Financial Model
Economic Analysis of CHP System
for DIA - Contents
• Information Sources and Basic Assumptions
–
–
–
–
Plant data
DIA Usage data
Rate data
Gas Price data
• Model Layout
–
–
–
–
–
–
Status Quo Usage and Cost
Status Quo Usage Components
Natural Gas Purchases in CHP Case for Electricity
Natural Gas Purchases for Supplemental Firing
Standby Costs in CHP Case
Financial Model, Inflation, Rate of Return
• Analysis of Alternative Plant Configurations
• Analysis of Standby Rates
• Alternative Gas and Electricity Prices
Model Assumptions
Economic Analysis of CHP System
for DIA – Basic Assumptions
• Information Sources and Basic Assumptions
–
–
–
–
Plant data
DIA Usage data
Rate data
Gas Price data
Economic Analysis of CHP System
for DIA – Plant Assumptions
• Plant Information
Sources is Detailed
Analysis Provided by
Solar Turbines
• Adjustments included
for altitude (reduces
electricity output)
Economic Analysis of CHP System
for DIA – Plant Data
• Focus on Two Cases
– Simple Cycle
– Combined Cycle
• Primary Issue is Tradeoff Between Heat Rate and Surplus
Steam Available
Tradeoff between heat
rate and steam
available
Economic Analysis of CHP System
for DIA – Usage Data
• Electricity Data – 2003 Billing
– Only include metered load; Only include accounts with positive
revenue; peak load is 46,000 kW.
• Natural Gas Data – From Discussion with Don Clarke
• Air Conditioning Load – 11.2% of Electricity Usage
Economic Analysis of CHP System
for DIA – Rate Data
• Electricity Rates – PSCo Rate Book including commodity
adjustment factor of $.00839 per kWh.
• Natural Gas Rates – From Discussion with Don Clarke
Transport Charge is .417
per MMBTU. Model
assumes same inflation
as electricity rates
• Natural Gas Commodity Price – From Futures Markets
Analysis
Economic Analysis of CHP System
for DIA – Natural Gas Prices
Natrual Gas Forward Price - Dec 2004
8
7
6
5
• .
2010
2010
2010
2009
2009
2009
2008
2008
2008
2007
2007
2007
2006
2006
2006
2005
2005
4
3
2
1
0
2005
$/MMBTU
• Current Price is about
$7/MMBTU; Average next
twelve month price is
$6.75/MMBTU
• Forward prices decline
significantly in future years
Economic Analysis of CHP System
for DIA - Analysis
• Analysis of alternative plant configurations
(combined cycle versus simple cycle)
• Analysis of standby rates versus purchasing
redundant capacity
• Analysis of alternative electricity price
inflation, given current gas and electricity
prices
• Analysis of different gas price assumptions
with alternative inflation rates
Plant Configuration Analysis
Base Case Assumptions
• Assumptions
–
–
–
–
Simple cycle and combined cycle configuration
Base case electricity and gas use
Gas prices from futures markets
3.5% electricity price inflation (consistent with
high natural gas cost)
– No Standby purchased
– Firm gas prices
Plant Configuration Case Results
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 3.0%
– Payback 17.1 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 17.1 Years; NPV; -$ 28,722,877 at 5.0%
Return on Investm ent 3.0%
$10,000,000
2005
• Simple Cycle Case
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(70,000,000)
• Combined Cycle Case
– ROI 8.3%
– Payback 12.3 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 12.3 Years; NPV; $ 41,905,863 at 5.0%
Return on Investm ent 8.3%
$20,000,000
$10,000,000
• Negative Cash Flow in Early
Years for Both Cases
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
$$(10,000,000)
Plant Configuration Case Results
• Combined Cycle improves performance
– Surplus steam does not add much value
because of limited use at the airport
– Analysis includes altitude adjustments with
reduces electricity output by about 20% but
does not reduce capital cost or natural gas
requirements
– Payback period is long because of gas price
assumptions and forward rates
Standby Case
• The next cases compare the performance of the
configurations assuming that standby capacity is purchased
instead of purchasing redundant capacity.
• The standby cases assume enough standby capacity is
purchased to cover the capacity of one unit.
• Inflation rates on standby are the same as the overall
inflation rate for electricity prices (3.5% in the base case).
• Standby versus redundant capacity is presented for both
the combined cycle configuration and for the simple cycle
configuration.
• A 2% random outage rate is assumed for the system
causing energy and daily demand purchases.
Standby Case Results – Simple
Cycle
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 3.0%
– Payback 17.5 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 17.1 Years; NPV; -$ 28,722,877 at 5.0%
Return on Investm ent 3.0%
$10,000,000
2005
• Simple Cycle Case
without Standby
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(70,000,000)
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 2.7%
– Payback 16.8 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 16.8 Years; NPV; -$ 30,362,624 at 5.0%
Return on Investm ent 2.7%
$10,000,000
2005
• Simple Cycle Case
with Standby
Standby Case Results – Combined
Cycle
$10,000,000
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 8.3%
– Payback 12.3 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 12.3 Years; NPV; $ 41,905,863 at 5.0%
Return on Investm ent 8.3%
$20,000,000
2005
• Combined Cycle Case
without Standby
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 8.2%
– Payback 11.8 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 11.8 Years; NPV; $ 36,039,447 at 5.0%
Return on Investm ent 8.2%
$10,000,000
2005
• Combined Cycle Case
with Standby
Standby Case Results
• The standby case slightly worsens
performance.
• Payback is somewhat improved because of
smaller investment in plant.
• Analysis depends on the amount of standby
capacity purchased and the outage rate of
plants.
Alternative Electric Inflation Case
• The base case assumes the electricity inflation is somewhat
higher than the overall rate of inflation.
• This is consistent with the high energy costs implied by
forward gas markets – PSCo will at some point have to
increase rates with more natural gas usage or it will have to
incur high capital costs for new clean coal or other
capacity.
• The electricity inflation rate (also applied to natural gas
transportation) has an important effect on the economics of
the project, so we show how high or low the inflation rate
becomes before the CHP becomes uneconomic.
• Electric Inflation rates – 4.5%, 4%, 3.5% (base), 3%,
2.5%, 2%, 1%, 0% (All cases use the combined cycle case)
Sensitivity Case – Electricity and
Natural Gas Inflation
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
-
Natural Gas
Electricity
0.1800
0.1600
0.1400
0.1200
0.1000
0.0800
0.0600
0.0400
0.0200
-
$/kWh
Natural Gas and Electricity Prices
$/MMBTU
• Base Case – 3.5%
Electricity Inflation
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
• Lower Electricity
Inflation – 2%
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
-
0.1200
0.1000
0.0800
0.0600
Natural Gas
Electricity
0.0400
0.0200
-
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
$/kWh
$/MMBTU
Natural Gas and Electricity Prices
Sensitivity Analysis – Combined
Cycle Case; Electricity Inflation
$10,000,000
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 10.5%
– Payback 10.4 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 10.4 Years; NPV; $ 82,994,403 at 5.0%
Return on Investm ent 10.5%
$20,000,000
2005
• Combined Cycle Case
4.5% Inflation
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$10,000,000
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 9.4%
– Payback 11.3 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 11.3 Years; NPV; $ 61,520,780 at 5.0%
Return on Investm ent 9.4%
$20,000,000
2005
• Combined Cycle Case
with 4% Inflation
Sensitivity Analysis – Combined
Cycle Case; Electricity Inflation
$10,000,000
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 8.3%
– Payback 12.3 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 12.3 Years; NPV; $ 41,905,863 at 5.0%
Return on Investm ent 8.3%
$20,000,000
2005
• Combined Cycle Case
3.5% Inflation
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 7.1%
– Payback 13.6 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 13.6 Years; NPV; $ 23,974,101 at 5.0%
Return on Investm ent 7.1%
$10,000,000
2005
• Combined Cycle Case
with 3% Inflation
Sensitivity Analysis – Combined
Cycle Case; Electricity Inflation
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 5.7%
– Payback 14.3 yrs
$10,000,000
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 14.3 Years; NPV; $ 7,567,077 at 5.0%
Return on Investm ent 5.7%
2005
• Combined Cycle Case
2.5% Inflation
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 4.2%
– Payback 16.5 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 16.5 Years; NPV; -$ 7,458,180 at 5.0%
Return on Investm ent 4.2%
$10,000,000
2005
• Combined Cycle Case
with 2% Inflation
Sensitivity Analysis – Combined
Cycle Case; Electricity Inflation
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 0.3%
– Payback NA
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 32.0 Years; NPV; -$ 33,867,012 at 5.0%
Return on Investm ent 0.3%
$10,000,000
2005
• Combined Cycle Case
1% Inflation
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI NA
– Payback NA
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 32.0 Years; NPV; -$ 56,141,379 at 5.0%
Return on Investm ent NA
$10,000,000
2005
• Combined Cycle Case
with 0% Inflation
Sensitivity Case – Future Natural
Gas Prices
Natural Gas
Electricity
0.1800
0.1600
0.1400
0.1200
0.1000
0.0800
0.0600
0.0400
0.0200
-
$/kWh
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
-
0.1800
0.1600
0.1400
0.1200
0.1000
0.0800
0.0600
0.0400
0.0200
-
$/kWh
Natural Gas and Electricity Prices
$/MMBTU
• Base Case – Flat
Natural Gas Prices
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
• Increased Future
Natural Gas Prices
$/MMBTU
Natural Gas and Electricity Prices
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
-
Natural Gas
Electricity
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
Sensitivity Case Results – Higher
Future Natural Gas Prices
$10,000,000
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 8.3%
– Payback 12.3 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 12.3 Years; NPV; $ 41,905,863 at 5.0%
Return on Investm ent 8.3%
$20,000,000
2005
• Combined Cycle Case
without Standby
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
– ROI 7.4%
– Payback 12.9 yrs
PSCO Rate Structure w ith $6.75 Gas Price
Payback Period -- 12.9 Years; NPV; $ 27,323,076 at 5.0%
Return on Investm ent 7.4%
$20,000,000
$10,000,000
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
$$(10,000,000)
2005
• Combined Cycle Case
with higher future gas
prices
Alternative Natural Gas Cases
• Currently, natural gas prices – both spot prices and forward prices – are
very high relative to history.
• If the decision to invest is delayed until the prices come down, the
economics can change significantly.
• In cases with alternative gas prices, the rate of inflation that is applied
to gas and electricity is assumed to be the same.
• The most likely case is where 2.5% inflation is assumed.
• Alternative cases assume zero inflation and 3.5% inflation.
• The alternative cases are run for both the combined cycle case and the
standby case.
• Alternative gas prices (wellhead prices) include $2.0/MMBTU;
$3.0/MMBTU; $4.0/MMBTU; and $5.0/MMBTU.
Sensitivity Case Results –
Alternative Natural Gas Prices
Oil and Gas Prices (2000 Dollars)
6.00
60
50
Natural Gas Price
4.00
40
Oil Price
2004
2002
2003
1999
2000
2001
1997
1998
1995
1996
1993
1994
1990
1991
1992
0
1988
1989
-
1986
1987
10
1984
1985
1.00
1982
1983
20
1979
1980
1981
2.00
1977
1978
30
1976
3.00
Real $/BBL
5.00
Real $/MMBTU
• Historic Natural Gas
Prices
6.00
0.1400
5.00
0.1200
0.1000
4.00
0.0800
3.00
2.00
1.00
0.0600
Natural Gas
0.0400
Electricity
0.0200
-
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
$/kWh
• Low Natural Gas Case
$/MMBTU
Natural Gas and Electricity Prices
Alternative Natural Gas Prices;
Combined Cycle – 2.5% Inflation
$10,000,000
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 13.7%
– Payback 8.1 yrs
$20,000,000
PSCO Rate Structure, DIA Rates $2.00 Gas
Payback Period -- 8.1 Years; NPV; $ 74,050,653 at 5.0%
Return on Investm ent 13.7%
2005
• Combined Cycle Case -$2.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
– ROI 9.7%
– Payback 11.2 yrs
PSCO Rate Structure, DIA Rates $3.00 Gas
Payback Period -- 11.2 Years; NPV; $ 37,214,844 at 5.0%
Return on Investm ent 9.7%
$10,000,000
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$(10,000,000)
2006
$-
2005
• Combined Cycle Case
with $3.00 Gas Prices
prices
Alternative Natural Gas Prices;
Combined Cycle – 2.5% Inflation
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 5%
– Payback 17.8 yrs
$10,000,000
PSCO Rate Structure, DIA Rates $4.00 Gas
Payback Period -- 17.8 Years; NPV; -$ 310,653 at 5.0%
Return on Investm ent 5.0%
2005
• Combined Cycle Case -$4.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
– ROI NA
– Payback NA
PSCO Rate Structure, DIA Rates $5.00 Gas
Payback Period -- 32.0 Years; NPV; -$ 37,491,306 at 5.0%
Return on Investm ent NA
$10,000,000
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$(10,000,000)
2006
$-
2005
• Combined Cycle Case
with $5.00 Gas Prices
prices
Alternative Natural Gas Prices;
Combined Cycle – 3.5% Inflation
$10,000,000
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 15.1%
– Payback 7.7 yrs
$20,000,000
PSCO Rate Structure, DIA Rates $2.00 Gas
Payback Period -- 7.7 Years; NPV; $ 97,507,587 at 5.0%
Return on Investm ent 15.1%
2005
• Combined Cycle Case -$2.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
– ROI 10.4%
– Payback 11.1 yrs
PSCO Rate Structure, DIA Rates $3.00 Gas
Payback Period -- 10.4 Years; NPV; $ 54,886,009 at 5.0%
Return on Investm ent 11.1%
$20,000,000
$10,000,000
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
$$(10,000,000)
2005
• Combined Cycle Case
with $3.00 Gas Prices
prices
Alternative Natural Gas Prices;
Combined Cycle – 3.5% Inflation
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 6.5%
– Payback 15.9 yrs
PSCO Rate Structure, DIA Rates $4.00 Gas
Payback Period -- 15.9 Years; NPV; $ 12,264,430 at 5.0%
Return on Investm ent 6.5%
$10,000,000
2005
• Combined Cycle Case -$4.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
– ROI .2%
– Payback NA
PSCO Rate Structure, DIA Rates $5.00 Gas
Payback Period -- 32.0 Years; NPV; -$ 30,357,148 at 5.0%
Return on Investm ent 0.2%
$10,000,000
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$(10,000,000)
2006
$-
2005
• Combined Cycle Case
with $5.00 Gas Prices
prices
Alternative Natural Gas Prices;
Combined Cycle – 0% Inflation
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI .1%
– Payback NA
PSCO Rate Structure, DIA Rates $4.00 Gas
Payback Period -- 32.0 Years; NPV; -$ 23,641,098 at 5.0%
Return on Investm ent 0.1%
$10,000,000
2005
• Combined Cycle Case -$4.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
– ROI NA
– Payback NA
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$(10,000,000)
2006
$-
PSCO Rate Structure, DIA Rates $5.00 Gas
Payback Period -- 32.0 Years; NPV; -$ 50,727,248 at 5.0%
Return on Investm ent NA
2005
• Combined Cycle Case
with $5.00 Gas Prices
prices
Alternative Natural Gas Prices;
Combined Cycle – 0% Inflation
2018
2019
2020
2018
2019
2020
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$(10,000,000)
2007
$-
2006
– ROI 9.9%
– Payback 9.5 yrs
$10,000,000
PSCO Rate Structure, DIA Rates $2.00 Gas
Payback Period -- 9.5 Years; NPV; $ 30,531,202 at 5.0%
Return on Investm ent 9.9%
2005
• Combined Cycle Case -$2.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
– ROI 5.6%
– Payback 14.4 yrs
$10,000,000
PSCO Rate Structure, DIA Rates $3.00 Gas
Payback Period -- 14.4 Years; NPV; $ 3,445,052 at 5.0%
Return on Investm ent 5.6%
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$(10,000,000)
2006
$-
2005
• Combined Cycle Case
with $3.00 Gas Prices
prices
Alternative Natural Gas Prices;
Simple Cycle – 2.5% Inflation
$10,000,000
2019
2020
2020
2018
2019
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$$(10,000,000)
2006
– ROI 8.1%
– Payback 12.8 yrs
PSCO Rate Structure, DIA Rates $2.00 Gas
Payback Period -- 12.8 Years; NPV; $ 29,266,614 at 5.0%
Return on Investm ent 8.1%
$20,000,000
2005
• Simple Cycle Case -$2.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(70,000,000)
– ROI 2.2%
– Payback 23.7 yrs
PSCO Rate Structure, DIA Rates $3.00 Gas
Payback Period -- 23.7 Years; NPV; -$ 22,032,500 at 5.0%
Return on Investm ent 2.2%
$10,000,000
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(70,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
$$(10,000,000)
2005
• Combined Cycle Case
with $3.00 Gas Prices
prices
Alternative Natural Gas Prices;
Simple Cycle – 2.5% Inflation
2019
2020
2020
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
$(10,000,000)
2019
– ROI NA
– Payback NA
$-
PSCO Rate Structure, DIA Rates $4.00 Gas
Payback Period -- 32.0 Years; NPV; -$ 73,331,614 at 5.0%
Return on Investm ent NA
2005
• Simple Cycle Case -$4.00 Gas Prices
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(70,000,000)
– ROI NA
– Payback NA
$(20,000,000)
$(30,000,000)
$(40,000,000)
$(50,000,000)
$(60,000,000)
$(70,000,000)
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
$(10,000,000)
2006
$-
PSCO Rate Structure, DIA Rates $5.00 Gas
Payback Period -- 32.0 Years; NPV; -$ 124,630,728 at 5.0%
Return on Investm ent NA
2005
• Combined Cycle Case
with $5.00 Gas Prices
prices
Appendix - Inputs
Assumptions – Alternative
Configurations
Assumptions – Natural Gas Prices
and Rates
Assumptions – DIA Energy Use
Assumptions – PSCO Electricity
Rates
Assumptions – PSCO Electricity
Rates
Assumptions – Alternative
Configurations
Assumptions – Alternative
Configurations
Model Structure
Economic Analysis of CHP System
for DIA - Contents
• Model Layout
– Status Quo Usage and Cost
– Status Quo Usage Components
– Natural Gas Purchases in CHP Case for
Electricity
– Natural Gas Purchases for Supplemental Firing
– Standby Costs in CHP Case
– Financial Model, Inflation, Rate of Return
Model Layout – Status Quo Usage
and Costs
Model Layout – Components of
Energy Usage
Model Layout – Components of
Energy Usage
Model Layout – Natural Gas for
Electricity of CHP
Model Layout – Supplemental
Natural Gas Purchases
Model Layout – Standby Costs