post-tax Project NPV
189,235 ('000) Baht
3,895 ('000) EURO
Post-tax Net Present Value (NPV)
Post-tax Equity IRR
20.0%
Post-tax nominal equity Internal Rate of Return (IRR)
Discounted payback time
7.1 Years
Simple payback time
4.8 Years
Total investment costs (incl. contingency)

Financial project lifetime
26
233,032 ('000) Baht

20 Years
4,796 ('000) EURO

Annual revenue, cost and investment
('000) Currency primary
150,000
100,000
50,000
0
-50,000
-100,000
Net investment
-150,000
Total revenues of operation & avoided costs
Total costs of operation
-200,000
-1
10
11
12
13
14
15
16
Operating year
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Discounted cumulative cash flow
250,000
('000) Currency primary
200,000
150,000
100,000
50,000
0
-50,000
-100,000
-150,000
-200,000
-250,000
-1
27
10
11
12
13
14
15
16
Operating year
17
18
19
20
21
22
23
24
25
26
27
28
29
30

Energy requirements (1)
Design of cogeneration plant & financial performance depends on:

Energy requirements: how much and when
How cogeneration plant meet requirements
28


Should be clarified:
Electricity requirements
Electricity export
Thermal energy requirements
Cooling requirements
Possible ways to define the energy requirements:

Energy audit done by consultant
Own mapping and prediction
Should be considered:
Possible savings, process changes, process integration etc.
Future energy requirements
29

30

Comparison with alternatives (1)

Current supply / Baseline:
Boiler with low efficiency and electricity from grid
31


Alternative 1:
Boiler with low efficiency &

electricity from grid
New boiler with high efficiency

(and maybe fuel switch) and
32


Alternative 2:

Cogeneration covering host

facility energy use
Fuel
cogeneration
33
Cogen
plant
Electricity
Thermal
energy
Facility use
electricity
& thermal
energy


Alternative 3:

Cogeneration covering host

facility energy use and export
34


Alternative 4:

Cogeneration covering host facility

energy use and export
Supplementary supply of electricity
and boiler
35


Boiler with low efficiency and electricity from grid
Alternative 1:
New boiler with high efficiency and electricity from grid covering host facility
energy use
Alternative 2:
Cogeneration covering host facility energy use
Alternative 3:
Cogeneration covering host facility energy use and export
Alternative 4:
Cogeneration, supplementary supply of electricity and supplementary boiler
covering host facility energy use and export
Systematic approach needed to find optimal solution!

36

PROJECT IDENTIFICATION
Company:
Rice husk Cogeneration
Case:
Base case
Project description:
Calculation done by: COGEN 3
Other identification:
SUMMARY FINANCIAL RESULTS

Pre-tax Project IRR
20.0%
Pre-tax project nominal Internal Rate of Return (IRR)
Pre-tax Project NPV
189,235 ('000) Baht
3,895 ('000) EURO
Pre-tax Net Present Value (NPV)
Post-tax Project IRR
20.0%
Post-tax nominal project Internal Rate of Return (IRR)
Post-tax Project NPV
189,235 ('000) Baht
3,895 ('000) EURO
Post-tax Net Present Value (NPV)
Post-tax Equity IRR
20.0%
Post-tax nominal equity Internal Rate of Return (IRR)
Discounted payback time
7.1 Years
Simple payback time
4.8 Years
Total investment costs (incl. contingency)

Financial project lifetime
37
233,032 ('000) Baht

20 Years
4,796 ('000) EURO

TFA Green House Gas calculations
38

Green House Gas emission change

Change in emission =
GHG emission cogeneration supply of electricity & thermal energy
GHG emission baseline supply of electricity & thermal energy`

39

CO2 equivalent emissions

Green Houses Gases:
Carbon Dioxide CO2
Methane CH4
Nitrous Oxide N2O
Carbon Dioxide equivalent emission =
Carbon Dioxide +
21 * Methane Carbon Dioxide eq. +
310 * Nitrous Oxide Carbon Dioxide eq.
40

New in TFA version 2

TFA model can be used in 2 different ways:
Model for financial calculations (.... Yearly amount / .... Lump sum). Data inputs
are yearly cash flows
Model for energy stream calculations and financial calculation (.... Facilitation):
Data inputs are amounts of electricity and thermal energy needed, type and size of
cogeneration plant, investment details etc.
4 new sheets has been added:
Income sheet
Balance sheet
Sensitivity analysis
Graphical presentation of energy streams
TFA model can now handle:
41
Sensitivity analysis
Taxation
Depreciation
Debt service
Corporate projections for cogeneration plant in a special purpose company

TFA - USER'S GUIDE
USER'S GUIDE FOR COGEN 3 TFA MODEL

This User's guide provides an overview and explains methodology of the COGEN 3
Technical-Financial Analysis (TFA) model, version 2. The TFA model environments has:
Calculation model for technical, financial and environmental analysis of cogeneration
j t database for guidance on e.g. cogeneration system efficiencies, fuel data,
Simple
d t is:
t
The TFAi model
Implemented in Microsoft Excel standard spreadsheet and has a transparent and open
d l t t by COGEN 3. The model is available for all and free
Developed
The User's guide has the following main sections:
42
TFA MODEL USES AND LIMITATIONS
Go to section
SPREADSHEET EXPLANATIONS
Go to section
HOW TO USE THE TFA MODEL
Go to section
CALCULATION PRINCIPLES
Go to section
EXCEL INFORMATION
Go to section
NEW FACILITIES AND CHANGES IN VERSION 2
Go to section

TFA - USER'S GUIDE

Colour codes used in the TFA model
The colours on the tabs of the worksheets indicates the main purpose:
Information and suggested data (libraries).
Input and technical calculations
Financial calculations
Summary sheets
Green House Gas calculations
In the Input & Calc., and the GHG emission worksheets, the cells have colours depending on their functio
Input cell. User must specify (if the calculation option is used).
Input cell with suggested value. User's own value can be entered instead of suggested
Suggested data from libraries. All values can be overruled by entering a value (different from
0 or " " (blank)) in a nearby yellow cell.
Calculated value, or text, for user's control.
Some blue cells can turn red as a warning if e.g. input values are inconsistent.
43

Security level for macros is "Medium"

If the level is "High" the Hide and Show buttons do not work as they are using macros.
How to change the security level for macro virus protection:
1. On the Tools menu, click Options.
2. Click the Security tab.
3. 'Under Macro Security, click Macro Security.
4. Click the Security Level tab, and then select the security level Medium or Low (see figure
If Low is selected Excel runs all macros in all spreadsheets. This might affect the virus risk.
If Medium is selected Excel will run macros if the user, every time a spreadsheet using
macros is opened, choose Enable Macros. See figure to the right.
New
44

TFA
45

TFA
46

TFA
47

TFA
48

TFA
49

TFA
50

TFA
51

TFA
52

TFA
53

TFA
54

Project Development & TFA
Technical Financial
Analysis model
55
Construction
Operation

Feasibility study - software tools

1. Spreadsheets - e.g. TFA Excel
2. Simulation software - e.g. EnergyPro
1:
Basic data processing
Ad hoc calculations, data summaries,
comparisons, graphs etc.
2:
56
Energy production system analysis

Environmental impact assessment
Investment estimate for energy production system
Economic evaluation of energy production system

Summary
57

For more information,

please visit COGEN 3 Website at:
http://www.cogen3.net
Thank You !
58

Cogen 3 Technical Financial Analysis Model

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EC-ASEAN COGEN Programme Phase III

Proven, Clean & Efficient Biomass, Coal, Gas Cogeneration

EC-ASEAN COGEN Programme Phase III

Technical Financial Analysis (TFA) model

EC-ASEAN COGEN Programme Phase III

TFA user requirements

EC-ASEAN COGEN Programme Phase III

EC-ASEAN COGEN Programme Phase III

Interaction TFA model - user

EC-ASEAN COGEN Programme Phase III

Cogeneration Project Development

Development of cogeneration project

EC-ASEAN COGEN Programme Phase III

Facilitation of cogeneration project development:

Services to project developers & end-users

Technical Financial Analysis model (ver. 2) for free distribution

Several advanced tools for advisory services

EC-ASEAN COGEN Programme Phase III

Facilitation of cogeneration project development:

Services to project developers & end-users

TFA model used

Technical Financial Analysis model (ver. 2) for free distribution

Several advanced tools for advisory services

TFA model used

EC-ASEAN COGEN Programme Phase III

Project Development & TFA

Development of cogeneration project

TFA model principles

Proven, Clean & Efficient Biomass, Coal, Gas Cogeneration

EC-ASEAN COGEN Programme Phase III

Conventional energy supply

EC-ASEAN COGEN Programme Phase III

Cogeneration energy supply

EC-ASEAN COGEN Programme Phase III

TFA model principles (1)

EC-ASEAN COGEN Programme Phase III

TFA model principles (2)

EC-ASEAN COGEN Programme Phase III

TFA model overview (1)

EC-ASEAN COGEN Programme Phase III

TFA model overview (2)

Summary of financial results. Read only worksheet.

Sum.Input & Calc.

Income statement. Read only worksheet.

Balance sheet. Read only worksheet.

EC-ASEAN COGEN Programme Phase III

TFA model overview (3)

EC-ASEAN COGEN Programme Phase III

TFA model overview (4)

EC-ASEAN COGEN Programme Phase III

TFA model overview (4)

EC-ASEAN COGEN Programme Phase III

TFA uses & benefits

TFA basic principles:

EC-ASEAN COGEN Programme Phase III

TFA limitations & assumptions

EC-ASEAN COGEN Programme Phase III

EC-ASEAN COGEN Programme Phase III

EC-ASEAN COGEN Programme Phase III

Current supply of electricty from grid.

Current supply of steam from diesel boiler.

EC-ASEAN COGEN Programme Phase III

Current supply of electricty from grid.