Financial Modelling

 Financial  Assignment
ENGG4900 Assignment 5
Financial Modelling Exercise
Context
You are the feasibility study team for End Power Pty Ltd who provides custom designed electricity generation systems for off-grid and fringe-of-grid communities. You are developing a proposal for Yakandangaroo in western Queensland.
Yakandangaroo has a population of 1,500. The main industry is grazing. The town consumes approximately 10 GW h per annum and has a peak load of 3.25 MW which occurs between 4:30 and 8 PM.
You have been asked to develop two proposals – one based on conventional diesel fired generation and one based on Solar PV (assume fixed panel) backed with a Tesla Battery Energy Storage system (up to 5 hours’ storage at peak load). Assume the solar PV has a capacity factor of 25%.
Project parameters:
 Commencement Date: As soon as possible.
 Investment costs1 for the power generation plant (excluding contingency) may be assumed as:
₋ Diesel Generation $800 per kW installed
₋ Solar PV $1,800 per kW installed
₋ Tesla Battery $400 per kWh installed (Special offer – 50% discount)
 Operating and maintenance costs1
₋ Diesel Generation Fixed $75 per kW installed
Variable $0.01 per kWh sent out
Diesel Costs 18 c per kWh sent out (Fixed, Nominal)
₋ Solar PV Fixed $30 per kW installed
Variable $ Nil
 The reference date for these estimates is December 2015.
 The technologies may be assumed to be AACE2 Reference Class 2.
 The technology maturity is different for each of these technologies and so the Process Contingency will also be different.
₋ Diesel Generation is fully commercial with many competing vendors.
₋ Fixed panel solar PV (utility sale) has some limited experience at full scale.
₋ Tesla Energy Storage system has mainly small pilot demonstrations.
 All plant assets are depreciable for tax purposes on a straight line basis over a 12-year period.
₋ Sufficient land is already available and allocated for the diesel option
₋ An additional 25 ha of land will be required for the solar PV option at an
estimated cost of $15,000 per hectare including fence and improvements.
 The investment decision will be made at the December board meeting this year for an
anticipated commencement of construction in January 2017.
 Capital expenditure schedule is projected to be:
₋ Land (if required) must be purchased up front;
₋ Diesel Case 12 months’ EPC.
₋ Solar PV + Battery 24 months’ EPC. (35% year 1, 65% year 2)
 Start-up
₋ Diesel option is expected to ramp to average 60% in year 1, 85% in year 2 and
100% in year 3 and beyond.
₋ Solar-Tesla option is expected to ramp to average 50% in year 1, 75% in year 2
90% in year 3 and 100% in year 4 and beyond.
Assumptions:
 Economic Life of the Project is 20 years from the commencement of operations.
 Residual value of any plant is offset by exactly offset by rehabilitation costs of the
site.
 Depreciation of plant over 12 years (straight line basis)
 Tax Rate is 30%. The company cannot group its losses with any related entity so tax
losses must be carried forward. Assume tax payable is paid in the year that it arises.
 The rate payers will pay 30 c / kWh for their electricity use (fixed for the life of the
plant).
 The CO2 emissions intensity is 0.6 tonnes per MWh generated Diesel Plant and nil
for the solar-battery system.
 CPI is 2.5%
 The WACC is 7% nominal after tax.
 O&M costs escalate at CPI (excl. diesel which is fixed in real terms).
 Capital costs are not expected to escalate.
 Assume all operating cashflows occur at year end.
TASK:
Develop a Spreadsheet Model to calculate:
 The nominal after tax cashflow for each year of the project’s life.
 The real after tax cashflow for each year of the project’s life.
 The NPV, IRR and Payback period for each project option.
Write a 1-page recommendation letter to the CEO of Yankandangaroo outlining
 Which project you are recommending and why?
 The implications of a CO2 levy of $30 per tonne (2016 dollar equivalent), which if the green party is elected will be applied on all power generation from 2020. The CO2 will escalate at CPI.
 An estimate of the CO2 levy that would be necessary to change your recommendation to the Solar + Tesla system.
 At this CO2 price what would the electricity price need to be to meet achieve the WACC?
Submission
 Submit as two consolidated turn-it-in assignments – 1 Page Recommendation Report + Excel Spreadsheet with the financial model(s) – on behalf of your team.
 Ensure that the individual roles for all team members are summarised in a table on the cover page of your submission.
Assessment Criteria
Tutorial Participation Week 9 2%
Assignment Report 18%
Total 20%
Presentations – Groups M, N, O & P in each of T01, T02, T03 & T04 will present in week 12 tutorial sessions (17/18 October). This assessment task is to be completed in you ENGG4900 teams.
1 http://www.co2crc.com.au/wp-content/uploads/2016/04/LCOE_Report_final_web.pdf
22 COST ESTIMATE CLASSIFICATION SYSTEM – AS APPLIED IN ENGINEERING, PROCUREMENT, AND CONSTRUCTION FOR THE PROCESS INDUSTRIES TCM Framework: 7.3 – Cost Estimating and Budgeting Rev. March 1, 2016
代写ENGG4900 Financial  Assignment

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