tpp task 5 economic and financial analysis

November, 2007

European Agency for Reconstruction

Contract nr 05KOS01/04/005

Studies to support the development of new generation capacities and related transmission – Kosovo UNMIK

CONSORTIUM OF PÖYRY, CESI, TERNA AND DECON

Task 5

ECONOMIC AND FINANCIAL ANALYSIS

Studies to support the development of new generation capacities and related transmission (48) Task 5, Economic and financial analysis November, 2007

European Agency for Reconstruction Pöyry-Cesi-Terna-Decon

CONTENTS

1 INTRODUCTION..............................................................................................................3

1.1 Scope....................................................................................................................................3 1.2 Operating Enviroment.......................................................................................................3 1.3 Modelling Assumptions......................................................................................................4

1.3.1 Factors Affecting Financial Viability...............................................................................4 1.3.2 Potential EVA Sources.....................................................................................................5 1.3.3 CO2 Issues......................................................................................................................10

2 FINANCIAL MODEL .....................................................................................................12

2.1 Technical Configuration Options ...................................................................................12 2.2 Site options ........................................................................................................................12 2.3 Initial Data – Basecost Excel Workbook........................................................................12

2.3.1 Site Cost Sheet ...............................................................................................................13 2.3.2 Network connection sheet ..............................................................................................15 2.3.3 Plant cost sheet ...............................................................................................................17 2.3.4 Construction schedule sheet ...........................................................................................19 2.3.5 Disbursement schedule sheet .........................................................................................24 2.3.6 Personnel sheet ...............................................................................................................25 2.3.7 Operation and maintenance (O&M) sheet .....................................................................26

2.4 Financial model – Excel workbook.................................................................................31 2.4.1 Opening sheet .................................................................................................................32 2.4.2 Input sheet ......................................................................................................................32 2.4.3 Results sheet ...................................................................................................................37 2.4.4 Report sheet....................................................................................................................46 2.4.5 All other sheets...............................................................................................................47



1 INTRODUCTION

1.1 Scope The financial model includes an estimate of itemised investment cost including process and project contingencies for the entire project implementation including, design, engineering, project management, plant and equipment cost, transportation and installation cost, supporting infrastructure cost, preparation of site, access to the site, power evacuation, spare parts, start-up fuel and required tools, commissioning and acceptance test, training of staff, insurance, etc.

The investment cost estimate includes an estimate of the ratio between local and foreign supplies including project implementation cost, land acquisition cost, resettlement cost, local taxes and import duties, project development cost, engineering fee, fee for legal and financial advisors, fee for approvals, and interest during construction.

A detailed sources and uses of funds during the construction period is included on a quarterly basis. The analysis includes calculation of net present value (NPV), internal rate of return (IRR), and other measures useful to decision-makers in Kosovo.

Operating cost includes lignite and fuel oil cost, other operating and maintenance cost, insurance premiums; and major overhauls cost. The frequency of rehabilitation over the plant life is forecast and the NPV of the operating cost and of the generated electricity are derived for the recommended three technical options.

The economic analysis integrates the above and shows the range of results for the recommended three options and assumptions (sensitivity analysis). (Gas and renewable sources and electricity import are not technically or economically viable options for comparison for the near future due to severe capacity constraints.)

A comprehensive financial model has been developed, answering all relevant questions concerning the financial viability of the project, the revenues, operating cost, cash flows, disbursement schedule of possible loans, capital requirements and liquidity. The model includes a default financing plan and it is flexible for decision-makers in Kosovo to understand the sensitivities to variables.

The model has been delivered to the Contracting Authority.

The scope of the Economic and Financial analysis was changed by client request during the project. Because of external considerations, the focus of Task 5 was focused on producing a flexible financial analysis model of the Kosovo C power plant to be used by selected stakeholders for evaluation and option comparison purposes.

1.2 Operating Enviroment The strategic and operational environment of the Kosovo C thermal power plant in the Kosovo electricity market is complex and with multiple interdependencies. In Figure 1 we have shown a simplified principial view of the market.



Physical DeliveryPaymentsContracts

MINING OPERATION

POWER PLANT 2POWER PLANT 3

POWER PLANT

POWER PLANT 2POWER PLANT 3

POWER PLANT

LOCAL CO (IPP)

ASH DISPOSAL

€ forash

€ forash

Ash disposal

Ash disposal

Lignite

Lignite

TSO

Finance

InvestmentInvestmentROI

Finance

RP & IR

ROIRP & IROwnership

Ownership

Finance

Finance

Price contract

€ forpower

€ forpower

€ forpower

€ forpower

€ forpower

Price contract

Price contract

Price contract

Price contract

WORLD BANK

OTHER FINANCERS

FOREIGN INVESTOR

KOSOVO ADMINISTRATION

TRADERS

FOREIGN GENERATION

EXPORT CLIENTS

LARGE KOSOVO CLIENTS

SMALL & MEDIUM

CONSUMERS

KOSOVO DISTRIBUTION

(KEK + OTHER?)

KEK

Kosovo B

KEK

Kosovo A

Figure 1: Principial Model of the IPP in the Kosovo Electricity Market

1.3 Modelling Assumptions

1.3.1 Factors Affecting Financial Viability The financial and operational viability of the Kosovo C thermal power plant is primarily dependent on the following factors:

1. The fuel cost, i.e. the price paid for the lignite supply

2. The regional electricity price

3. Project (construction and site) costs

4. Fees or levies paid (Economic Value Added for Kosovo)

5. Operational costs

6. Cost of financing

7. Other fees and costs



Of these factors, the electricity price is variable and thus carries most of the associated risk. In assessing the financial viability of the power plant this risk normally requires a considerable risk premium for the investor.

1.3.2 Potential EVA Sources This section discusses the assumptions for potential income sources from the Kosovo C project for the Kosovo administration. As no conclusive decisions or comments were provided by key stakeholders, the financial model for reasons of clarity and flexibility only allows for calculation with a few of the options below.

Lignite fee (EUR / tonne lignite) In this case the lignite mine would either be owned by the Kosovo administration or there would be separate legislation allowing for a license fee, tax or levy on natural resources.

The Kosovo C company would pay a lignite consumption-based fee. Price development would be ensured with an index mechanism following the general development of Kosovo economy, indexed for selected price indicators and inflation rate.

There is a possibility to require a minimum assumed annual consumption (tons of lignite) – with payment due also if there is no real physical lignite consumption. This would be a strong incentive for continuous production with high efficiency and ensure a minimum level of annual revenues for Kosovo. It would not constitute an obligation to generate electricity

If the fee would also cover ash disposal the investor would not be burdened with additional payments.

It would be essential for competition reasons that the same fee would apply to all lignite users (i.e. also KEK).

Key benefits of introducing a lignite volume-based fee would be that it is:

• Easy to measure and unambiguous

• It provides a guaranteed cash flow level for the Kosovo administration

• There is a strong incentive for generation due to the minimum fee level.

• Another strong incentive is for efficiency as higher efficiency rate would mean lower lignite cost per MWh electricity

• Price indexing ensures relevance of prices in the long term

Drawbacks would include:



• If new legislation is passed, the influence would not be restricted to Kosovo C creating short-term adverse effects on e.g. KEK financial performance

• A minimum threshold may increase investment risk with low market prices (ex. seasonal low prices), which increases the required investment risk premium

• High electricity market prices would give no extra yield to the Kosovo Administration

• A volume-based fee is insensitive to lignite quality (heating value

Energy fee (EUR / GJ energy content of lignite) This is similar to the lignite fee, but the power company is charged for annual usage of lignite and its energy content, and is contractually bound to pay an energy fee based on energy content of the lignite resource, and where the measurement of the energy content is done by an agreed third party, i.e. the energy content can be verified by periodical samples, which are examined by independent laboratory

Additional benefits compared to lignite fee:

• The Kosovo C pays for the actual energy content, not the physical mass of the resource

Additional drawbacks:

• The energy content is variable – meaning a variable cost with increased risk for and variable EVA income for the Kosovo Administration

• There is a slightly higher cost (calorimetric measurement + weighing)

• Laboratory independence needs to be certain

• Operational output might not correlate with energy content input during first years (learning curve – later efficiency increases

Energy fee (EUR / MWh electricity) The electrical energy output measured by the TSO as delivered to network is the fee basis, with terms that oblige the power company to generate a certain annual (or monthly) minimum level in output - not tied to strict daily values.

Additional incentives / requirements for better efficiency and reliability can be built into the fee structure, but the same fee should be levied for all generators (also KEK). The incentives should be set to different levels: The higher the efficiency, the lower the fee for additional electricity produced, or no fee for heat generation (district heating) to improve incentives



A mutually acceptable structure in case of operational delays or technical failures must be created, with Force Majeure clauses for major issues.

Benefits:

• Easy to measure –through TSO

• Additional incentives to drive up performance can be utilized

• Could be used in conjunction with other fees

Drawbacks

• Complex, multi-layered fee structure necessary

• Variable cash flow as electricity generation fluctuates

• Dependent on grid stability

• Heat production (for DH) needs a separate structure

• No inherent incentive for fuel efficiency

• Energy tax-type levy normally paid by consumers, not generators

Concession fee (one-off fee) The concession for the lignite mine and/or power plant is sold separately to the investor, who is obliged to build and start an IPP by concession agreement within an agreed timeframe. The concession is auctioned to the highest bidder. The better and more secure the long-term investment situation is, the higher the auctioned price will be. Settlement (payment) of the concession fee can be annualized or a one-off payment. Clauses for mine utilization need to be applied.

Benefits:

• A one-off cash payment, which is not tied to the output or the operational quality of the IPP

• Up-front cash for the Kosovo administration

• Simplest possible commercial bidding structure for transaction

Drawbacks:

• No control after the transaction by the administration other than national laws (or contract)

• KEK lignite supply price - a fixed volume and price for KEK (Kosovo B) lignite supply from the mine is needed



• If the concession is only for the power plant, another structure is needed for the lignite mine

• Complicated contract structure, unclear incentives. Without utilization clauses in concession– risk for no generation or late start

• Uncertain status of Kosovo can lower fee – higher investor risk, and up-front payment means high discount rate (lower fee) due to high risk

• Long-term management of received capital within Kosovo administration – budgeting risk (+other issues)

Energy off-take (electricity and district heating) Kosovo C delivers energy to the Kosovo Administration, and is contractually bound to supply (generate or buy) a fixed amount of energy per annum/other agreed period, and the Administration organizes the use of that energy (requires resources). The economic effect (EVA) depends on volatile market prices, unless subsidized delivery is intended. The Kosovo Administration would be entitled to fixed (or variable) amount of output MWh electricity and (later) district heating

Benefits:

• The economic effect follows the market price development – natural hedge for power company

• The Kosovo administration has control over fixed energy volume – improved supply situation

Drawbacks:

• Hard to define correct volume level to be delivered

• Economic effect follows the market price development and volatility

• Kosovo administration has control over fixed energy volume – but does it have sufficient expertise and resources?

• Severely limits investment upside - increases investment price risk

• Sales pricing is essential(Government-subsidized delivery price reduces economic benefit for Kosovo)

Energy Taxation Energy taxes can be set to affect any part of the energy value chain: mining, lignite price, sold electricity price, ash disposal etc. Taxation can be also based on volume, environmental impact, etc.



This requires a well-defined legal set-up fixed for the long term to be attractive for the investor

Energy taxes are currently used in many countries. Taxes must normally be applied equally to all market participants. The long-term effect on investment value is fixed by contract / additions in law. This could also be a pinpoint law/tax (for one IPP) but assumption is same law and tax for all

Shareholding The Kosovo Administration invests capital or receives a share in the IPP and as a shareholder has direct insight and control (level depends on the shareholding stake)

The income to the Administration comes from annual dividends which are determined by financial results

Assumption: Administration is minority shareholder, but has some control e.g. through the board. Clear decision-making structures, governance structures and articles of association are required for balanced management.

Key benefits:

• Government participation in the power plant lowers some risks of the investors

• Stake can also include other industry sector stakeholders

• Kosovo Administration received part of investment upside

Drawbacks:

• The double role of the Administration can hinder other investments to energy sector (possible conflicts of interests, and significantly reduces the investor’s upside

• The annual income stream is volatile and unpredictable with a full risk bearing in e.g. default situation, and the Kosovo Administration gets partial investment risk

• Availability of capital for the investment

• Political decisions affect financial viability – increased political risk

Equity loan The Administration issues an equity loan to the power company, which will be repaid with appropriate interest over the time. An equity loan does not give control, but is the second in line for liquidation (after loans) in possible default. National legislation can contain restrictions or special rules for equity loans



Terms should be agreed for both securing steady income stream to Administration and securing reasonable financial strength to IPP

Capital is acquired from international sources

Investor risk rating probably better than Kosovo Administration

Benefits:

• Possible tax shield on interest

• Terms can be negotiated in flexible way

• May improve the financial feasibility if necessary for raising debt capital

• Keeps the power plant separated from Administration – no double role

Drawbacks:

• The price of capital can be high, if it is syndicated from international sources (normally more expensive than commercial debt)

• Interest and re-payments can be restricted to positive financial result of the company – difficult to control

• Limited or no economic upside for Kosovo Administration or investor

Rent Rental fees work similar to license or concession fees with the difference primarily in which legislation the agreement falls under (real estate).

Obligations The power company is obliged to deliver electricity (and / or heat) at agreed price, with a price cap and volume obligation targeted either for the Administration or to a certain customer group. The risk of technical or operational failure must be taken into account in contract terms

Could be combined with other fees etc. and decreases EVA cash flow volatility. Cost-bearing obligations means including e.g. site cleanup costs or decommissioning costs or ash disposal costs to be paid for by the investor.

Other obligations may include domestic or local employment requirements, counter trades, etc.

1.3.3 CO2 Issues Task 3 comprises a detailed analysis of the issues related to greenhouse gas emissions illustrating the characteristics of the main flexibility mechanisms that exist at the



moment in order to lower the CO2 emission volumes, and an analysis in which way such mechanisms could be implemented in the Kosovo context and the effects on the Kosovo C power plant.

The first conclusion of the analysis was that the development about this topic strongly depends on if Kosovo will ratify the Kyoto protocol, moving Kosovo from a passive position to an active one. If Kosovo will ratify Kyoto in fact, besides not having any emission cap to respect, it would take the position of “beneficiary” country of a Clean Development Mechanism Project, held by an Annex I Country.

On the other hand, if Kosovo decided to ratify Kyoto, an emission cap would probably be fixed for Kosovo. In this case the level of this emissions cap would contribute in the determination whether an investment (ex. Kosovo C) is economically interesting. With the Kyoto ratification and the cap level assignment, becoming Annex I, Kosovo would not have the possibility to benefice anymore of CDM Projects but, on the other hand, would have the chance to take part in Joint Implementation Projects, both as proposal and as guest. These kinds of Project, if compared with CDMs, can be easier to be developed, especially if both the Countries satisfy the eligible criteria.

If the Kosovo C thermal power plant project is compared with a baseline in which the demand is satisfied by an internal generation capacity increase, then the USC technology may be a strong alternative from the CO2 emissions point of view. Scenario analysis in Task 3 states that the project will save an overall quantity of 11.9 Mt CO2 calculated over the 7 years credit period. If the baseline was defined starting from a situation similar to the actual one, in which the peak load is covered with the help of imports, then any generation project, even the one characterised by the highest efficiency, would be probably penalised.

It is, based on the facts at hand, not feasible to estimate the full economic and financial impact of a hypothetical situation, as no status regarding the Kyoto protocol has been declared.

The default assumption for the economic and financial model is that it is CO2 neutral, i.e. there is no associated CO2 cost. The calculation model does, however, allow for a different set of assumptions where a CO2 cost can be used for calculation.

The medium and high electricity price scenarios from Task 1 that are used in the model include a moderate to high CO2 price as price components. This fact does not mean that the Kosovo C plant needs to buy emission rights, but rather that the electricity sales price reflects the CO2 costs in the whole region.



2 FINANCIAL MODEL This report covers the characteristics of the financial model of the Kosovo C power plant developed by Pöyry Energy. Input values for the model (such as plant costs, disbursement schedule etc.) will be described in detail below, the idea being to give an explanation to why specific values are used.

This section also provides a walk-through of the functional characteristics of the model, and describes on a high level how results are obtained and how they should be interpreted.

2.1 Technical Configuration Options The model evaluates three different cases, which are described below. The modelling is done separately for each of the three technical options, with three separate calculation models.

1. 500 PF (pulverised firing)

In this case the power plant is made up of four 500 MW units, utilising pulverised firing technology.

2. 500 CFB (circulating fluidised bed)

In this case the power plant is made up of four 500 MW units, utilising circular fluidised bed technology.

3. 750 PF (pulverised firing)

In this case the power plant is made up of one 500 MW unit and two 750 MW units, all utilising pulverised firing technology.

These technical configurations are described in detail in the documentation for Task 3. Detailed specifications for the above units can be found in three separate Excel files named in this manner: Basecost[model][date] (e.g. basecost500PF050709). This Excel file will hereafter be referred to as the Basecost file.

2.2 Site options As described in detail in Task 4, the new thermal power plant can be situated at the sites Kosovo A, Kosovo B, or Bivolak. The financial model offers the ability to select between the three site options for financial evaluation.

2.3 Initial Data – Basecost Excel Workbook This section shows the initial data in the abovementioned Excel files, and descriptions for selected values. The content of the Excel files is detailed worksheet by worksheet with one collective description for all three technical options due to the relatively small differences between them.



2.3.1 Site Cost Sheet This worksheet presents the estimated overall site-related costs for site selection. These costs do not appear directly in the actual model for the power plant. For example, the cost of the 400 kV line connection will be taken care of by the transmission line operator KOSTT. The same applies to the cost of belt conveyors from the mine and conveyor/pipe to the ash dump as that cost is assumed to be taken care of by the mine operator and the ash dump operator respectively. In this respect the model is limited to within the power plant boundary.

2.3.1.1 Site-specific Investment Cost Initial costs are presented in table below.

Initial costs for the evaluated sites

siteItem Kosovo A Kosovo B BivolakInitial costs

Land cost 3 000 000 3 000 000 1 500 000

Access road 400 000 800 000 4 000 000

Access road bridge 0 0 1 000 000

Cleaning from toxic substances 2 000 000 0 0

Dismantling existing structures 2 000 000 0 0

Levelling 1 000 000 2 000 000 10 000 000

Removal of contaminated soil/ash 12 500 000 37 500 000 0

Backfill of removed soil 25 000 000 0 0

Potable w ater supply 50 000 50 000 500 000

Construction pow er 100 000 100 000 500 000

Drainage 100 000 100 000 0

Industrial w ater supply 250 000 250 000 250 000

Beltconveyor f rom mine 12 000 000 15 000 000 21 000 000

Belt/pipeconveyor to ash dump 6 000 000 10 000 000 16 000 000

400/110 kV pow er connections 19 950 000 24 825 000 29 575 000

Foundations

pow erplant 10 000 000 10 000 000 10 000 000

lignite yard 2 800 000 2 100 000 1 400 000Grand total initial cost 97 150 000 105 725 000 95 725 000

Table 1: Site-specific investment costs

The cost estimates above have been made by the key experts based on site visits. The site costs are estimated to be the same for all technical options and Kosovo B figures have been used in the default case. The site cost worksheet is editable and new figures can be inserted for comparison of the sites to support decision-making.

The cost items of the site options are determined as follows:



Land cost is the estimated price to be paid KEK for approximately 75 hectares of industrial land in Kosovo A or B case. In Bivolak there are several private owners for the same area of agricultural land.

Access road requirements for Kosovo A and B case are relatively limited as a separate paved access road needs to be built from the existing roads next to the property. For the Bivolak site a new access road has to be constructed from the main road Pristina – Mitrovica plus a bridge crossing the Sitnica River.

Cleaning from toxic substances is a cost in Kosovo A as there are phenols etc. that have to be removed before any further activities can commence on this particular site. Task 4 details the environmental issues and related clean-up costs for the sites.

Dismantling of the existing structures is also necessary for the Kosovo A site as the proposed site currently is occupied by the abandoned gasification-fertilizer plant as well as facilities for preparation (drying) of lignite for sale. There are also tanks for storing of phenols. The dismantling cost is uncertain as there is no information available on whether asbestos is found there. On the other hand the current high price of scrap steel/stainless steel can lower the net cost considerably.

Levelling cost is for preparing the site for construction. The Kosovo A and B sites are fairly flat to start with, and thus this cost is just marginal. In Bivolak there are more rolling hills and the cost for levelling the area is estimated at 10 million. The sheet indicates the material volumes and specific costs used in the estimates.

Removal of contaminated soil/ash in case of Kosovo A it is assumed that some 5 million cubic meters of contaminated (phenolic) soil is removed to the ash dump. For the Kosovo B site the existing ash pile of 15-16 million tons needs to be removed to the ash dump.

Backfilling is required for the Kosovo A site. The cost per cubic meter is higher as the clean material has to be brought in and compacted for further construction.

Potable water supply is the estimated connection cost of the site (for construction camp purposes) to the public water supply system.

Construction power supply is the estimated cost of connecting the construction site to the 20 kV power supply.

Drainage is the estimated cost of organising drainage of the site for the construction period.

Industrial water supply is the estimated cost of connecting the plant to the Iber-Lepenc channel system.

Belt conveyor from the mine is the estimated cost of a new belt conveyor system from the SW Sibovc mine to each alternative site.

Belt conveyor / pipe for ash transport is the cost of connecting the site to the ash dump at the Mirash mine.



400/110 kV power line connection is the cost to enlarge the existing 400 kV switchyard and construct the 400 kV overhead lines from the plant step transformers to the switchyard. A 110 kV connection is built for start-ups and emergency service. The cost is based on Task 2.3 figures. The transmission operator KOSTT will bear the cost for this part of the project, and thus the cost is excluded from the financial model.

Foundations are the actual cost of constructing building foundations for the plant. The basic assumption is that the foundation concept is almost the same for all the investigated sites as there is a lignite seam beneath.

It should be noted that the differences between the sites are relatively small when the overall initial costs. There are considerable unknown factors and risks involved like the dismantling cost of existing Kosovo A site facilities and the ash pile removal cost at the Kosovo B site.

2.3.1.2 Site-specific Operating Cost An estimate of the annual site-specific operating costs of the proposed power plant at different sites has been made and the results are presented in the table below:

Operating costs for the evaluated sites

Operating costs Kosovo A Kosovo B Bivolak

Lignite transport f rom mine 3 200 000 4 000 000 5 600 000

Water pumping 685 714 342 857 342 857

Ash disposal 420 000 700 000 1 120 000

Limestone transport 560 000 576 000 616 000Total operation 4 865 714 5 618 857 7 678 857

Table 2: Site-specific operating costs The above operating costs are a function of transport distance from mine to power plant

The operating costs specified in Table 2: Site-specific operating costs are all dependent on the physical distance between the lignite mine and the power plant site. The Kosovo A site is closest to the new SW mine, while the Bivolak site is furthest away. The estimated costs are typical lignite transportation costs for this type of mine, over the relevant distances.

2.3.2 Network connection sheet Network connection costs are estimated as follows.



Network connection costs for the evaluated sites

Electrical connection cost - €

Item Kosovo A Kosovo B Bivolak

400/220 kV sw itchyard 16 200 000 18 800 000 18 000 000

2 // 400 kV line to Kosovo B 1 750 000 1 000 000 3 500 000

400 kV line to Albania 0 0 0

400 kV line to Shkupi 500 000 0 0

400 kV line to Podgorica 375 000 375 000

2 // 220 kV line to Kosovo B 0 1 000 000 3 500 000

2 // 220 kV line to Pristhina 4 0 1 750 000 0

2 // 220 kV line to Krushevci 0 0 1 500 000Total for 400 kV 18 450 000 22 925 000 26 875 000

Start-up connection 110 kV 1 500 000 1 900 000 2 700 000Grand total ouside plant 19 950 000 24 825 000 29 575 000

Table 3: Site-specific network connection costs Network connection costs for the three power plant alternatives are considered the same

The above table shows Terna’s estimation of the cost to connect a power plant of this magnitude to the grid at the different sites. The estimation is based on the network evaluation; see Task 2 for further details.



2.3.3 Plant cost sheet The plant cost sheet contains the specific plant costs of the three different power plant alternatives, and hence differs for each of the three alternatives. In the three following tables the plant costs are presented for the three different technical options.

The plant costs presented in the three following tables is based on the results from Task 3, and represents the consultant’s best estimate of the costs of a power plant of the specified type, with a typical distribution of cost.

Costs for the first unit (in a power plant complex with multiple units) are usually higher than for additional units at the same site, due to the fact that some work does not need to be carried out twice (e.g. the access road only needs to be built once etc.). In the analysis, the cost “savings” for the following three (two in the 750 PF case) units represent typical cost savings based on data from equipment manufacturers and experience from other similar power plant projects.

Costs are showed in two columns, the first column shows the expected costs for the first built unit, and the second column shows expected costs for the following three (or two in the 750 PF case) units. Both engineering and start-up costs are assumed to be lower for the following units than for the first unit. These figures do not include any interest during construction and are calculated with a mid-2007 cost level.

Specific plant costs – 500 PF

Plant costs - M€500 MW 500 MW

Alternative Kosovo B site M € Local % M € M € Local % M €

Boiler plant 220,0 5 11,0 205,0 5 10,3

FGD plant 25,0 5 1,3 24,0 5 1,2

Turbine plant 85,0 3 2,6 82,0 3 2,5

Black start 17,0 2 0,3 1,0 0 0,0

Lignite yard 18,0 10 1,8 13,0 10 1,3

Cooling tow ers 21,0 25 5,3 20,0 25 5,0

Piping 22,0 5 1,1 21,0 5 1,1

Electrical systems 45,0 3 1,4 40,0 3 1,2

Instruments & DCS 31,0 3 0,9 28,0 3 0,8

Water treatment 5,0 10 0,5 4,0 10 0,4

Auxiliary boiler plant 6,0 10 0,6 1,0 10 0,1

Tank farm 2,0 15 0,3 0,5 15 0,1

Ash disposal 5,0 15 0,8 4,0 15 0,6

Civil w orks 38,0 50 19,0 50,0 50 25,0

Temporary facilities 7,0 40 2,8 2,0 40 0,8

Maintenance shop 5,0 15 0,8 0,5 15 0,1

Off ices 2,0 15 0,3 0,5 15 0,1

Pre-operating costs 2,0 20 0,4 2,0 20 0,4

Taxes and duties 11,0 100 11,0 10,0 100 10,0

Site external connections 6,8 10 0,7 2,9 10 0,3

Electrical connections 0,0 5 0,0 0,0 5 0,0Subtotal plant 573,8 62,7 511,4 61,1CM & engineering 28,0 15 4,2 23,0 15 3,5Development costs 12,0 15 1,8 2,0 15 0,3Contingency 10 % 63,0 0,0 55,7 0,0Grand total excl. financing costs 676,8 10,1 68,7 592,2 11,0 64,9

Unit cost 1354 € / kW 1184 € / kW

PF First unit PF Following units

Table 4: Technical option plant cost – 500 PF



The right hand columns for both the first and following units show how much of each component’s cost will be spent on local materials, labour, and services. The cost of Electrical connections is borne by KOSTT.

The cost per unit is, for the first 500 MW unit, estimated at 1354 € / kW, and for the next three 500 MW units at 1184 € / kW.

Specific plant costs – 500 CFB



Boiler plant 215,0 5 10,8 205,0 5 10,3

FGD plant 0,0 5 0,0 0,0 5 0,0

Turbine plant 85,0 3 2,6 82,0 3 2,5

Black start 17,0 2 0,3 1,0 0 0,0

Lignite yard 18,0 10 1,8 13,0 10 1,3

Cooling tow ers 21,0 25 5,3 20,0 25 5,0

Piping 22,0 5 1,1 21,0 5 1,1


Instruments & DCS 30,0 3 0,9 27,0 3 0,8

Water treatment 5,0 10 0,5 4,0 10 0,4


Tank farm 2,0 15 0,3 0,5 15 0,1

Ash disposal 5,0 15 0,8 4,0 15 0,6

Civil w orks 38,0 50 19,0 50,0 50 25,0



Offices 2,0 15 0,3 0,5 15 0,1


Taxes and duties 11,0 100 11,0 10,0 100 10,0

Site external connections 6,8 10 0,7 2,9 0,0


Unit cost 1282 € / kW 1127 € / kW

CFB First unit CFB Following units

Table 5: Technical option plant cost – 500 CFB


The cost per unit is, for the first 500 MW unit, estimated at 1282 € / kW, and for the next three 500 MW units at 1127 € / kW.



Specific plant costs – 750 PF



Boiler plant 220,0 5 11,0 310,0 5 15,5

FGD plant 25,0 5 1,3 35,0 5 1,8

Turbine plant 85,0 3 2,6 120,0 3 3,6

Black start 17,0 2 0,3 1,0 0 0,0

Lignite yard 18,0 10 1,8 22,0 10 2,2

Cooling tow ers 21,0 25 5,3 30,0 25 7,5

Piping 22,0 5 1,1 28,0 5 1,4


Instruments & DCS 31,0 3 0,9 41,0 3 1,2

Water treatment 5,0 10 0,5 6,0 10 0,6


Tank farm 2,0 15 0,3 0,5 15 0,1

Ash disposal 5,0 15 0,8 7,0 15 1,1

Civil w orks 38,0 50 19,0 55,0 50 27,5



Offices 2,0 15 0,3 0,5 15 0,1


Taxes and duties 11,0 100 11,0 14,0 100 14,0

Site external connections 8,3 10 0,8 3,6 0,0


Unit cost 1356 € / kW 1132 € / kW

MW PF First unit MW PF Following units

Table 6: Technical option plant cost – 750 PF


The cost per unit is, for the first 500 MW unit, estimated at 1358 € / kW, and for the next two 500 MW units at 1132 € / kW.

2.3.4 Construction schedule sheet The construction schedule can be viewed in the Construction schedule sheet of the Basecost files. With investor selection being made in the 3rd quarter of 2008, commissioning of the last unit is expected in late 2017, with take over of the last unit in the first quarter of 2018 (estimate based on equipment manufacturer information from July 2007).

The time schedules for the different power plant alternatives are presented in three separate charts.



2.3.4.1 Fundamentals behind the proposed schedule The proposed schedule assumes that the site for the power plant is selected in 2008, and that the power plant investor is selected half way into 2008. It is assumed that the investor has made basic feasibility studies at this stage, but still some EIA (environmental impact assessment) processes might be ongoing at this stage.

The ultimate decision to go ahead with the power plant investment, the financial close or notice to proceed, is made when the plant contract is signed half way through 2009. Immediately after the plant contract is signed, engineering of the first unit is started.

Plant erection of the first unit is expected two and a half years later, at the beginning of 2012. Plant erection plays a central role in the scheduling of the following (three or two) units, due to the fact that the needed construction crane (150 meters lifting height is required for the tower type boiler) and construction crews are one of the main cost components, and thus their use needs to be optimised. The schedule for building the following units are thus made in such a way that the construction crane and construction crews smoothly can move from one unit to the next without undue decommissioning, resulting in the fact that at a certain point in time (in 2013) all four units are under construction/development. The construction crane and construction teams are expected to be commissioned for roughly five and a half years altogether, from start of 2012 until the middle of 2017.

2.3.4.2 Using the project schedule The project schedule can be used to alter the project disbursement schedule, the development of personnel costs and the development of power generation. If the project schedule is changed, the disbursement schedule, personnel employed, and quarterly generation need to be changed accordingly.

2.3.4.3 Disbursements Disbursements can be altered under “disbursement %” (typed in red font). This row indicates how big a percentage of the total money is spent quarterly on prepatory works, 1st unit, 2nd unit, 3rd unit, and 4th unit. Below “disbursement %” is a control calculation of the cumulative disbursement.

2.3.4.4 Personnel In the personnel row it can be specified how much of annual personnel costs are incurred during the different stages of construction. (For instance during year 2010, annual personnel costs are 70% of a “standard year”, looking at the first unit). Personnel costs reach 100% before completion of the power plant to facilitate for training of staff. Furthermore, key personnel are anticipated to take part in commissioning tests.

500 PF – project schedule Y

ear

2008 2009

2010 2011

2012 2013

2014 2015

2016 2017

2018

Site selection

X

Investor selectionX

Dism

antle Kosovo A

fertilizerX

XX

XX

XX

XX

X

Engineering clean-upX

XX

XX

X

Permitting clea

n-u

pX

XX

XX

XX

Contract cle

an-up

XX

X

Cle

an-u

p Kosovo fertilize

rX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Cle

an-u

p Kosovo B

ash

pile

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Disb

ursem

ent p

repa

rato

ry wo

rks

22

1010

1015

1010

1010

101

Cu

mu

lative %

24

1424

3449

5969

7989

99100

Plant co

ntract sign

ed

XX

Ist u

nit

Age

12

34

5

Engineering X

XX

XX

XX

XX

XX

XX

XX

XX

Civil w

orks 1st unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Fabrica

tionX

XX

XX

XX

XX

XX

XX

XX

XX

Erectio

n p

lant

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Com

missioning

XX

XX

XX

X

Take Ove

r 1st u

nitX

XX

Disb

ursem

ent 1st u

nit %

11

11

82

62

82

82

82

82

82

82

82

34

1C

um

ula

tive %1

23

412

1420

2230

3240

4250

5260

6270

7280

8290

9295

99100

Perso

nn

el emp

loyed

%20

6070

8090

100100

100100

100100

Qu

arterly g

enera

tion

%20

7080

90100

10080

100100

10080

100100

10080

100100

10080

100T

ota

l gen

eratio

n %

6595

9595

95

2nd

un

itA

ge1

23

4

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

Civil w

orks 2nd unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Fabrica

tionX

XX

XX

XX

XX

XX

XX

XX

Erectio

n p

lant

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Com

missioning

XX

XX

XX

X

Take Ove

r 2nd unit

XX

X

Disb

ursem

ent 2n

d u

nit %

11

11

82

62

82

82

82

82

82

82

82

34

1C

um

ula

tive %1

23

412

1420

2230

3240

4250

5260

6270

7280

8290

9295

99100

Perso

nn

el emp

loyed

%30

8090

100100

100100

Qu

arterly g

enera

tion

%5

2070

80100

80100

100100

80100

100100

80100

100T

ota

l gen

eratio

n %

4495

9595

3rd u

nit

Age

12

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

X

Civil w

orks 3rd unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Fabrica

tionX

XX

XX

XX

XX

XX

XX

XX

XX

X

Erectio

n p

lant

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Com

missioning

XX

XX

XX

X

Take Ove

r 3rd

unit

XX

X

Disb

ursem

ent 3rd

un

it %1

11

18

26

28

28

28

28

28

28

28

23

41

Cu

mu

lative %

12

34

1214

2022

3032

4042

5052

6062

7072

8082

9092

9599

100P

erson

nel em

plo

yed %

3080

100100

100100

Qu

arterly g

enera

tion

%5

2070

80100

100100

80100

100T

ota

l gen

eratio

n %

6,3

8895

4th u

nit

Age

1

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

X

Civil w

orks 4th unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Fabrica

tionX

XX

XX

XX

XX

XX

XX

XX

XX

X

Erectio

n p

lant

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Com

missioning

XX

XX

XX

X

Take Ove

r 4th

unit

XX

X

Disb

ursem

ent 4th

un

it %1

11

18

26

28

28

28

28

28

28

28

23

41

Cu

mu

lative %

12

34

1214

2022

3032

4042

5052

6062

7072

8082

9092

9599

100P

erson

nel em

plo

yed %

3080

100100

100Q

ua

rterly gen

eratio

n %

520

7080

100100

To

tal g

enera

tion

%6,3

88 Table 7: Project schedule – 500 PF

500 CFB

– project schedule Y

ear

2008 2009

2010 2011

2012 2013

2014 2015

2016 2017

2018

Site selection

X

Investor selectionX

Dism

antle Kosovo A

fertilizerX

XX

XX

XX

XX

X


XX

XX

X

Permitting clean-up

XX

XX

XX

X

Contract clean-up

XX

X

Clean-up K

osovo fertilizerX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Clean-up K

osovo B ash pile

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Disb

ursem

ent p

repa

rato

ry wo

rks

22

1010

1015

1010

1010

101

Cu

mu

lative %

24

1424

3449

5969

7989

99100

Plant contract signedX

X

Ist u

nit

Age

12

34

5

Engineering X

XX

XX

XX

XX

XX

XX

XX

XX

Civil w

orks 1st unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

FabricationX

XX

XX

XX

XX

XX

XX

XX

XX

Erection plantX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Com

missioning

XX

XX

XX

X

Take Over 1st unit

XX

X

Disb

ursem

ent 1st u

nit %

11

11

82

62

82

82

82

82

82

82

82

34

1C

um

ula

tive %1

23

412

1420

2230

3240

4250

5260

6270

7280

8290

9295

99100

Perso

nn

el emp

loyed

%20

6070

8090

100100

100100

100100

Qu

arterly g

enera

tion

%20

7080

90100

10080

100100

10080

100100

10080

100100

10080

100T

ota

l gen

eratio

n %

6595

9595

95

2nd

un

itA

ge1

23

4

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

Civil w

orks 2nd unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

FabricationX

XX

XX

XX

XX

XX

XX

XX

Erection plantX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Com

missioning

XX

XX

XX

X

Take Over 2nd unit

XX

X

Disb

ursem

ent 2n

d u

nit %

11

11

82

62

82

82

82

82

82

82

82

34

1C

um

ula

tive %1

23

412

1420

2230

3240

4250

5260

6270

7280

8290

9295

99100

Perso

nn

el emp

loyed

%30

8090

100100

100100

Qu

arterly g

enera

tion

%5

2070

80100

80100

100100

80100

100100

80100

100T

ota

l gen

eratio

n %

4495

9595

3rd u

nit

Age

12

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

X

Civil w

orks 3rd unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

FabricationX

XX

XX

XX

XX

XX

XX

XX

XX

X

Erection plantX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Com

missioning

XX

XX

XX

X

Take Over 3rd unit

XX

X

Disb

ursem

ent 3rd

un

it %1

11

18

26

28

28

28

28

28

28

28

23

41

Cu

mu

lative %

12

34

1214

2022

3032

4042

5052

6062

7072

8082

9092

9599

100P

erson

nel em

plo

yed %

3080

100100

100100

Qu

arterly g

enera

tion

%5

2070

80100

100100

80100

100T

ota

l gen

eratio

n %

6,388

95

4th u

nit

Age

1

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

X

Civil w

orks 4th unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

FabricationX

XX

XX

XX

XX

XX

XX

XX

XX

X

Erection plantX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Com

missioning

XX

XX

XX

X

Take Over 4th unit

XX

X

Disb

ursem

ent 4th

un

it %1

11

18

26

28

28

28

28

28

28

28

23

41

Cu

mu

lative %

12

34

1214

2022

3032

4042

5052

6062

7072

8082

9092

9599

100P

erson

nel em

plo

yed %

3080

100100

100Q

ua

rterly gen

eratio

n %

520

7080

100100

To

tal g

enera

tion

%6,3

88 Table 8: Project schedule – 500 C

FB

750 PF – project schedule

Ye

ar 2008

2009 2010

2011 2012

2013 2014

2015 2016

2017 2018

Site selection

X

Investor selectionX

Dism

antle Kosovo A

fertilizerX

XX

XX

XX

XX

X


XX

XX

X

Permitting clean-up

XX

XX

XX

X

Contract clean-up

XX

X

Clean-up K

osovo fertilizerX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Clean-up K

osovo B ash pile

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Disb

ursem

ent prepa

rato

ry work

s2

210

1010

1510

1010

1010

1C

um

ulative %2

414

2434

4959

6979

8999

100100

100100

100100

100100

100100

100100

100100

100100

100100

100100

100100

100100

100100

100100

100100

100

Plant contract signedX

X

Ist u

nit

Age

12

34

Engineering X

XX

XX

XX

XX

XX

XX

XX

XX

Civil w

orks 1st unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

FabricationX

XX

XX

XX

XX

XX

XX

XX

XX

Erection plantX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Com

missioning

XX

XX

XX

X

Take Over 1st unit

XX

X

Disb

ursem

ent 1st unit %

11

11

82

62

82

82

82

82

82

82

82

34

1C

um

ulative %1

23

412

1420

2230

3240

4250

5260

6270

7280

8290

9295

99100

100100

100100

100100

100100

100100

100100

100100

100100

100P

ersonn

el employed

%20

6070

8090

100100

100100

100100

Qua

rterly genera

tion

%10

5090

100100

100100

80100

100100

80100

100100

80100

100100

80100

To

tal g

eneratio

n %

2nd

un

itA

ge1

23

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

Civil w

orks 2nd unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

FabricationX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Erection plantX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Com

missioning

XX

XX

XX

X

Take Over 2nd unit

XX

X

Disb

ursem

ent 2nd un

it %1

11

11

62

62

82

82

82

82

82

82

82

35

1C

um

ulative %1

23

45

1113

1921

2931

3941

4951

5961

6971

7981

8991

9499

100100

100100

100100

100100

100100

100P

ersonn

el employed

%30

80100

100100

100Q

uarterly g

eneratio

n %

3080

90100

100100

80100

100100

80100

100T

ota

l gen

eration %

3rd un

itA

ge1

EngineeringX

XX

XX

XX

XX

XX

XX

XX

XX

Civil w

orks 3rd unitX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

FabricationX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

X

Erection plantX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

XX

Com

missioning

XX

XX

XX

X

Take Over 3rd unit

XX

X

Disb

ursem

ent 3rd u

nit %1

11

11

62

62

82

82

82

82

82

82

82

35

1C

um

ulative %1

23

45

1113

1921

2931

3941

4951

5961

6971

7981

8991

9499

100100

100100

Perso

nnel em

ployed %

3080

100100

Qua

rterly genera

tion

%0

3080

90100

80100

To

tal g

eneratio

n %

Table 9: Project schedule – 750 PF

Studies to support the development of new generation capacities and related transmission (48) Task 5, Economic and financial analysis September 13, 2007


A disbursement schedule can also be found in the Construction schedules sheet, showing in percent the distribution of disbursements over time. The following section describes project disbursements in more detail.

2.3.5 Disbursement schedule sheet The disbursement schedule shows how money is spent over time for the different power plant alternatives. Disbursement schedules for the three different power plant alternatives are shown below. The excel-file automatically generates these sheets from the data on the Construction schedule sheets.

Disbursement schedule – 500 PF

Quarterly disbursements general & plant - k€

Item Total k€ 2008 2009 2010

Preparatory w orks 40 300 0 0 806 806 4 030 4 030 4 030 6 045 4 030 4 030 4 030 4 0301st unit 695 939 0 0 6 959 6 959 6 959 6 959 55 675 13 919 41 756 13 919 55 675 13 9192nd unit 594 893 0 0 0 0 0 0 0 5 949 5 949 5 949 5 949 47 5913rd unit 594 893 0 0 0 0 0 0 0 0 0 0 0 04th unit 594 893 0 0 0 0 0 0 0 0 0 0 0 0Grand total 2 520 918 0 0 7 765 7 765 10 989 10 989 59 705 25 913 51 735 23 898 65 654 65 540

Yearly disbursements general & plant - k€

Item Year 2 008 2 009 2 010 2 011 2 012 2 013 2 014 2 015 2 016 2 017 2 018 2 019

Preparatory w orks 1 612 18 135 16 120 4 433 0 0 0 0 0 0 0 01st unit 13 919 83 513 125 269 139 188 139 188 139 188 55 675 0 0 0 0 02nd unit 0 5 949 65 438 107 081 118 979 118 979 118 979 59 489 0 0 0 03rd unit 0 0 0 17 847 101 132 118 979 118 979 118 979 89 234 29 745 0 04th unit 0 0 0 0 17 847 101 132 118 979 118 979 118 979 89 234 29 745 0Grand total 15 531 107 597 206 827 268 548 377 145 478 277 412 611 297 446 208 212 118 979 29 745 0Cumulative 15 531 123 127 329 955 598 503 975 648 1 453 925 1 866 535 2 163 982 2 372 194 2 491 173 2 520 918 2 520 918

Table 10: Disbursement schedule – 500 PF

For a full view of quarterly disbursements, consult the Basecost Excel workbook. The disbursement schedule showed here is linked with how disbursements are specified under project schedule. Disbursements are carried out as they typically are for a power plant investment of this type.

Disbursement schedule – 500 CFB

Disbursements general & plant


Item Total k€ 2008 2009 2010

Preparatory w orks 40 300 0 0 806 806 4 030 4 030 4 030 6 045 4 030 4 030 4 030 4 0301st unit 660 189 0 0 6 602 6 602 6 602 6 602 52 815 13 204 39 611 13 204 52 815 13 2042nd unit 566 293 0 0 0 0 0 0 0 5 663 5 663 5 663 5 663 45 3033rd unit 566 293 0 0 0 0 0 0 0 0 0 0 0 04th unit 566 293 0 0 0 0 0 0 0 0 0 0 0 0Grand total 2 399 368 0 0 7 408 7 408 10 632 10 632 56 845 24 912 49 304 22 897 62 508 62 537


Item Year 2 008 2 009 2 010 2 011 2 012 2 013 2 014 2 015 2 016 2 017 2 018 2 019

Preparatory w orks 1 612 18 135 16 120 4 433 0 0 0 0 0 0 0 01st unit 13 204 79 223 118 834 132 038 132 038 132 038 52 815 0 0 0 0 02nd unit 0 5 663 62 292 101 933 113 259 113 259 113 259 56 629 0 0 0 03rd unit 0 0 0 16 989 96 270 113 259 113 259 113 259 84 944 28 315 0 04th unit 0 0 0 0 16 989 96 270 113 259 113 259 113 259 84 944 28 315 0Grand total 14 816 103 021 197 246 255 392 358 555 454 825 392 591 283 146 198 202 113 259 28 315 0Cumulative 14 816 117 836 315 083 570 475 929 030 1 383 855 1 776 445 2 059 592 2 257 794 2 371 053 2 399 368 2 399 368

Table 11: Disbursement schedule – 500 CFB


European Agenecy for Recosntruction Pöyry-Cesi-Terna-Decon


Disbursement schedule 750 PF

Disbursements general & plant


Item Total k€ 2008 2009 2010

Preparatory w orks 40 300 0 0 806 806 4 030 4 030 4 030 6 045 4 030 4 030 4 030 4 0301st unit 697 039 0 0 6 970 6 970 6 970 6 970 55 763 13 941 41 822 13 941 55 763 13 9412nd unit 853 189 0 0 0 0 0 0 0 0 8 532 8 532 8 532 8 5323rd unit 853 189 0 0 0 0 0 0 0 0 0 0 0 0Grand total 2 443 718 0 0 7 776 7 776 11 000 11 000 59 793 19 986 54 384 26 503 68 325 26 503


Item Year 2 008 2 009 2 010 2 011 2 012 2 013 2 014 2 015 2 016 2 017 2 018 2 019

Preparatory w orks 1 612 18 135 16 120 4 433 0 0 0 0 0 0 0 01st unit 13 941 83 645 125 467 139 408 139 408 139 408 55 763 0 0 0 0 02nd unit 0 0 34 128 127 978 170 638 170 638 170 638 127 978 51 191 0 0 03rd unit 0 0 0 8 532 34 128 136 510 170 638 170 638 170 638 153 574 8 532 0Grand total 15 553 101 780 175 715 280 351 344 173 446 556 397 039 298 616 221 829 153 574 8 532 0Cumulative 15 553 117 332 293 047 573 398 917 571 1 364 127 1 761 166 2 059 782 2 281 612 2 435 186 2 443 718 2 443 718

Table 12: Disbursement schedule – 750 PF


2.3.6 Personnel sheet Personnel costs per unit are estimated to be the same in all three power plant alternatives. The costs presented in the following table are split up between personnel needed for the first unit, and personnel needed per unit for the following two or three units. The table comprises both the number of personnel employed, and overall annual cost for that type of personnel.



Estimation of required personnel

Personnel cost estimateFirst unit Following units First Next

k€/a k€/a k€/anumber type number type pay Total Total

Plant director 1 expat. 0 expat. 400 400 0Deputy plant manager 1 local 0 local 250 250 0Operations director 1 expat. 0 expat. 250 250 0Sales director 1 expat. 1 local 250 250 250Finance director 1 expat. 0 expat. 250 250 0Personnel director 1 expat. 0 expat. 250 250 0Safety and environmental manager 1 expat. 0 200 200 0Secretaries, clerks 7 local 1 local 7 49 7

Operation div.Operations planner & eff iciency control 2 local 1 local 10 20 10Shift engineers 5 local 1 local 15 75 15Operators 30 local 30 local 6 180 180

Technical department-maintenanceEngineersBoilers 2 exp./local 1 exp./local 100 200 100Turbines 2 exp./local 1 exp./local 100 200 100Chemist (w ater & fuel) 2 exp./local 0 exp./local 100 200 0Electrical 2 exp./local 1 exp./local 100 200 100I&C 2 exp./local 1 exp./local 100 200 100Scheduling 2 exp./local 1 exp./local 80 160 80

SupervisorsMechanical 9 local 5 local 10 90 50Electrical 4 local 2 local 10 40 20I&C 4 exp./local 2 exp./local 20 80 40Misc. 2 local 2 local 10 20 20

Shift maintenanceMechanical 5 local 2 local 7 35 14Electrical 5 local 1 local 7 35 7I&C 5 local 1 local 7 35 7

DayMechanical 10 local 5 local 7 70 35Electrical 5 local 2 local 7 35 14I&C 5 local 3 local 7 35 21Laboratory 3 local 1 7 21Misc. drivers 10 local 5 local 7 70 35Grand total 130 70 3900 1205

Table 13: Personnel requirement estimate exp = expatriate

The personnel costs stated above represent the consultant’s best estimation of personnel needs for the power plant, based on information available at the time. Personnel needs may vary significantly because of regional, political, personnel cost, employment regulation, automation level etc. variations.

2.3.7 Operation and maintenance (O&M) sheet Operation and maintenance costs are presented individually for each of the three power plant alternatives in the following tables.



The user of the financial model can alter the unit prices as necessary.

Operation and maintenance costs - 500 PF

Operation and maintenance costs Fuel, maintenance and fixed costs

Consumption Unit price €/MWhkg/MWh €/t, m3

Lignite 1038 8,00 8,30Heavy fuel oil 0,3 400 0,12Light oil 0,05 1200 0,06Limestone 2,5 20 0,05Raw w ater 2700 0,1 0,27Chemicals

Aluminium sulphate 0,11 200 0,022HCl 0,3 290 0,087Caustic 0,05 300 0,015

Cooling tow er chemicals 0,07 4000 0,28Consumables 0,01 5000 0,05Gypsum sales 5 0 0,00Ash disposal cost 159 3,00 0,48Total operation 9,73Variable maintenance 1 2,1 2,10Grand total operation 11,83

Annual f ixed costs € 1st unit follow ing unitsMaintenance 1 700 000 1 500 000Inspections permitting 300 000 200 000Outside services excl. maintenance 2 000 000 500 000Insurance 3 000 000 2 750 000Grand total 7 000 000 4 950 000

Initial lignite stockpile 10 days 124 546 tons Table 14: Operation and maintenance cost – 500 PF

The lignite stockpile can hold up to 14 days consumption. The initial stockpile is to make the inventory between the mine and the plant during start-up of a unit.

The costs shown in red colour represent the consultant’s best estimate of costs at the time of making the report. These costs should be updated as better information becomes available, as the cost level develops over time.

The most important unit cost figure to be entered into the model is the lignite cost per ton. It has been assumed that the lignite has an average heat value of 8,2 MJ/kg LHV. Another cost figure is the ash disposal cost that has to be confirmed and entered.

The unit price for raw water has been preliminarily stated by Iber-Lepenc.



Operation and maintenance cost 500 CFB


Consumption Unit price €/MWhkg/MWh €/t, m3

Lignite 1042 8,00 8,33Heavy fuel oil 0,3 400 0,12Light oil 0,05 1200 0,06Limestone 0 20 0,00Raw w ater 2700 0,1 0,27Chemicals


Cooling tow er chemicals 0,07 4000 0,28Consumables 0,01 5000 0,05Gypsum sales 0 0 0,00Ash disposal cost 159 3,00 0,48Total operation 9,71Variable maintenance 1 1,9 1,90Grand total operation 11,61


Initial lignite stockpile 10 days 124 989 tons Table 15: Operation and maintenance cost – 500 CFB


The lignite cost is based on the Vattenfall mining study. It should be noted that the cost and availability of mining equipment has changed significantly since the study was made, potentially increasing the lignite cost by 10-50%.

The lignite heating value and the cost of water are the same as in the previous case.



Operation and maintenance cost – 750 PF


Unit price€/t, m3

500 M W 750 M W 500 M W 750 M W

Lignite 1038 1021 8,00 8,30 8,17Heavy fuel oil 0,3 400 0,12Light oil 0,05 1200 0,06Limestone 2 20 0,04Raw w ater 2700 0,1 0,27Chemicals


Cooling tow er chemicals 0,07 4000 0,28Consumables 0,01 5000 0,05Gypsum sales 3 0 0,00Ash disposal cost 159 156 3,00 0,48 0,47Total operation 9,72 9,58Variable maintenance 1 2,1 2,10 2,10Grand total operation 11,82 11,68


Initial lignite stockpile 10 days 186 819 tons

Consumptionkg/MWh

€/MWh

Table 16: Operation and maintenance cost – 750 PF


The assumptions for annual operating figures that are used to estimate the annual operating costs are presented in the three following tables, separately for each power plant alternative.



Annual operating figures – 500 PF

Kosovo C, 2000 MW annual operating figures500 MW PF net capacity units0,85 load factor

Item unit One block Whole plantGeneration GWh/a 3 723 14 892Lignite demand tons/a 3 864 037 15 456 149Limestone consumption tons/a 9 308 37 230Water consumption cu.m/a 10 052 100 40 208 400Heavy fuel oil tons/a 1 117 4 468Light oil cu.m/a 186 745Aluminium sulphate tons/a 410 1 638Hydrochloric acid tons/a 1 117 4 468Caustic tons/a 186 745Cooling tow er chemicals tons/a 261 1 042

Gypsum sales tons/a 18 615 74 460Ash disposal tons/a 591 198 2 364 791

CO2 emission tons/a 3 168 511 12 674 043SO2 emission tons/a 2 890 11 561NOx emission tons/a 2 890 11 561Particulates tons/a 434 1 734 Table 17: Annual operating figures – 500 PF

Annual Operating figures – 500 CFB

Kosovo C, 2000 MW annual operating figures500 MW CFB net capacity units0,85 load factor

Item unit One block Whole plantGeneration GWh/a 3 723 14 892Lignite demand tons/a 3 877 788 15 511 154Limestone consumption tons/a 0 0Water consumption cu.m/a 10 052 100 40 208 400Heavy fuel oil tons/a 1 117 4 468Light oil cu.m/a 186 745Aluminium sulphate tons/a 410 1 638Hydrochloric acid tons/a 1 117 4 468Caustic tons/a 186 745Cooling tow er chemicals tons/a 261 1 042

Gypsum sales tons/a 0 0Ash disposal tons/a 593 302 2 373 206

CO2 emission tons/a 3 179 786 12 719 146SO2 emission tons/a 2 901 11 602NOx emission tons/a 2 901 11 602Particulates tons/a 435 1 740 Table 18: Annual operating figures – 500 CFB



Annual operating figures – 750 PF

Kosovo C, 2000 MW annual operating figures750 MW PF net capacity units0,85 load factor

Item unit 500 MW 750 MW Whole plantGeneration GWh/a 3 742 5 585 14 911Lignite demand tons/a 3 883 358 5 796 056 15 475 470

Limestone consumption tons/a 7 483 11 169 29 821Water consumption cu.m/a 10 102 361 15 078 150 40 258 661Heavy fuel oil tons/a 1 122 1 675 4 473Light oil cu.m/a 187 279 746Aluminium sulphate tons/a 412 614 1 640Hydrochloric acid tons/a 1 122 1 675 4 473Caustic tons/a 187 279 746Cooling tow er chemicals tons/a 262 391 1 044

Gypsum sales tons/a 11 225 16 754 44 732Ash disposal tons/a 594154 886797 2367747

CO2 emission tons/a 3 184 353 4 752 766 12 689 885SO2 emission tons/a 2 905 4 335 11 576NOx emission tons/a 2 905 4 335 11 576Particulates tons/a 436 650,31749 1 736 Table 19: Annual operating figures – 750 PF

2.4 Financial model – Excel workbook This section refers to the Excel file named “Poyry_Kosovo_C_Financial_Model_[version]_[date]”.

This Excel file reads the technical data from the Basecost Excel files, and performs financial modelling over the life cycle of the power plant.

The financial model considers all three power plant scenarios (500 PF, 500 CFB and 750 PF) simultaneously. For easy comparison of the results based on key parameters, these parameters can be entered as reference or alternative values. The model calculates the three technical options, each with reference and alternative parameters; consequently, 6 separate scenarios are presented.

The reference parameters represent the consultants view on this specific input value, according to best available information at the time of making the financial model. The reference parameters can and should thus be updated as more/new information becomes available.

For sensitivity analysis key parameters have been made easy to edit through the alternative input values. This functionality is explained further in the walk-through section for the input sheet of the financial model below.



The different elements of the financial model are presented sheet-by-sheet in the following sections.

2.4.1 Opening sheet The opening sheet shows a brief presentation of the financial model and stating some rules of it use

2.4.2 Input sheet The input sheet is the only place in the model where it is intended that the user enters any values. Input values are entered in two versions: a reference value and a variation to this reference value (for sensitivity analysis). Cells are colour-coded in order to show the user where input values can be entered, and where calculations are made automatically, the different colour codes are presented below. Data should only be entered in cells marked as “input” cells.

INPUT CALCULATION

The data entry procedure is shown in detail in the following section. Each category of input data is shown or hidden by using the “+” or “-“ buttons at the left edge of the Excel sheet.

Input values - financing

Parameter Reference case Variation Value in alternative case

WACC 10,40 % 0,00 % 10,4 %

Leverage 60,0 %

Equity cost 20,00 %

Interest rate 5,00 %

Loan repayment period 5,0 years 0 years 5,0 years

Asset depreciation 25 years 0 years 25 years

Table 20: Financing input values The financial model compares the reference case with the alternative case

WACC - The model calculates the WACC (weighted average cost of capital) automatically, hence only leverage, equity cost and general interest rate have to be entered. The equity cost is the internal cost of capital, specified as a discounting percentage rate. If an alternative value for the WACC is required in the alternative case, enter under variation the percentage rate that will be added/subtracted (in absolute terms) to/from the reference WACC rate.



Loan repayment period - The financial model starts amortising loans one full year after the final unit has been commissioned. The duration of the loan repayment can be specified here. Under variation you can add/subtract years to/from the reference case value.

Asset depreciation – The model uses linear depreciation of assets. In this field you specify the length of time within which the power plant investment is to be depreciated. Under variation you can add/subtract years to/from the reference case value.

Input values – economic environment


Tax rate 20,0 % 0,0 % 20,0 %

Inflation 0,0 % 0,0 % 0,0 %

CO2 cost 0,0 €/t,CO2 0,0 €/t,CO2 0,0 €/t,CO2

Table 21: Input values for economic environment The financial model compares the reference case with the alternative case

Tax rate – The tax rate specifies the corporate tax rate that the power plant owner has to pay on the profits gained from the operation of the power plant. These taxes may or may not be paid where the power plant is located, i.e. choose the tax rate for the region showing the profit. Under variation you can add/subtract a percentage (in absolute terms) to/from the reference case value for comparison of two tax rates.

Inflation – This is the general inflation rate. When used, this inflation rate is applied to all costs (including investments) and also to all income. Adding a percentage point of inflation is essentially equal to subtracting a percentage point from the WACC. Under variation you can add/subtract a percentage (in absolute terms) to/from the reference case value for comparison or sensitivity analysis.

CO2 cost – Specify here a cost in Euros per tonne of CO2 released that is expected for the power plant. Under variation you can add/subtract a cost to/from the reference case value for comparison or sensitivity analysis.



Input values – license costs


Lignite fee 0,0 €/ton 0,0 €/ton 0,0 €/ton

Mine rent 0 1000€/a 0 1000€/a 0,0 1000€/a

Ash disposal 0 1000€ 0 1000€ 0,0 1000€

Table 22: License cost input values The financial model compares the reference case with the alternative case

Lignite fee – The lignite fee is a fee collected by the government (local authority) for each ton of lignite supplied. The fee is specified in euros per tonne. The fee is considered to be a direct income to the government Under variation you can add/subtract a unit price difference to/from the reference case value.

Mine rent – Mine rent is a rent for the lignite mine collected by the government. The rent is specified in thousands of Euros per year. The rent is considered a direct income to the government. Under variation you can add/subtract an amount to/from the reference case value.

Ash disposal – Ash disposal is a fee collected by the government for the right to dispose of ash from the power plant. The ash disposal fee is specified in thousands of Euros. The ash disposal fee is considered a direct income to the government. Under variation you can add/subtract a price to/from the reference case value.

Input values – power market


Electricity price scenario central choose: low, central, high

Electricity price 0,0 % 0,0 % see below

2008 2009 2010 2011 2012 2013High 45,38 63,94 75,77 76,06 84,59 92,15Central 30,71 33,66 38,69 41,33 41,41 44,48Low 27,06 25,50 25,70 27,71 28,56 30,51

In reference case 30,71 33,66 38,69 41,33 41,41 44,48

In alternative case 30,71 33,66 38,69 41,33 41,41 44,48

Table 23: Input values for the power market The financial model compares the reference case with the alternative case



Electricity price scenario – In this dropdown menu you can choose which electricity price scenario is to be used; the low, the central or the high scenario. The scenarios are based on Pöyry’s Ilex Energy Reports for electricity price development in the Balkans. The central case is the base case, which case is used is up to the user of the model. To view electricity prices beyond 2013, please see consult the excel model directly. The price scenario data is not intended for editing, but it is possible to use a different set of price data if necessary. This needs to be input in correct place in the data sheets (ex. data500PF sheet)

Electricity price – Here the option is given to add (or subtract) a percentage to (or from) the chosen electricity price scenario. Under variation an additional change in addition to the reference case can be made. The results of the changes can be viewed a couple of rows down, under the static low, central and high scenarios.

Input values – operating costs and investment


Lignite cost 0,00 % 0,00 % 0,0 %

Other consumables 0,00 % 0,00 % 0,0 %

Var. maintenance 0,00 % 0,00 % 0,0 %

Fixed cost, excl. P. 0,00 % 0,00 % 0,0 %

Personnel 0,00 % 0,00 % 0,0 %

Investment 0,00 % 0,00 % 0,0 %

Table 24: Input values for operating cost and investment The financial model compares the reference case with the alternative case

Lignite cost – The lignite cost enables the user to adjust the cost of lignite up or down by a chosen percentage value. Under variation you can add/subtract a percentage to/from the reference case value.

Other consumables – Other consumables represents costs for chemicals, etc. The cost of other consumables can be adjusted up or down by a chosen percentage value. Under variation you can add/subtract a percentage to/from the reference case value.

Variable maintenance cost – Variable maintenance costs can be adjusted up or down by a chosen percentage value. Under variation you can add/subtract a percentage to/from the reference case value.

Fixed costs (excluding personnel) – Fixed costs, excluding personnel costs, can here be adjusted up or down by a chosen percentage value. Under variation you can add/subtract a percentage to/from the reference case value.



Personnel – The costs of personnel can be adjusted up or down by a chosen percentage value. Under variation you can add/subtract a percentage to/from the reference case value.

Investment – The over all power plant investment can be adjusted up or down by a chosen percentage value. Under variation you can add/subtract a percentage to/from the reference case value.



2.4.3 Results sheet This section comprises the results from the financial modelling and analysis. As in the input data sheet, the results are categorised, and shown/hidden using the +/- buttons at the left edge of the Excel sheet.

Key results will be presented in graphs; representing calculations based on the best available input data at the time of making the financial model. The results showed in the graphs are initially the same for reference and alternative scenarios (no variation in the default setting), hence only three lines are seen in the graphs by default. Results that are not showed in graphs can still be viewed in detail in the financial model itself.

Quarterly free cash flow – Quarterly free cash flow is presented in numbers and plotted in graphs for all six analysed cases. The quarterly free cash flow represents the free cash flow of the power plant investment, and is calculated as follows: operating margin - investment and taxes (financing costs are not included).

When the project has a negative operating profit, negative taxes are subtracted from the operating margin, thus increasing the free cash flow. The quarterly free cash flow is initially negative during the disbursement period but cash flow becomes positive as production starts.

Cumulative free cash flow – The cumulative free cash flow is presented in numbers and plotted in graphs for all six analysed cases. The cumulative free cash flow shows the quarterly free cash flow in cumulative form.

Cumulative free cash flow: for all six cases

Cumulative Cash Flow: All scenarios compared

-5 000

0

5 000

10 000

15 000

20 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Years

M€

500 PF500 CFB750 PF500 PF alt.500 CFB alt.750 PF alt.

Figure 2: Cumulative free cash flow

Alternative cases show the same value as the reference cases for all power plant options



Net present value (NPV) – NPV is presented in numbers and plotted in graphs for all six analysed cases. The NPV showed here is the NPV of the free cash flow of the power plant investment (i.e. the NPV of the quarterly free cash flow). NPV represents the future free cash flows discounted by the WACC (weighted average cost of capital).

Net present value (NPV): for all six cases

NPV - All scenarios

0

100

200

300

400

500

600

700

800

500 PF 500 CFB 750 PF

M€

reference

alternative

Figure 3: Net Present Value (NPV)

Using the input data presented earlier in this document (the consultant’s best estimates), the highest NPV is received for the power plant alternative 500 CFB, at roughly 740 million euros.

Internal rate of return (IRR) – The IRR is presented in numbers and plotted in graphs for all six analysed cases. The IRR showed here is the IRR of the power plant investment. Note that the reference and alternative case results are identical due to identical input parameters in the example.



Internal rate of return (IRR): for all six cases

IRR - All scenarios

0 %

2 %

4 %

6 %

8 %

10 %

12 %

14 %

16 %

500 PF 500 CFB 750 PF

reference

alternative

Figure 4: Internal rate of return (IRR)

Using the input data presented earlier in this document (the consultant’s best estimates), the highest IRR is received for the power plant alternative 500 CFB, at roughly 14,6 %.

Economic value added (EVA) for Kosovo – NPV of charged fees – EVA represents the income that the local authorities will receive from the investor/plant owner. This sum includes lignite fees, mine rent and ash disposal fees. The EVA – NPV of charged fees calculates the net present value of future incomes, as discount rate is used the general interest rate (see interest rate under the financing section of the input sheet). If Lignite fee, ash disposal fee, and mine rent are all set to zero, EVA will naturally be zero as well as in the default case.

Economic value added (EVA) for Kosovo – NPV of charged fees: for all six cases

[This figure contains no data in the default case, as the default EVA value is ZERO (no assumptions for lignite fee, ash fee, or mine rent)]

[Comment]

Economic value added (EVA) for Kosovo – Total value of cash flow - EVA represents the income that the local authorities will incur from the power plant owner. Included in this income are incurred lignite fees, mine rent and ash disposal fees. The EVA – Total value of cash flow states the monetary value of all future incomes undiscounted.

Economic value added (EVA) for Kosovo – Quarterly cash flow - EVA represents the income that the local authorities will incur from the power plant owner. Included in this income are incurred lignite fees, mine rent and ash disposal fees. The EVA – Quarterly cash flow shows the quarterly income to the local authorities.



Economic value added (EVA) for Kosovo – Cumulative cash flow – EVA represents the income that the local authorities will incur from the power plant owner. Included in this income are incurred lignite fees, mine rent and ash disposal fees. The EVA – Cumulative cash flow shows the cumulative undiscounted value of the quarterly cash flow.

Economic value added (EVA) for Kosovo – Cumulative cash flow: for all six cases

[This figure contains no data in the default case, as the default EVA value is ZERO (no assumptions for lignite fee, ash fee, or mine rent)]

[Comment]

Tax income for Kosovo – Net present value (NPV) – The NPV of the taxes paid by the power plant owner over the lifespan of the power plant is showed here. Please note that the taxes paid may or may not end up in Kosovo. The assumption in the default case is that they will.

Tax income for Kosovo – Net present value (NPV): for all six cases

NPV of tax incomes - All scenarios

0

200

400

600

800

1 000

1 200

1 400

500 PF 500 CFB 750 PF

M€

reference

alternative

Figure 5: NPV of tax incomes

[The NPV of tax income ranges between 1122 million EUR for the 500 PF option and 1184 million EUR for the 750 PF option ]

Net present value (NPV) of tax incomes and EVA – The NPV of tax incomes and EVA added together is showed here. In an optimal scenario (where all taxes end up in Kosovo), this would be the income for the local authorities. Please note that the taxes paid may or may not end up in Kosovo. The assumption in the default case is that they will. As the EVA is zero in the default case the NPV only contains tax income.



Overall financing costs – The overall financing cost shows how much money is needed in total to finance the power plant investment. The overall financing cost is represented by the minimum value of the overall cumulative free cash flow of the power plant investment. The table below shows the maximum capital expenditure reached before the project cash flow turns positive.

Overall financing costs: for all six cases

Overall financing costs - All scenarios

0

500

1 000

1 500

2 000

2 500

500 PF 500 CFB 750 PF

M€

reference

alternative

Figure 6: Overall financing cost

Overall financing costs presented here represent the lowest point of the cumulative free cash flow. This cash flow covers the investment and operating costs, but excludes financing costs (i.e. loans).

Equity ratio – The equity ratio, presented as a pie chart, shows the ratio of shareholders’ equity versus liabilities.

Equity ratio

Equity ratio

40 %

60 %

Shareholders'equityLiabilities

Figure 7: Equity ratio



[This ratio is the default assumption, which is the same for all technical options]

Levelised operating costs – marginal cost of production – The marginal cost of production is obtained by dividing production volume with overall operating costs (personnel, fuel, etc.) and depreciation, resulting in a €/MWh value. The marginal cost of generation excludes financing costs.

Levelised operating costs – marginal cost of production: for all six cases

Levelised operating costs: All scenarios compared

0

10

20

30

40

50

60

70

80

90

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Years

€/MWh


Figure 8: Levelised operating cost (marginal cost of generation)

The marginal cost of production is, in the long term, below 20€/MWh for all three power plant alternatives.

Total cost of production – The total cost of production is the marginal cost of production (see above) plus financing costs.

Development of loans – Here is shown the total loan amount at any given time (quarterly). The maximum loan amount and payback time can be seen here.

Development of loans: for all six cases

Development of loan principal: All scenarios compared

0

200

400

600

800

1 000

1 200

1 400

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

Years

M€


Figure 9: Development of loans



The graph shows how loans are taken and repaid in the different cases.

Financing, graphs of equity development – Equity development is followed in six separate graphs, one for each scenario. The ratio between equity and liabilities can be followed over time. Below each graph, a check is made if the financing plan is sound or not. If the message “okay” is displayed, the financing is okay. If the message “default” is displayed, there is not enough money to finance the project. In the case of “default” a date when the default occurs is showed, this date refers to the relevant quarter it is in, not the exact date. For instance, if loans are repaid to rapidly (see input sheet loan repayment) financing will not be adequate, and the model will give the “default” message.

Financing: Okay

If not, then default date:

Financing: Equity development

Financing: 500 PF

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55Years

M€

LiabilitiesEquity

Figure 10: Financing – Equity development This figure show loan repayment and the equity development – equity grows according to D/E ratio up to maximum debt amount, then stays constant..

Investment: Quarterly – Shows the quarterly investment made in each of the six scenarios.

Investment: Cumulative – Shows the quarterly investment cumulatively made in each of the six scenarios

Investment: Cumulative, split by type – Shows the quarterly investment cumulatively made in each of the six scenarios split by area of investment. Considered areas are prepatory works, 1st unit, 2nd unit, 3rd unit, and (in the 500 cases) 4th unit. When investments begin and end for each of the units can easily be observed here. Below three graphs are shown for each of the three power plant alternatives.



Investment: Cumulative, split by type: 500 PF

Cumulative investment: 500 PF

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Years

k€

4th unit3rd unit2nd unit1st unitprepatory works

Figure 11: Cumulative investment by type, 500 PF

Of the three power plant alternatives, the 500 PF has the highest investment need at 2 490 million euros.

Investment: Cumulative, split by type: 500 CFB

Cumulative investment: 500 CFB

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Years

k€

4th unit3rd unit2nd unit1st unitprepatory works

Figure 12: Cumulative investment by type, 500 CFB

Of the three power plant alternatives, the 500 CFB has the lowest investment need at 2 370 million euros.



Investment: Cumulative, split by type: 750 PF

Cumulative investment: 750 PF

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Years

k€

3rd unit2nd unit1st unitprepatory works

Figure 13: Cumulative investment by type, 500 PF

The 750 PF power plant has an investment need of 2 420 million euros.

Total Capital Expenditure (CAPEX) – CAPEX represents total funds spent on the project, and is thus made up of the total investment and the total financing costs.

Total Capital Expenditure: for all six cases

CAPEX - All scenarios

0

500

1 000

1 500

2 000

2 500

3 000

3 500

500 PF 500 CFB 750 PF

M€

reference

alternative

Figure 14: Total CAPEX

Capital expenditure is lowest for the 500 CFB alternative at 2 880 million euros.

Development of production – Development of production shows, graphically, how the different power plant units produce electricity in the 20 first years after the investment decision. Quarterly production continues much like this until decommissioning.



Development of production: for reference scenarios

Quarterly production: 500 PF

0500

1 0001 5002 0002 5003 0003 5004 0004 500

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

GWh

4th unit3rd unit2nd unit1st unit

Quarterly production: 500 CFB

0500

1 0001 5002 0002 5003 0003 5004 0004 500

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

GWh


Quarterly of production: 750 PF

0500

1 0001 5002 0002 5003 0003 5004 0004 500

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

GWh


Figure 15: Quarterly generation volumes fot the three technical options

The above graphs show how the different power plant alternatives respective units come into production during the first 20 years after investment decision has been made

2.4.4 Report sheet The results sheet is intended as a printer-friendly summary of the results. Input parameters used are shown in the top left table. The results are shown annually, instead of quarterly. Consult the results sheet (as described above) for more detailed results.



All results shown in the report sheet are also shown in the results sheet, except for turnover, which is only shown on the report sheet.

2.4.5 All other sheets The rest of the sheets in the financial model Excel file are for calculation only, and not intended for editing, except if using a different set of market price data.



INDEX OF FIGURES Figure 1: Principial Model of the IPP in the Kosovo Electricity Market.............................................4 Figure 2: Cumulative free cash flow ..................................................................................................37 Figure 3: Net Present Value (NPV)....................................................................................................38 Figure 4: Internal rate of return (IRR)................................................................................................39 Figure 5: NPV of tax incomes............................................................................................................40 Figure 6: Overall financing cost.........................................................................................................41 Figure 7: Equity ratio .........................................................................................................................41 Figure 8: Levelised operating cost (marginal cost of generation)......................................................42 Figure 9: Development of loans .........................................................................................................42 Figure 10: Financing – Equity development ......................................................................................43 Figure 11: Cumulative investment by type, 500 PF...........................................................................44 Figure 12: Cumulative investment by type, 500 CFB........................................................................44 Figure 13: Cumulative investment by type, 500 PF...........................................................................45 Figure 14: Total CAPEX....................................................................................................................45 Figure 15: Quarterly generation volumes fot the three technical options ..........................................46

INDEX OF TABLES Table 1: Site-specific investment costs ..............................................................................................13 Table 2: Site-specific operating costs.................................................................................................15 Table 3: Site-specific network connection costs ................................................................................16 Table 4: Technical option plant cost – 500 PF...................................................................................17 Table 5: Technical option plant cost – 500 CFB................................................................................18 Table 6: Technical option plant cost – 750 PF...................................................................................19 Table 7: Project schedule – 500 PF....................................................................................................21 Table 8: Project schedule – 500 CFB.................................................................................................22 Table 9: Project schedule – 750 PF....................................................................................................23 Table 10: Disbursement schedule – 500 PF .......................................................................................24 Table 11: Disbursement schedule – 500 CFB....................................................................................24 Table 12: Disbursement schedule – 750 PF .......................................................................................25 Table 13: Personnel requirement estimate .........................................................................................26 Table 14: Operation and maintenance cost – 500 PF.........................................................................27 Table 15: Operation and maintenance cost – 500 CFB......................................................................28 Table 16: Operation and maintenance cost – 750 PF.........................................................................29 Table 17: Annual operating figures – 500 PF ....................................................................................30 Table 18: Annual operating figures – 500 CFB .................................................................................30 Table 19: Annual operating figures – 750 PF ....................................................................................31 Table 20: Financing input values .......................................................................................................32 Table 21: Input values for economic environment.............................................................................33 Table 22: License cost input values ...................................................................................................34 Table 23: Input values for the power market .....................................................................................34 Table 24: Input values for operating cost and investment .................................................................35

tpp task 5 economic and financial analysis

Documents

personnel sheet

opening sheet

input sheet

site cost sheet

construction schedule

disbursement schedule

plant cost sheet

maintenance om sheet