Techno-economic investment framework for REIPPPP utility-scale PV plants in SA

[摘要] ENGLISH ABSTRACT: The South African department of energy forecasts generation capacity to reach 89.5GW by2030, and the objective is to have 8.4GW generated from solar Photovoltaic (PV) renewableenergy plants. The department created an enabling environment for the private sector to investthrough the Renewable Energy Independent Power Producer Procurement Program(REIPPPP). The REIPPPP has been hailed as one of the best renewable energy programsworld-wide and has stimulated investment in this sector in South Africa. The questionsconsidered in this research were: how is project viability of PV utility power plants assessed?Are conventional capital budgeting and project financial evaluation parameters sufficient toperform a preliminary analysis? How should investors account for risk associated with PVplants in South Africa? And finally, how should the risk be calculated or what tools and ortechniques should be considered applicable? The aim of this research was to propose anddevelop an investment framework and model that private investors could use during thepreliminary phase of utility scale solar photovoltaic projects. The first focus of the study wasthe development of a financial model which employs the conventional capital budgetingparameters such as the net present value (NPV), the rate of return (IRR), the return oninvestment (ROI), and the Debt Service Coverage Ratio (DSCR). @Risk® simulation packagewas used to simulate financial uncertainty through varying some of the inputs randomly, to seethe effect on required financial output and probability of viability. The second phase of the studyexpands on the NPV values that were calculated, through the use of real options analysis. Thesignificance of real options is the fact that, the volatility factor which is incorporated in theformulae, best represents all risks which are not catered for in most project financial formulas.Real options analysis provides the decision makers of a project with the flexibility to activelyevaluate the project's financial viability and undertake the risk based on all availableinformation. The study uses project data obtained from REIPPPP window two PV project toevaluate the investment feasibility using conventional project finance evaluationparameters, an @Risk® analysis is performed and then expanded upon to do a real optionsanalysis. A real options analysis (ROA) active mapping framework is adopted to map andanalyse the viability of the project. This dynamic study of project financial evaluation in the formof the ROA of the case study, provided volatility and NPV ratios that yielded a 'maybe investnow' decision. The project used as a case study is already constructed and the volatility usedin this study was based on risks experienced during the construction phase. The resultssupport the decision made to invest in this project, as a good investment opportunityundertaken three years ago. The research objective proposing that three techniques;conventional capital budgeting methods, risk analysis and real option analysis should becombined in financial analysis of renewable energy utility scale PV projects was confirmed through this study. The advantage of combining the three techniques is that the financial duediligence now incorporates the risks associated with such projects which conventional capitalbudgeting methods does not account for.

[发布机构] Stellenbosch University