Jamaicans are not likely to see any price reduction in electricity rates come 2016 – Part #2

Simplified basic analysis and assumptions used to arrive at my figures. I am open to a challenge from anyone, who has not yet taken the time out to provide Jamaicans with some basis for the discussions regarding the 434 MW( not 360MW)  plant being proposed by EWI.

LNG OPTION

Installed Capacity (MW) 434
Rated output (MW) 399.28
Uptime /Utilization 85%
# Days 365
Projected Run hrs 7446
Total Generated power (MWh)                 2,973,038.88
Plant Rated Eff  (CCGT)  50%
Average Heat rate of LNG (MWH/m3) 1.11E-02
Total volume of LNG Req M3                  537,160,924
MMBTU of fuel required               20,288,017.32
Cost LNG US$/ (MMBTU) (Asia)  $                           15.00
Total Fuel Cost /Annum  $              304,320,260
Fuel cost as a % of total cost 85%
O&M Cost 15%
Est total annual cost (Sub total)  $        358,023,835.01
Fuel Cost / KWH  $                         0.1024
Total Cost per KWH  $                         0.1204
Interest payment on loan $46,423,767.88
Total Annual Cost Incl Int Pay $404,447,602.89
Cost per Kwh $0.1360
EWI stated cost per KWH  $                         0.1456
ROI > 6.6%( After tax) 8.50%
Tax Rate 33.30%
Total Generation Cost to meet After tax ROI $497,985,833.77
Sale Price to JPS (Minimum)  $                         0.1675
Assumptions ( Best Guess)
Plant Est Cost  $       734,000,000
Loan amount  $       600,000,000
Ave weighted cost of borrowing 6.60%
Length of loan yrs 30.00
ROI > 6.6%( After tax) 8.50%
Tax Rate 33.30%

Next I will look at the estimated pricing for electricity using HFO given this plant has dual fuel capability.

The $0.1675 represents the lowest possible price initial  rate EWI would be able to sell electricity to JPS .

Missing from the analysis are the following

  1. The effect on inflation on the price of fuel
  2. The effect of the exchange rate on input cost
  3. Volatility of fuel price on world market.
  4. The effect of additional taxes by the GOJ
  5. Depreciation expenses.
  6. Time Value of money given this is a long-term capital-intensive project
  7. Other fees, legal, permit, EIA and other related cost.

This is just a basic analysis to try and get idea if the cost presented to us are a fair reflection of what it would actually cost to produce power , which would give a fair idea of how much savings the Jamaican consumer are likely to see.

Credits.

EIA, Wikipedia.

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