WACC the dog: The effect of financing costs on the levelized cost of solar PV power

Ondraczek, Janosch; Komendantova, Nadejda; Patt, Anthony

doi:10.1016/j.renene.2014.10.053

Cited by 185 publications

(81 citation statements)

References 17 publications

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“…Therefore, for financial and tax considerations, we use cross-national parameters ( Table 6). The chosen equity-to-debt-ratio 25:75 for Western European countries is consistent to literature (Kost et al, 2013;Ondraczek et al, 2015). This also holds for return on equity and interest rates on debt (Kost et al, 2013).…”

Section: Financial and Tax Parameterssupporting

confidence: 84%

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Economic Analysis of Improved Alkaline Water Electrolysis

2017

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Alkaline water electrolysis (AWE) is a mature hydrogen production technology and there exists a range of economic assessments for available technologies. For advanced AWEs, which may be based on novel polymer-based membrane concepts, it is of prime importance that development comes along with new configurations and technical and economic key process parameters for AWE that might be of interest for further economic assessments. This paper presents an advanced AWE technology referring to three different sites in Europe (Germany, Austria, and Spain). The focus is on financial metrics, the projection of key performance parameters of advanced AWEs, and further financial and tax parameters. For financial analysis from an investor's (business) perspective, a comprehensive assessment of a technology not only comprises cost analysis but also further financial analysis quantifying attractiveness and supply/market flexibility. Therefore, based on cash flow (CF) analysis, a comprehensible set of metrics may comprise levelised cost of energy or, respectively, levelized cost of hydrogen (LCH) for cost assessment, net present value (NPV) for attractiveness analysis, and variable cost (VC) for analysis of market flexibility. The German AWE site turns out to perform best in all three financial metrics (LCH, NPV, and VC). Though there are slight differences in investment cost and operation and maintenance cost projections for the three sites, the major cost impact is due to the electricity cost. Although investment cost is slightly lower and labor cost is significantly lower in Spain, the difference can not outweigh the higher electricity cost compared to Germany. Given the assumption that the electrolysis operators are customers directly and actively participating in power markets, and based on the regulatory framework in the three countries, in this special case electricity cost in Germany is lowest. However, as electricity cost is profoundly influenced by political decisions as well as the implementation of economic instruments for transforming electricity systems toward sustainability, it is hardly possible to further improve electricity price forecasts.

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Section: Financial and Tax Parameterssupporting

confidence: 84%

“…Due to very different country-specific characteristics, IPCC additionally calculates an upper range of 10%. Ondraczek et al (2015) use WACC parameters of 3.8-4.3% for Western European countries (Ireland, Switzerland, UK, and Netherlands).…”

Section: Financial and Tax Parametersmentioning

confidence: 99%

Economic Analysis of Improved Alkaline Water Electrolysis

2017

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“…The resulting return on equity (in percentage terms) can be incorporated in the fundamental concept of the finance of the WACC, which defines the weighted average of the cost of capital coming from both the equity and the debt [42,43]. The internal rate of return (IRR), the payback period, and the net present value (NPV) were calculated.…”

Section: Economic and Financial Examinationmentioning

confidence: 99%

Building Energy Opportunity with a Supply Chain Based on the Local Fuel-Producing Capacity

Bonazzi¹,

Cividino

Zambon

et al. 2018

Sustainability

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Studying and modeling plants for producing electric power obtained from vegetal wood cellulose biomass can become an opportunity for building a supply chain based on the local fuel-producing capacity. Focusing on energy-producing technologies, such as pyrolysis or gasification, the present work assessed the amount of vegetal biomass that may be used as fuel, both in terms of actual availability and supply price, in the Province of Rieti (Italy). The aim is to draw up a supply plan that has an intrinsic relationship with the local area. The results confirmed a production of 24 MW of project thermal power and 4 MW of project electric power. The ensuing plant was then studied following current norms about renewable energy, environmental consistency, and atmospheric emissions. An economic analysis of the cost investment was also carried out, where the total return is approximately of 19%. The results exposed that plant costs are acceptable only if short-supply chain fuel is purchased. The costs of generating energy from agroforestry biomass are certainly higher; however, the plant represents a significant territorial opportunity, especially for the economic sectors of agriculture and forestry. The employment effect plays a central role in the concession process, which is relevant for the interaction among renewable energy production and agriculture. The environmental impact of a biomass plant from agroforestry residues can be measured exclusively on atmospheric emissions: the plant must be placed in industrial areas without any landscape or naturalistic value.

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“…9). The Weighted Average Cost of Capital (WACC) is as important a factor in determining the Levelized Cost of Electricity (LCOE) from Solar PV as solar radiation (Ondrazcek et al 2013).…”

Section: Green Initiatives Are Good For the Bottom Linementioning

confidence: 99%

Transformative Approaches to Sustainable Development at Universities

Filho¹

2015

World Sustainability Series

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WACC the dog: The effect of financing costs on the levelized cost of solar PV power

Cited by 185 publications

References 17 publications

Economic Analysis of Improved Alkaline Water Electrolysis

Economic Analysis of Improved Alkaline Water Electrolysis

Building Energy Opportunity with a Supply Chain Based on the Local Fuel-Producing Capacity

Transformative Approaches to Sustainable Development at Universities

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