financial model flowchart
TRANSCRIPT
Cen
ter
for
Stu
dy o
f Sci
ence
, Tec
hn
olog
y &
Pol
icy
TECHNO-ECONOMIC MODEL FOR MINI-GRIDS IN RURAL KARNATAKA
Rushil Zutshi
22nd August, 2016
ww
w.c
step
.in
2
Model FlowchartData from Homer Legacy Software
System Configuration:1. Panel Size2. Storage Requirement3. Inverter Size
Central Electricity Regulatory Commission Document
Solar PV Benchmark Costs
Financial Model1. Annual Cost of
Generation2. Profitability3. Term Loan Interest
and ROE4. Tax, Depreciation and
PAT5. Subsidy
Output1. LCOE2. IRR3. PAT
Main Insights
1. Tariff Design2. Hybrid
Subsidy Design
ww
w.c
step
.in
3
Project Parameter AssumptionsProject Lifetime 25 yearsCapacity Factor 20%
Village Population 698Number of households 233
Daily Total Demand 102 kWh, 9.9 kWp
Case Study: Bedaguli
System Configuration
Assumptions
Solar PV 38 kWConverter 10kWBattery 48 units (2 strings or
288 kWh)Capacity Shortage 1.9%Excess Electricity 20.4%
ww
w.c
step
.in
4
Financial ModelAssumptions
Debt to Equity Ratio 0.7:0.3Pre Tax Discount Rate 14%WACC 11%Debt Moratorium Period 0 yearsDebt Repayment Period 12 yearsDebt Interest Rate 13%Return on Equity for first 10 years
15%
Return on Equity for 11th year onwards
16%
Weighted average return on equity
16%
ww
w.c
step
.in
5
Financial Model Results
Depreciation
Interest on Term
Loan
Return on
Equity
Interest on WC
LCOE = = ₹ 25.76 (for base case)
Total Incom
eEBITDA
Income Tax and
MAT
Profit Before
Tax
Total Interes
t
Determining LCOE
Determining IRR
When NPV = 0, IRR = 11.29%
NPV =
O&M
ww
w.c
step
.in
6
Current Subsidy Model• 30% Capital SubsidyProposed Subsidy Models• Hybrid Subsidy Model – Operational Subsidy • Hybrid Subsidy Model – Interest Rate SubsidyProposed Tariff Model• Two-part tariff: One tariff for domestic consumption and a different tariff for
commercial consumption
Subsidy & Tariff Model and Cost Charts
20%
2%
2%
3%
2%
3%61%
8%
Capital Cost Break-Up
PV ModuleCivil CostMounting StructuresEvacuation CostPrelim, Preop and IDCInverter CostBattery CostSystem Capital Cost
6%
35%
37%
2%
21%
Fixed Cost Break-Up
Operations and Main-tenanceDepreciationInterest on Term LoanInterest on Working Capi-talReturn on Equity
ww
w.c
step
.in
7
Sensitivity AnalysisLCOE (base case: 30% subsidy – split equally)
-50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% 350.0% ₹2.00
₹4.00
₹6.00
₹8.00
₹10.00
₹12.00
₹14.00
₹16.00
₹18.00
₹20.00
₹22.00
₹24.00
₹26.00
Subsidy Pecentage Term Loan Interest Rate Subsidy Percentage as Capital SubsidyMAT Tax
Input Value as % of Base Case
LCO
E
ww
w.c
step
.in
8
Sensitivity AnalysisIRR (base case: 30% subsidy – split equally)
-50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% 350.0%10.00%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
17.00%
18.00%
19.00%
20.00%
21.00%
22.00%
23.00%
24.00%
25.00%
Subsidy Pecentage Subsidy Percentage as Capital Subsidy Term Loan Interest RateTax MAT
Input Value as % of Base Case
IRR
THANK YOU