Photovoltaic Systems Training

Session 5 – Economic Analysis

Javier Relancio & Luis Recuero
Generalia Group

September 30th 2010

http://www.leonardo-energy.org/training-pv-systems-design-
construction-operation-and-maintenance
 PHOTOVOLTAIC SYSTEM
Design, Execution, Operation & Maintenance

PROFITABILITY ANALYSIS

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

Expenses of the plant operation.

Insurance

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

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 INDEX

Expenses of the plant operation.

Insurance

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

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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…
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 INDEX

Expenses of the plant operation.

Insurance

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

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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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Operation expenses:
Insurance

1. Identification of risks and insurable assets & interests

A. Insurable risks

ƒ Risks of the nature

ƒ Theft, vandalism, terrorism or sabotage

ƒ Execution defects

ƒ Losses due to facility stop (indirect damages)

ƒ Breakdown of the equipments

ƒ Responsibilities for third persons damages

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

ƒ Political, social or financial risks

ƒ Technological, professional risks

ƒ Strategic risks

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Operation expenses:
Insurance

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:

ƒ Assets

ƒ Income

ƒ Responsibilities

B. There are two defined periods

ƒ Plant execution

ƒ Operation

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Operation expenses:
Insurance

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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Operation expenses:
Insurance

2.1 The insurance program: execution (II)

All-risk insurance II

A. Covertures

Natural risks
Ordinary risks
ƒ Wind, hailstorm, snow and rain
ƒ Other natural extraordinary phenomena
ƒ Fire, explosion and lightning strike
ƒ Frost and defrost
ƒ Steal and vandalism
ƒ Overflow and floods
ƒ Plane crashes or vehicles impacts
ƒ Collapse, detachment and landslide of land
ƒ Earthquakes and volcanic phenomena

Staging risks Optional risks

ƒ Consequences of a design mistake

ƒ Technical risks: managing, assembly, tests, short
ƒ Terrorism and sabotage
circuit, overvoltage, overpressure, centrifugal force
ƒ Strike, riot and civil commotion
ƒ Human errors: mistakes of assembly, negligence,
ƒ Insurance of maintenance (12 months)
inexperience, malicious hurt
ƒ Civil responsibility

And any other issue that is not excluded from the policy

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Operation expenses:
Insurance

2.1 The insurance program: execution (III)

All-Risk policy. The execution III

A. Requirements for the contracting :

ƒ Analysis of the risk situation

ƒ Protection and vigilance measures

ƒ Control of subcontractors and bidders

B. Other considerations

ƒ Contractual losses or penalties

ƒ Exemptions

ƒ Deliveries in different stages

C. Who has to get an insurance?

ƒ All the persons with interests in the insured risk: promoter,

operating company, financial company, bidders and
subcontractors

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Operation expenses:
Insurance

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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Operation expenses:
Insurance

2.2 The insurance program: Opération(II)

Multi-risk insurance

A. Coverage

Extensive guarantees
Basic guarantees Rain, hailstorm, wind or snow
Damages due to water or flood
Fire, explosion and lightning strike Acts of vandalism or sabotage
Impact of vehicles
aircraft or spaceships crashes, sonic waves

Optional guarantees
Civil responsibility
Theft and spoliation
Electrical damages in electrical or electronic equipments CR Exploitation, employers, defense and bails
Breakdown of equipments CR for damages to the energy receptor
Loss of benefits

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Operation expenses:
Insurance

2.2 The insurance program: Operation (III)

All-risk insurance

A. Exclusions

General exclusions
Optional guarantees
Bad intentions from the contractor
Design mistake
Production losses
Degradation

Consideration
Civil responsibility
General exemptions
Several sinister CR Exploitation, employers, defense and bails
Consequences of a design mistake CR for damages to the energy receptor
Other clauses

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Operation expenses:
Insurance

2.2 The insurance program: Operation (IV)

All-risk & Multi-risk insurances

A. Requirements for the contracting :

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

ƒ Protection and vigilance measures

ƒ Control of operation & maintenance contracts

B. Other considerations

ƒ Availability of solar modules in the market

ƒ Exemptions

C. Who has to get an insurance?

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

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 INDEX

Expenses of the plant operation.

Insurance

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

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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

ƒ For 12 years

ƒ Grace period: 1 year

ƒ Interest rate of 5%

ƒ 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

ƒ Equity: 20 %

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Profitability analysis

Inputs (II)

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

Investment  Operation and other costs (The insurance and the 
Type of installation
(€/Wp) physical surveillance are NOT considered)

Fix to ground crystalline module 2.9

Fix to ground thin film module 2.7
Fix cost: 200 €
Crystalline module with 
4.1 +
suntracker
2 % of the incomes for the energy produced
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

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Profitability Analysis

Inputs (III). Production & Energy price

Germany

ƒ Estimated production: 950 kWh/kWp

ƒ Subvention (ground): 0,284 €/kWh
ƒ Subvention (roof):
ƒ 30 – 100kW: 0,3723 €/kWh
ƒ > 1000 kW: 0,2937 €/kWh

Spain

ƒ Estimated production: 1350 kWh/kWp

ƒ Subvention (ground): 0,265 €/kWh
ƒ Subvention (roof):
ƒ >20 kW: 0,295 €/kWh
ƒ <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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Profitability Analysis

Study cases

Estimated 
Technology Power Type Country Subvention
production
Ground  0.265 
Case 1 Crystalline 1.000 kW Spain 1350
Plant €/kWh
Ground  0.265 
Case 2 Thin film 1.000 kW Spain 1350
Plant €/kWh
0.3723 
Case 3 Crystalline 100 kW Roof Germany 950
€/kWh
0.295
Case 4 Crystalline 100 kW Roof Spain 1350
€/kWh
Suntracker  0.265 
Case 5 Crystalline 1.000 kW Spain 1890
Plant €/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
MAINTENANCE COST ACCRUED
LOAN FEE INCOMES CASH FLOW
WITHOUT INSURANCE 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
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(1) Hypothetical fee for an extraordinary reparation on the year 15th : 150.000 €
Study case 1 (II)

Technology Power Type Country kWh/kWp Tariff

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)

Technology Power Type Country kWh/kWp Tariff

Case 2 Thin film 1.000 kW Ground Spain 1350 0.265 €/kWh
OUTPUTS INPUTS RESULT
MAINTENANCE COST ACCRUED
LOAN FEE INCOMES CASH FLOW
WITHOUT INSURANCE 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 159.907 483.058 323.151 2.510.234
1)
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

24 25º YEAR 11.469 559.229 547.760 7.643.087

(1) Hypothetical fee for an extraordinary reparation the 15th year: 750.000 €
Study case 2 (II)

Technology Power Type Country kWh/kWp Tariff

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

INCOMES PER YEAR

385.455 €

INVESTMENT ACCRUED INCOMES

2.970.000 € 7.643.087 €

LOAN I.I.R

2.376.000 € 26,49%

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Study case 3 (I)

Technology Power Type Country kWh/kWp Tariff

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

OUTPUTS INPUTS RESULT

MAINTENANCE COST ACCRUED
LOAN FEE INCOMES CASH FLOW
WITHOUT INSURANCE 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
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(1) Hypothetical fee for an extraordinary reparation on the year 15th: 15.000 €
Study case 3 (II)

Technology Power Type Country kWh/kWp Tariff

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

INCOMES PER YEAR

37.927 €

INVESTMENT ACCRUED INCOMES

319.000 € 717.941 €

LOAN I.I.R

255.200 € 22,35%

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Study case 4 (I)

Technology Power Type Country kWh/kWp Tariff

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

OUTPUTS INPUTS RESULT

MAINTENANCE COST ACCRUED
LOAN FEE INCOMES CASH FLOW
WITHOUT INSURANCE 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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(1) Hypothetical fee for an extraordinary reparation on the year 15th: 15.000 €
Study case 4 (II)

Technology Power Type Country kWh/kWp Tariff

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

INCOMES PER YEAR

42.731 €

INVESTMENT ACCRUED INCOMES

330.000 € 847.994 €

LOAN I.I.R

264.000 € 26,39%

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Study case 5 (I)

Technology Power Type Country kWh/kWp Tariff

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

OUTPUTS INPUTS RESULT

MAINTENANCE COST ACCRUED
LOAN FEE INCOMES CASH FLOW
WITHOUT INSURANCE 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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(1) Hypothetical fee for an extraordinary reparation on the year 15th: 150.000 €
Study case 5 (II)

Technology Power Type Country kWh/kWp Tariff

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

INCOMES PER YEAR

539.716 €

INVESTMENT ACCRUED INCOMES

4.510.000 € 10.317.272 €

LOAN I.I.R

3.608.000 € 22,69%

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Profitability Analysis

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

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construction-operation-and-maintenance

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