Photovoltaic Training - Session 5 - Economic and Financial Analysis

Photovoltaic Systems Training

Session 5 – Economic Analysis

http://www.leonardo-energy.org/training-pv-systems-design-construction-operation-and-maintenance

Javier Relancio & Luis RecueroGeneralia Group

September 30th 2010

PHOTOVOLTAIC SYSTEM

Design, Execution, Operation & Maintenance

PROFITABILITY ANALYSIS

Javier Relancio. Generalia Group. 30/09/2010www.generalia.es

2 http://www.leonardo-energy.org/training-pv-systems-design-construction-operation-and-maintenance

INDEX

Expenses of the plant operation.

Insurance

Project Cash-flow & IIR (Internal rate of return)


INDEX


Insurance



5

Operation expenditures

As we already know, the operation expenses for a PV plant are…

1. Plant operators & maintenance staff

2. Spare Parts stoc

3. Consumable stock: oil, paint, etc

4. Surveillance system

5. Monitoring system

6. Insurance

7. Land renting contract

8. Supplies: Water, light, internet…

9. Taxes

Note: In this presentation we will

study in detail the insurance…

INDEX


Insurance



7

Operation expenses:Insurance

Key points

1. Identification of the risks and insurable assets & interests

2. The insurance program should cover

a. Plant execution

b. Plant operation

c. Civil responsibility


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1. Identification of risks and insurable assets & interests

A. Insurable risks

Risks of the nature

Theft, vandalism, terrorism or sabotage

Execution defects

Losses due to facility stop (indirect damages)

Breakdown of the equipments

Responsibilities for third persons damages

B. Non-insurable risks (The company takes the risk)

Political, social or financial risks

Technological, professional risks

Strategic risks



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2. The insurance program

Main objective:

To protect the interests (heritage and profitability) of the property and of the financing company

A. It must cover:

Assets

Income

Responsibilities

B. There are two defined periods

Plant execution

Operation



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2.1 The insurance program: execution (I)

All-risk insurance I

A. Insured goods:

Foundations, solar modules and equipments, constructions and fences, civil and electrical work, equipments of protection...

B. All-risk conditions

There are covered all direct, sudden and unforeseen damages that are not explicitly excluded

C. Risks which are result of:

Transport, load and unload, assembly, pre-installation, installation, tests, commissioning and maintenance



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2.1 The insurance program: execution (II)

All-risk insurance II

A. Covertures

And any other issue that is not excluded from the policy

Ordinary risks

Fire, explosion and lightning strikeSteal and vandalism

Plane crashes or vehicles impacts

Optional risks

Consequences of a design mistakeTerrorism and sabotage

Strike, riot and civil commotionInsurance of maintenance (12 months)

Civil responsibility

Staging risks

Technical risks: managing, assembly, tests, short circuit, overvoltage, overpressure, centrifugal forceHuman errors: mistakes of assembly, negligence, inexperience, malicious hurt

Natural risks

Wind, hailstorm, snow and rainOther natural extraordinary phenomena

Frost and defrostOverflow and floods

Collapse, detachment and landslide of landEarthquakes and volcanic phenomena



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2.1 The insurance program: execution (III)

All-Risk policy. The execution III

A. Requirements for the contracting :

Analysis of the risk situation

Protection and vigilance measures

Control of subcontractors and bidders

B. Other considerations

Contractual losses or penalties

Exemptions

Deliveries in different stages

C. Who has to get an insurance?

All the persons with interests in the insured risk: promoter, operating company, financial company, bidders and subcontractors



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2.2 The insurance program: Operation (I)

All-risk & Multi-risk insurances

A. Insured goods:

Foundations, modules and equipments, constructions and fences, civil and electrical work, equipments of protection...

B. Risks of the ownership and operation of the PV facility

C. Multi-risk coverage

The contract details the reasons that are considered recoverable disasters

D. All-risk coverage

The contract details only the exclusions, being recoverable the rest of circumstances



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2.2 The insurance program: Opération(II)

Multi-risk insurance

A. Coverage

Basic guarantees

Fire, explosion and lightning strike

Extensive guarantees

Rain, hailstorm, wind or snowDamages due to water or floodActs of vandalism or sabotage

Impact of vehiclesaircraft or spaceships crashes, sonic waves


CR Exploitation, employers, defense and bailsCR for damages to the energy receptor

Optional guarantees

Theft and spoliationElectrical damages in electrical or electronic equipments

Breakdown of equipmentsLoss of benefits



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2.2 The insurance program: Operation (III)

All-risk insurance

A. Exclusions

General exclusions

Bad intentions from the contractorDesign mistake

Degradation

Optional guarantees

Production losses


CR Exploitation, employers, defense and bailsCR for damages to the energy receptor

Consideration

General exemptionsSeveral sinister

Consequences of a design mistakeOther clauses



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2.2 The insurance program: Operation (IV)

All-risk & Multi-risk insurances

A. Requirements for the contracting :

Analysis of the situation of risk (terrain, access, etc)

Protection and vigilance measures

Control of operation & maintenance contracts

B. Other considerations

Availability of solar modules in the market

Exemptions

C. Who has to get an insurance?

All the persons with interests in the insured risk: operating company & financial company



INDEX


Insurance



18

Profitability analysis

Inputs (I)

For the profitability analysis in this presentation, we will consider the following inputs:

1.Peak power 10% over the nominal power

2.Module degradation: 1% per year

3.Electricity price increase: 2,5% per year

4.Loan

For 12 years

Grace period: 1 year

Interest rate of 5%

Though the most of the financings of the facilities have a variable type indexed to the EURIBOR, we consider an interest of 5 % for this study

Equity: 20 %


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We are considering the following investment, operation & maintenance costs…

Type of installationInvestment

(€/Wp)

Operation and other costs (The insurance and the

physical surveillance are NOT considered)

Fix to ground crystalline module 2.9

Fix cost: 200 €+

2 % of the incomes for the energy produced

Fix to ground thin film module 2.7

Crystalline module with suntracker 4.1

Fix to roof crystalline module 3

Fix to roof thin film module 2.8

Note: The price of a solar plant in Germany will be 0.1 € lower per Wp than in Spain, due to administrative simplifications in that country

Profitability analysis

Inputs (II)


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Profitability Analysis

Inputs (III). Production & Energy price

Germany

Estimated production: 950 kWh/kWpSubvention (ground): 0,284 €/kWhSubvention (roof):

30 – 100kW: 0,3723 €/kWh> 1000 kW: 0,2937 €/kWh

Spain

Estimated production: 1350 kWh/kWpSubvention (ground): 0,265 €/kWhSubvention (roof):

>20 kW: 0,295 €/kWh <20 kW: 0,33 €/kWh

Note: The production in Germany has a lower radiation, but it is favored by the low temperature losses


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Study cases

Technology Power Type Country Estimated production Subvention

Case 1 Crystalline 1.000 kW Ground Plant Spain 1350 0.265

€/kWh

Case 2 Thin film 1.000 kW Ground Plant Spain 1350 0.265

€/kWh

Case 3 Crystalline 100 kW Roof Germany 950 0.3723 €/kWh

Case 4 Crystalline 100 kW Roof Spain 1350 0.295€/kWh

Case 5 Crystalline 1.000 kW Suntracker Plant Spain 1890 0.265

€/kWh


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Study case 1 (I)

Technology Power Type Country kWh/kWp Tariff

Case 1 Crystalline 1.000 kW Ground Spain 1350 0.265 €/kWh

OUTPUTS INPUTS RESULT

LOAN FEE MAINTENANCE COST WITHOUT INSURANCE INCOMES CASH FLOW ACCRUED

INCOME

-638.000 -638.000

1º YEAR 283.238 8.071 393.525 102.216 -535.784

2º YEAR 283.238 8.190 399.329 107.902 -427.882

3º YEAR 283.238 8.310 405.220 113.671 -314.212

4º YEAR 283.238 8.433 411.197 119.525 -194.686

5º YEAR 283.238 8.557 417.262 125.466 -69.220

6º YEAR 283.238 8.684 423.416 131.494 62.274

7º YEAR 283.238 8.812 429.662 137.612 199.886

8º YEAR 283.238 8.942 435.999 143.819 343.705

9º YEAR 283.238 9.073 442.430 150.118 493.823

10º YEAR 283.238 9.207 448.956 156.510 650.334

11º YEAR 283.238 9.343 455.578 162.997 813.330

12º YEAR 283.238 9.481 462.298 452.817 1.266.147

13º YEAR 9.621 469.117 459.496 1.725.644

14º YEAR 9.763 476.036 466.274 2.191.917

15º YEAR 159.907 .(1) 483.058 323.151 2.515.068

16º YEAR 10.053 490.183 480.130 2.995.199

17º YEAR 10.201 497.413 487.212 3.482.411

18º YEAR 10.352 504.750 494.398 3.976.809

19º YEAR 10.504 512.195 501.691 4.478.500

20º YEAR 10.659 519.750 509.091 4.987.591

21º YEAR 10.816 527.416 516.600 5.504.191

22º YEAR 10.976 535.196 524.220 6.028.411

23º YEAR 11.138 543.090 531.952 6.560.363

24º YEAR 11.302 551.100 539.798 7.100.161

25º YEAR 11.469 559.229 547.760 7.647.921

(1) Hypothetical fee for an extraordinary reparation on the year 15th : 150.000 €

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Study case 1 (II)


Case 1 Crystalline 1.000 kW Ground Spain 1350 0.265 €/kWh

INCOMES PER YEAR

385.455 €

INVESTMENT ACCRUED INCOMES

3.190.000 € 7.364.683 €

LOAN I.I.R

2.552.000 € 23,07%


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Study case 2 (I)


Case 2 Thin film 1.000 kW Ground Spain 1350 0.265 €/kWh



INCOME

-594.000 -594.000

1º YEAR 263.705 8.071 393.525 121.750 -472.250

2º YEAR 263.705 8.190 399.329 127.435 -344.815

3º YEAR 263.705 8.310 405.220 133.205 -211.611

4º YEAR 263.705 8.433 411.197 139.059 -72.552

5º YEAR 263.705 8.557 417.262 141.000 72.448

6º YEAR 263.705 8.684 423.416 151.028 223.476

7º YEAR 263.705 8.812 429.662 157.145 380.622

8º YEAR 263.705 8.942 435.999 163.353 543.974

9º YEAR 263.705 9.073 442.430 169.652 713.627

10º YEAR 263.705 9.207 448.956 176.044 889.671

11º YEAR 263.705 9.343 455.578 182.530 1.072.201

12º YEAR 263.705 9.481 462.298 189.112 1.261.313

13º YEAR 9.621 469.117 459.496 1.720.809

14º YEAR 9.763 476.036 466.274 2.187.083

15º YEAR 159.907 .(1) 483.058 323.151 2.510.234

16º YEAR 10.053 490.183 480.130 2.990.364

17º YEAR 10.201 497.413 487.212 3.477.577

18º YEAR 10.352 504.750 494.398 3.971.975

19º YEAR 10.504 512.195 501.691 4.473.666

20º YEAR 10.659 519.750 509.091 4.982.757

21º YEAR 10.816 527.416 516.600 5.499.357

22º YEAR 10.976 535.196 524.220 6.023.576

23º YEAR 11.138 543.090 531.952 6.555.528

24º YEAR 11.302 551.100 539.798 7.095.327

25º YEAR 11.469 559.229 547.760 7.643.087

(1) Hypothetical fee for an extraordinary reparation the 15th year: 750.000 €

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Study case 2 (II)


Case 2 Thin film 1.000 kW Ground Spain 1350 0.265 €/kWh

INCOMES PER YEAR

385.455 €


2.970.000 € 7.643.087 €

LOAN I.I.R

2.376.000 € 26,49%


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Study case 3 (I)





INCOME

-63.800 -63.800

1º YEAR 28.324 978 38.905 9.603 -54.197

2º YEAR 28.324 993 39.479 10.163 -44.034

3º YEAR 28.324 1.007 40.062 10.731 -33.303

4º YEAR 28.324 1.022 40.652 11.307 -21.997

5º YEAR 28.324 1.037 41.252 11.891 -10.106

6º YEAR 28.324 1.052 41.861 12.484 2.379

7º YEAR 28.324 1.068 42.478 13.086 15.465

8º YEAR 28.324 1.084 43.105 13.697 29.162

9º YEAR 28.324 1.100 43.740 14.317 43.479

10º YEAR 28.324 1.116 44.385 14.946 58.424

11º YEAR 28.324 1.132 45.040 15.584 74.008

12º YEAR 28.324 1.149 45.705 16.232 90.240

13º YEAR 1.166 46.379 45.213 135.453

14º YEAR 1.183 47.063 45.880 181.332

15º YEAR 16.201 .(1) 47.757 31.556 212.888

16º YEAR 1.218 48.461 47.243 260.131

17º YEAR 1.236 49.176 47.940 308.071

18º YEAR 1.255 49.901 48.647 356.718

19º YEAR 1.273 50.638 49.364 406.083

20º YEAR 1.292 51.384 50.093 456.175

21º YEAR 1.311 52.142 50.831 507.007

22º YEAR 1.330 52.911 51.581 558.588

23º YEAR 1.350 53.692 52.342 610.930

24º YEAR 1.370 54.484 53.114 664.044

25º YEAR 1.390 55.287 53.898 717.941

(1) Hypothetical fee for an extraordinary reparation on the year 15th: 15.000 €

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Study case 3 (II)



INCOMES PER YEAR

37.927 €


319.000 € 717.941 €

LOAN I.I.R

255.200 € 22,35%


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Study case 4 (I)


Case 4 Crystalline 100 kW Roof Spain 1350 0.295 €/kWh



INCOME

-66.000 -66.000

1º YEAR 29.301 1.076 43.808 13.431 -52.569

2º YEAR 29.301 1.092 44.454 14.061 -38.508

3º YEAR 29.301 1.108 45.109 14.701 -23.807

4º YEAR 29.301 1.124 45.775 15.350 -8.458

5º YEAR 29.301 1.141 46.450 16.008 7.551

6º YEAR 29.301 1.158 47.135 16.677 24.227

7º YEAR 29.301 1.175 47.830 17.355 41.582

8º YEAR 29.301 1.192 48.536 18.043 59.625

9º YEAR 29.301 1.210 49.252 18.741 78.366

10º YEAR 29.301 1.228 49.978 19.450 97.816

11º YEAR 29.301 1.246 50.715 20.169 117.985

12º YEAR 29.301 1.264 51.463 20.899 138.884

13º YEAR 1.283 52.222 50.940 189.823

14º YEAR 1.302 52.993 51.691 241.514

15º YEAR 16.321 .(1) 53.774 37.453 278.968

16º YEAR 1.340 54.568 53.227 332.195

17º YEAR 1.360 55.372 54.012 386.207

18º YEAR 1.380 56.189 54.809 441.016

19º YEAR 1.401 57.018 55.617 496.633

20º YEAR 1.421 57.859 56.438 553.070

21º YEAR 1.442 58.712 57.270 610.341

22º YEAR 1.464 59.578 58.115 668.455

23º YEAR 1.485 60.457 58.972 727.427

24º YEAR 1.507 61.349 59.842 787.269

25º YEAR 1.529 62.254 60.725 847.994


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Study case 4 (II)

INCOMES PER YEAR

42.731 €


330.000 € 847.994 €

LOAN I.I.R

264.000 € 26,39%


Case 4 Crystalline 100 kW Roof Spain 1350 0.295 €/kWh


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Study case 5 (I)


Case 5 Crystalline 1.000 kW Suntracker Spain 1890 0.265 €/kWh



INCOME

-902.000 -902.000

1º YEAR 400.441 11.219 550.935 139.276 -762.724

2º YEAR 400.441 11.384 559.061 147.237 -615.488

3º YEAR 400.441 11.552 567.307 155.315 -460.173

4º YEAR 400.441 11.722 575.675 163.512 -296.661

5º YEAR 400.441 11.895 584.166 171.830 -124.830

6º YEAR 400.441 12.071 592.783 180.271 55.441

7º YEAR 400.441 12.249 601.526 188.837 244.278

8º YEAR 400.441 12.430 610.399 197.529 441.807

9º YEAR 400.441 12.613 619.402 206.349 648.156

10º YEAR 400.441 12.799 628.539 215.299 863.455

11º YEAR 400.441 12.988 637.809 224.381 1.087.836

12º YEAR 400.441 13.179 647.217 233.597 1.321.434

13º YEAR 13.374 656.764 643.390 1.964.823

14º YEAR 13.571 666.451 652.880 2.617.703

15º YEAR 163.771.(1) 676.281 512.510 3.130.213

16º YEAR 13.974 686.256 672.282 3.802.495

17º YEAR 14.180 696.378 682.198 4.484.693

18º YEAR 14.390 706.650 692.261 5.176.954

19º YEAR 14.602 717.073 702.471 5.879.425

20º YEAR 14.817 727.650 712.833 6.592.258

21º YEAR 15.036 738.383 723.347 7.315.605

22º YEAR 15.257 749.274 734.016 8.049.621

23º YEAR 15.483 760.326 744.843 8.794.465

24º YEAR 15.711 771.541 755.830 9.550.294

25º YEAR 15.943 782.921 766.978 10.317.272


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Study case 5 (II)

INCOMES PER YEAR

539.716 €


4.510.000 € 10.317.272 €

LOAN I.I.R

3.608.000 € 22,69%


Case 5 Crystalline 1.000 kW Suntracker Spain 1890 0.265 €/kWh


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Study conclusions

Case 1 Case 2 Case 3 Case 4 Case 5

Technology Crystalline Thin film Crystalline Crystalline Crystalline

Power 1.000 kW 1.000 kW 100 kW 100 kW 1.000 kW

Type Ground Ground Roof Roof Suntracker

Country Spain Spain Germany Spain Spain

Estimated production 1350 kWh/kWp 1350 kWh/kWp 950 kWh/kWp 1350 kWh/kWp 1890 kWh/kWp

Tariff 0.265 €/kWh 0.265 €/kWh 0.3723 €/kWh 0.295 €/kWh 0.265 €/kWh

INVESTMENT 3.190.000 € 2.970.000 € 319.000 € 330.000 € 4.510.000 €

ACCRUED INCOMES 7.364.683 € 7.643.087 € 717.941 € 847.994 € 10.317.272 €

TIR 23,07% 26,49% 22,35% 26,39% 22,69%


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End of Session 5


Thank you for attending