Presentation by Takaya Watanabe – General Manager, Sustainability Energy & Environment Strategic Planning Dept., Mitsubishi Heavy Industries, Ltd. at Tokyo CCS Financial Model Workshop, 3 September 2012.
2. Contents
Model Features
• Expected Users
• Commercial Relation Model
• Model Logic & Features
Project Case Study : IGCC + CCS Project
• Case Study (Assumption of a fictional project)
• Base Case Results (Model Outputs)
• Sensitivity Analysis (Model Outputs)
• Value & Request
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3. Model Features/Expected Users
The Model was developed to evaluate CCS Projects at a screening stage
The Expected Users are:
• Plant Owners (Utility company etc.)
• Project Developers
• Investors
• Lenders
• Policy Makers (Subsidies)
• Consultant/Think Tank
• EPC Contractor
• OEMs
This presentation is prepared by MHI as Project Developer/EPC Contractor/OEM
of Gasifier, Gas Turbine, Steam Turbine, CO2 Compressor.
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4. Model Features/Commercial Relation
Various type of
“Government Subsidies”
can be simulated
Payment to CO2
Transport & Storage
Provider is added to
Cost of Generation &
Capture Plant
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5. Model Features/Model Logic & Features
The model is set up to evaluate an integrated CCS Project including:
• Upto three (3) Power Generation and CO2 Capture Projects
• A Single CO2 Transport Project
• A Single CO2 Storage Project
The Model’s worksheets have been structured around four (4) categories as follows:
• Inputs : General Assumptions, Price Assumptions, Scenario Manager
• Calculations: WACC (Weighted Average Cost of Capital), Timing, Operating Cash Flow,
Capex, Depreciation, Transport & Storage Charges,
LCOE (Levelised Cost of Electricity), Government Subsidies
• Outputs
• Financial Statements: P/L Statement, Cashflow Statement, Balance Sheet,
Discounted Cashflow Valuation
• Summary: LCOE, Commercial Gaps, NPVs, Government Subsidies
• Charts: EBITDA, Source & Use of Funds, LCOE constrains, NPV Constituents
Commercial Gaps
• Others: Cover Sheet, Table of Contents, Information, Project Scheme, Macros etc.
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6. Model Features/Model Logic & Features
The Model can run a different scenario of User’s choice using “Scenario Manager”
The Model contains Sensitivity inputs for the following categories
• Capex
• Capex Subsidies
• O&M Costs
• Fuel Costs
• CO2 Cost
• CO2 Transportation Costs
• CO2 Storage Costs
• PPA Revenue
• Other Revenue (such as EOR Revenue
• Operating Subsidies
• WACC (Weighted Average Cost of Capital)
The Model can run the following Goal Seeking Macros:
• Goal Seeking Transport & Storage Charges (optimization to NPV = Zero)
• Goal Seeking Government Capex Subsidies (optimizing to NPV=Zero)
• Updating Sensitivities
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7. Case Study : Project Assumption
(Base Case)
General Assumption CCS Assumption
Project Scope: IGCC + CCS CO2 Transport CAPEX, OPEX
Commercial Operation starts in 2020 CO2 Storage CAPEX, OPEX
Business Model : SPC Scheme Etc. to calculate CO2 Transport & Storage Fee
w/ Equity 40%: Debt 60% (Sample of Input Sheet)
Revenue: Electricity Tariff @$ 50/MWh
No CO2 Revenue GCCSI CCS Model OK
Input - General
Assumptions
Power Generation & Capture Assumption SHEET CHECK OK
1General Assumptions Unit
Gross Generation Capacity: 1017MW
Timing
Plant Auxiliary Power: 218MW 1.1
Model start date Year 2012
Model periods Years
Fuel Consumption : 10.2 GJ/MWh Model end date Year
70
2,082
Fuel Cost: @$2.61/GJ 30-Jun-
Valuation date
date 11
CO2 Capture: 0.8 CO2- ton/Net MWh Mid-period cashflows
assumed
CO2 Cost: $30/CO2-ton Emission per Yr
Escalation
CAPEX: $ 3.0 Billion 1.2
Inflation Rate (CPI) % 2.5%
OPEX(Fixed): $ 3.9 Million /Yr Base Year of real revenue
inputs Year
2012
OPEX (Variable): $ 6.1/MWh per Year Base Year of real cost
inputs Year
2012
Price Escalation -
100.0%
Percentage of CPI %
Cost Escalation -
100.0%
Percentage of CPI %
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8. Base Case Result (Outputs)
•LCOE= Levelised Cost of Electricity = NPV of Project Costs/NPV of Total Generation= @$103.6/MWh
→ Project is not feasible with Market PPA Tariff (@$50/MWh)
• Commercial Gap = “LCOE” - “Levelised Electricity Price” = @$53.6/MWh
• Sample of “Built-in” chart for Model Outputs is shown below
CAPEX is the largest constituent $53.61/MWh
$103.6/MWh
Fuel Cost
$28.51/MWh is
$50.0/MWh
relatively low due
to low Coal Cost
Not
Considered
$53.6/MWh
The Model calculates Transportation Cost ($1.55/MWh)”
& Storage Cost ($7.24/MWh)
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11. “Value” and “Request”
• The Model is easy to operate and to simulate not only variation of essential
“Project Values” (CAPEX, OPEX, Revenue, Schedule, Plant Performance etc.)
but also various form of “Government Subsidies” (Feed-in-Tariff, Capital Cost
Subsidies, Operating Cost Subsidies and Tax Credit). This is a unique value of
GCCSI Financial Model.
• The Model is also useful to understand and evaluate the relation between
“Power Generation” and “CCS” in one cashflow model.
Request for Further Improvement
1.“Built-in Scenario of EOR (Enhanced Oil Recovery)”
The current model has EOR Revenue Selection Input but requires manual adjustment
for CCS related cost inputs. It would be ideal if the Model has a built-in function of
“CCS: EOR Ratio” (i.e.100%= No CCS but all the captured CO2 goes to EOR)
2. “Funding Cashflows”
The current Model is set for “Pre-Financing Cashflow” only. The built-in Option for
cashflow with various inputs of Debt terms (interest rate, repayment period), Debt
amortization and Equity distribution. Then, adding “ROE=Return of Equity” in Outputs
and Sensitivity sheets will be very much appreciated, especially, by Investors.
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