II.A.

SUC Startup Costs

Cost definition:
...all costs associated with design changes needed after completion
of installation before it can operate at design conditions, in particular
labour, materials, equipment and overhead expenses (but only startup
time) plus loss of income when installation is not operating or
operating at partial capacity...
Rough estimates:
-

usually SUC ~ (0.050.12) FCI

on average SUC = 0.1 FCI

for power plants use the sum of:

-

one months of fixed OMC

one month of variable operating costs at full load

one week of fuel at full load

0.02 PFI = 0.02 (FCI land cost).

Notice:
-

SUC are capitalized in this approach

SUC may be included as part of IC in preliminary analysis

Some companies capitalize only costs of equipment modifications

while labour and materials used during startup are considered as
first-year OMC.

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II.B. WC -

Working Capital

Cost definition:
...funds required to sustain plant operation before payment for
products sold is received, including funds for materials end fuel in
stock, accounts receivable, cash on hand for purchases of materials,
wages, fringe benefits, taxes, accounts payable...
Rough estimates:
-

WC ~ (0.10.2) TCI

on average WC = 0.15 TCI

for power plants use the sum of:

-

2 months of fuel at full load

2 months of variable operating costs at full load

3 months of full labour costs

II.C. LRD -

0.25 of all above costs as contingency.

Licensing, Research and Development

Cost definition:
...licensing costs and costs for research development directly related
to the system or process in the system...
Notice:
-

LRD costs, both lump-sums or regularity paid royalties must be

capitalized, i.e. added to TCI.

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II.D. AFUDC

Allowance for Funds

Used During Construction.

Cost definition:
...time value of money spent during construction, based on interest
rate, equal to the so called weighted cost of capital...
Rough estimate:
-

AFUDC + LRD = 0.15 FCI (on average)

Notice:
-

AFUDC is an interest compounded annually (end of year)

during the construction period for all funds spent during a year
and previous years

AFUDC applies for both company own resources and direct

loans as well as for combined financing (i.e. combination of
own resources and loans)

For known period of design and construction and known

allocation of FCI to individual years of the period the more
precise value of AFUDC may be calculated.

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