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Innovation Energie Développement
IFRERA-Intermediate progress MeetingIFRERA-Intermediate progress Meeting
Activity in IndonesiaActivity in Indonesia
SULAWESI PROJECT PRESENTATION
LYON, JULY 20th 2005
Innovation Energie Développement
General context of the project
Demand : 35 GWh, peak load 9MW
77% is Residential consumption, the main driver for growth.
Current supply : exclusively diesel engines (12MW), with increasingly high operating costs.
The project considers the interconnection of 4 currently independent systems in order to:
improve supply stability provide 24h supply ease energy placement higher public relations profile (IPO)
Three run-of-the-river, mini-hydro sites have been identified in the South-East Sulawesi Island of Indonesia.
Sambilambo : 3.1 MW Mikuasi 1.8 MW Rate Limbong 1.3 MW
6.2 MW
Innovation Energie Développement
Feasibility study achievements
Project sizing optimized (max. energy placement over project lifetime). Full energy placement occurs in 2012 with 43 GWh supplied.
The national authority (DJLPE) and the local authority (mayor of Mikuasi) are supportive of the project because of development opportunities.
Staging of investment costs by item
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2005
2006
2007
2008
2009
in 1
,00
0 U
SD
20
05
Eq
uiv
ale
nt
Overhead
Engineering services
Access Road
20kV line
Cost of E/M works
Cost of civil works
Project development
The potential developer is Indonesia Power (IP), and is now negotiating a PPA with the national utility PLN, based on the IFRERA F/S.
Total investment package : US$10m 30% equity injection 50% USD and 50%
Rupiah investment
Innovation Energie Développement
Financial Analysis and Results
A financial analysis was conducted based on the criteria, assumptions and method wished by IP.
The objective of this study : to identify the PPA tariff price that enables IP’s profitability target (IRR = WACC + 5%)
At US$53/MWh : price is lower than end-customer prices and competitive with diesel engines.
MWh cost in $US
0
10
20
30
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60
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Diesel generationmax cost
Min end-user tariff Diesel generationmin cost
IFRERA project
Innovation Energie Développement
Sensitivity study (1/2)
40
53
58
57
5454
69
0
10
20
30
40
50
60
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Reference price
Hydrology (80%)
Investment costs (+15%)
Inflation (10% instead of 8%)Lower demand growth (50%)
Investment currency 100% Rp
Investment currency 100% $US
Risk mitigation price $US/MWh
Innovation Energie Développement
Sensitivity study (2/2)
Worst case scenario : 100% Rupiah investment, leading to US$ 82/MWh (uncompetitive price)
100% USD investment leads to PPA price = US$45/MWh, but the project is very much exposed to exchange rate risks.
Conclusion : to improve competitiveness it is preferable to invest in US$ as much as possible, WHILE mitigating the exchange rate risk with PLN in PPA arrangements (by agreeing on a PPA price in US$ for example).
Innovation Energie Développement
Open questions for debate
How could the IFRERA team help the project to reach achievement stage ?
What could be drawn from this experience for economic and financial training sessions in Asia ?
Other questions …
Sensitivity analysis: compare the evolution of the oil price and the impact on diesel generation price.