Image Study Diesel Power Plants - MAN Diesel & Turbo

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Image Study can only be carried out on a case-by-case basis. To get an impression of how construction- related costs have developed over the past several years, the IHS/CERA Power Capital Costs Index (PCCI) offers some useful information. It tracks the costs of building coal, gas, wind and nuclear power plants (it is indexed to the year 2000 and costs are associated with the construction of a portfolio of 30 different power generation plants in North America). In the second quarter of 2009, the index registered 217 index points, indicating that a power plant that cost $100 million in 2000 would, on average, have cost $217 million in the second quarter of 2009. Since the introduction of the index in the year 2000, it continuously increased until the first quarter of 2008. Since then, the costs captured by the index are trending downward. Especially since the beginning of 2009, this downward trend was caused by significantly lower prices for steel, copper and petroleum and affected all power plant types covered by the index. Fuel costs, the third component of lifecycle costs covered in this study is a significant cost parameter. In the case of engine-based solutions it is important to mention that it is the most volatile parameter which usually makes up the lion’s share of the plant’s total lifecycle costs. The development of oil prices over the past several years has proven how fast and sometimes unexpectedly prices can change. To a certain extent, it is of course possible to compensate such price fluctuations with long- term purchasing or fuel supply agreements. However, looking at the full life time of a power plant, the general volatility of the fuel price makes long term projections very difficult and is of course able to impact a plant’s profitability. Looking at table 3, a final point needs to be made considering the end of a power plant’s life time. While there is of course the option to make an investment in order to extend its operating life, one of the benefits of modern engine-based plants is that they can be fully disassembled again within a reasonable amount of time. In light of sub-hypothesis 3, the analysis above has shown that investment costs are generally lowest with engine-based power plants. When it comes to operation and maintenance costs however, it is very difficult to determine a low cost leader, as the variety of different cost influencers calls for a case-by-case analysis. Fuel costs generally make up most of the plant’s lifecycle costs and fuel prices can be rather volatile. In light of those findings, it is not possible to fully verify sub-hypothesis 3 or to make a general statement including all engine- based plants. To make this topic more tangible, graph 5 illustrates a real-life investment example kindly provided by MAN Diesel & Turbo SE. It shows that the main factors, investment and operating costs and typical income, discounted and cumulated on a 25-years perspective. As already pointed out in the text, these investment cases are typically characterized by 28
Image Study a rather short investment period (in this example, 3 years) and therefore the possibility to reach the break even point within few years, making it an interesting investment case. Due to difficulties in predicting all the cost and Real-Life Investment Example by MAN Diesel S.E. M€ 400,0 300,0 200,0 100,0 - -100,0 -200,0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Years income factors over a 25 years-period, this investment case shows a linear development. Nevertheless, it perfectly supports the findings, discussed above. 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Invest - discounted Operating cost - discounted Income - discounted Break Even cum. discounted Break Even p.a. discounted Graph 5: Real-Life Investment Example by MAN Diesel & Turbo SE Graph 5 is based on the following key assumptions: Key assumption parameters for the Real Life Investment Example Key assumption parameters First Year 2013 Operating Hours 7500 Investment 750 €/kW Discount Rate 8% Load 100% Fuel Price 29 €/MWh Escalation 2,5% Plant Output 220 MW FOM 18 €/kWa Operation Base Load Efficiency 45% VOM 29 €/MWh Electricity Price 120 €/MWh Table 4: Key Assumption for Real-Life Investment Example provided by MAN Diesel & Turbo SE 29
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Page 3 and 4: Image Study 1. EXECUTIVE SUMMARY To
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Image Study Diesel Power Plants - MAN Diesel & Turbo

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