3 Project Risks Not Covered Under Tariff

The Tariff structure in project finance does not cover 3 major risks that Project Co has exposure to: Project cost overrun Availability Operating Cost   Project Cost Overrun: Tariff does not include the project cotst overrun and during the debt and equity financing it is assumed to be fixed Availability: if the plant is not … Continue reading 3 Project Risks Not Covered Under Tariff

Tariff and Power Purchase Agreement

Under the PPA Tariff is usually paid by monthly. Therefore Days of Sales Outstanding should be close to 30-32. The  tariff paid under 2 elements Fixed Portion : Capacity Charge, Availability Charge Variable Portion: Energy Charge, Dispatch Charge Availability Charge fixed portion is paid no matter what, energy is dispatched or not. the project co … Continue reading Tariff and Power Purchase Agreement

Contractual Analysis of A Power Plant

ProjectCo: Independent Power Plant project for gas-fired power plant First contract to read: Power Purchase Agreement because it sets out the framework for the project, in PPA check the Output: in Megawatt hours Heat Rate: A measurement used in the energy industry to calculate how efficiently a generator uses heat energy. It is expressed as … Continue reading Contractual Analysis of A Power Plant

Offtake Contracts

An offtake contract provides a predictability for sales and sometimes eliminates the volume and price risk. 6 types of offtake contracts are Take or Pay Contract Take and Pay Contract Long term sales Contract Hedging Contract Contract for Differences Throughput Contract Take or Pay Contract: Offtaker must purchase the projectco's product no matter what based … Continue reading Offtake Contracts

Project Finance Contracts: The Project Agreement

The Project Contracts provide a basis for the ProjectCo's construction and operation of the project. Just like constitution is the main framework of a country's legal system, The Project Agreement is the main contract which states how company operates, collaborates with multiple stakeholders and most importantly how it obtains its revenues. Not all projects have … Continue reading Project Finance Contracts: The Project Agreement

A Crash Course on Power Production at a Hydroelectric Plant

A simple formula for approximating electric power production at a hydroelectric plant is: P = ρhrgk, where P is Power in watts, ρ is the density of water (~1000 kg/m3), h is height in meters, r is flow rate in cubic meters per second, g is acceleration due to gravity of 9.8 m/s2, k is a coefficient … Continue reading A Crash Course on Power Production at a Hydroelectric Plant