new vision of engineering economy course (vision) module 3

NEW VISION OF ENGINEERING ECONOMY

COURSE (VISION)

MODULE 3

LECTURE 6 Cairo, 16 July 2005

JULY 2005 TEI OF PIRAEUS 2

Case Studies - 1

Objectives: • Application of the payback method

on a wind farm investment• Investigation of critical factors in

the investment’s viability• Estimation of the optimal point to

start an energy investment

JULY 2005 TEI OF PIRAEUS 3

Problem Statement

(1)What?

Where?

Why?

How big?

in Greece

a wind park

(scale economy,funding)

for a private investment

JULY 2005 TEI OF PIRAEUS 4

Problem Statement (2)

JULY 2005 TEI OF PIRAEUS 5

Investment Cost (1)

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Investment Cost (2)

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Investment Revenues

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Cost-Benefit Analysis

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Influence of Capital Cost-Return on Investment

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Impact of the Inflation Rate

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Impact of the Electricity Price Escalation Rate

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Influence of the Turn-on Key Cost

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Impact of the M&O Cost

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Sensitivity Analysis

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Time-Depending AnalysisTime Evolution of the Main Economic Parameter of the Local Economy

-5

0

5

10

15

20

25

30

35

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Year

(%)

Return on Investment

Capital Cost

Inflation Rate

M&O Inflation Rate

Electricity Price Escalation Rate

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Economic Behavior in Different Time Points

Lakonia-95, z=10, No=100kW, 225kW, 500kW, ω=0.45

-3

-2

-1

0

1

2

3

4

5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Years of Operation

BC

R

Lakonia-95

Lakonia-90

Lakonia-85