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ENEL’s Solar Venture in PeruLingyan YuRisk Analysis and ModelingProfessor White

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POV Profile: Italian Multinational Electricity Company • Upcoming renewable PPA auction in

Peru• 144MW Solar Power Plant• Pay-as-bid sealed bid auction system • main competitor might bid as low as

$49/MWh for the PV project

StrategiesBid Price Expected NPV Likelihood of Winning

Strategy 1 $46/MWh ($1,313,000) Very High

Strategy 2 $48/MWh $8,493,000 High

Strategy 3 $50/MWh $17,213,000 Low

3Equity IRR Comparison

Project NPV Comparison

Uncertain Inputs

Construction periodConstruction Cost

Operating Expense Level

PPA Inflation Index

Credit Spread

O&M Inflation Index

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Construction Cost is Dependent on Construction Time (Delay)

Credit Spread is Dependent on Biding Price (Future Revenue)

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Index PPA Rate Random Walk

6Strategy 1Strategy 2Strategy 3

Strategy 2

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Q&A