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ProForm: A Tool for Pre-Feasibility Analysis of Renewable Energy and Energy Efficiency Projects. Bill Golove WHGolove@lbl.gov Lawrence Berkeley National Laboratory Yerevan, Armenia April 19 – 23, 2004. Agenda. Introduction to ProForm and Carbon Trading

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proform a tool for pre feasibility analysis of renewable energy and energy efficiency projects

ProForm: A Tool for Pre-Feasibility Analysis of Renewable Energy and Energy Efficiency Projects

Bill Golove

WHGolove@lbl.gov

Lawrence Berkeley National Laboratory

Yerevan, Armenia

April 19 – 23, 2004

agenda
Agenda
  • Introduction to ProForm and Carbon Trading
  • Partnerships – Roles, Rights, Responsibilities
  • Analyzing projects using ProForm:

Explainations and Examples

      • Renewable Electric – Basic and Expert User
      • Cogeneration – Basic User
      • Energy Efficiency – Basic User
  • Project Analysis
  • Evaluation
major international carbon funds
Major International Carbon Funds
  • World Bank’s Prototype Carbon Fund – 29 projects, US $180 million
  • World Bank’s Community Development Carbon Fund – target size US $100 million
  • World Bank’s BioCarbon Fund – target size US $100 million
  • Dutch government – 19 projects
  • Japanese companies – 14 projects
  • Swedish government – 3 projects
  • Canadian companies – 2 projects
  • Finnish government – 2 projects
  • UK companies – 2 projects
what is proform
A computational spreadsheet tool for clean energy projects that:

Calculates basic energy and financial indicators

Quantifies emission reductions

Calculates the financial impact of the sale of carbon credits on a project

Designed to evaluate a multitude of project types

Generation, efficiency, co-generation, fuel switching, methane capture

What is ProForm?
rationale for the development of proform
Rationale for the Development of ProForm
  • Need for a common framework to conduct assessment of clean energy projects (i.e., projects with greenhouse gas reduction benefits)
  • Lack of familiarity among small entrepreneurs in developing countries with financial analysis/pro-formas
  • Lack of access among local developers to expensive project analysis software
  • Requirement for evaluation of the impact of potential revenue from carbon credits under alternative project financing arrangements (additionality)
who should use proform
Who Should Use ProForm?
  • Entrepreneurs in developing countries and EITs
  • National climate change/energy and regulatory agencies
  • Individual/multi-lateral investors and financial institutions
  • Consultants/analysts
benefits of proform
Benefits of Proform
  • Simple, transparent and precise methodology
  • Lowers project preparation costs
  • Reduces complexity and subjectivity in the process of estimating financial and environmental benefits.
  • Can be used both for preparing project proposals and for evaluating project proposals
types of projects i
Types of Projects (I)
  • Renewable energy projects that:
    • Generate and sell electricity to the grid
    • Generate and use electricity internally
  • Renewable non-electric projects that displace
    • Electricity
    • Fuel
  • Cogeneration projects
types of projects ii
Types of Projects (II)
  • Energy efficiency projects that:
    • Reduce electricity consumption
    • Reduce fuel consumption
    • Reduce electricity and fuel consumption
  • Fuel switching projects
  • Landill methane gas capture projects
pre feasibility scenario analysis
Pre-Feasibility Scenario Analysis
  • ProForm aids the user in evaluating a variety of scenarios
    • 3 scenario capability built-in
      • Values for carbon credits
      • Discount rates
    • Other financial and technical variables, such as
      • Loan terms
      • Electricity price
      • Capacity factor, etc.
results
Results
  • Financial (pre- and post-tax):
    • Net Present Value
    • Internal Rate of Return
    • Cash Flow
    • Debt Service Coverage Ratio
  • Emissions reductions:
    • C, NOx, SOx, PM
additional information
Additional Information
  • ProForm is a tool in development for a market in development
  • Financing ProForm
    • Seed money from the U.S. Department of Energy
    • Continuing development, distribution, and training funds from USAID
  • ProForm is distributed free of charge
  • Training in the use of ProForm will be offered if there is sufficient interest and funding; also customized versions
partners

Partners

Roles, Rights, and Responsibilities

types of partnerships

Financing Agencies

USAID

USDOE

Logistic Partners

NGOs

Consultants

Orientation

Endorsement Partners

Development Banks

Governmental Agencies

Multilateral Investors

Financial Institutions

Training and Distribution Partners

NGOs

Industry Assoc’s

Consultants

Individual users

Private Companies

Researchers

Consultants

Types of Partnerships
endorsement partners
Endorsement Partners
  • Accept project proposals which use ProForm in their preparation
  • Use ProForm to evaluate the project proposals received
  • Distribute ProForm from own internet site, if desired
training and distribution partners
Training and Distribution Partners
  • Distribution of ProForm to users
  • Train and provide technical assistance to users
  • Collect example project data
logistics partners
Logistics Partners
  • Establish contacts within the country or region
  • Coordinate training workshops
  • Collect example project information
individual users
Individual Users
  • Use ProForm for project preparation and analysis
  • Share project data, at their discretion
slide20
LBNL
  • Training of the trainers
  • Customizing software to meet specific needs of partners
  • Distribution of ProForm to users
minimum data requirements
Minimum Data Requirements
  • Minimum requirements workbook is available to help in preparing data for input into ProForm
  • ProForm denotes minimum required cells with an asteric

*

opening dialogue box project types i
Opening Dialogue Box – Project Types (I)
  • Renewable Electric
    • Projects that generate and sell electricity to the grid
  • Renewable Non-Electric
  • Co-Generation
    • Natural gas - single cycle
opening dialogue box project types ii
Opening Dialogue Box – Project Types (II)
  • Efficiency
    • Reduce the use of energy
    • Generate electricity for internal use
  • Fuel Switching
  • Landfill Methane Gas Capture Projects
opening dialogue box options
Opening Dialogue Box - Options
  • Biomass fuel
  • Baseline Energy types
    • Electricity
    • Fuel
    • Both
  • Source of Cogeneration
    • Steam
  • Project Developer –
    • Utility
    • Energy Services Company (ESCO)
    • End User
opening dialogue box user mode
Opening Dialogue Box - User Mode
  • Basic
    • Rapid and easy analysis
  • Expert
    • Allows user to change input values over time, for example:
      • Capacity
      • Efficiency
      • Financial elements
opening dialogue box financial analysis
Opening Dialogue Box - Financial Analysis
  • Basic
    • All revenues and costs are aggregated in to a single flow
  • Advanced
    • Allows for two different project sponsors and financial flows
proform structure

Project Identification

Financial

Energy

Environmental

Environment

Technical Information

Financial

Financial

ProForm Structure

Project Specific Data

Results

Calculations

Baseline Data

Technical Data

worksheets
Worksheets
  • Input Data: “I”
  • Calculations: “_Calc”
    • “Base” Baseline
    • “RenE, RenN, Eff, CoGen, FuelSwitch, Landfill” Project technology
    • “Fin” Finances
    • “GHG” Greenhouse gas emissions
    • “Results”
  • Appendix
    • Approximate global values
    • Conversion Factors
cells and protection
Cells and Protection
  • Yellow cells – Data entry
  • Grey Cells – Calculations
    • Can only be changed in expert user mode
  • Purple Cells – Results
example projects
Example Projects
  • Renewable Electric
    • Small Hydroelectric– Expert User
  • Cogeneration
    • District Heating – Basic User
  • Efficiency
    • Cement Production – Basic User
hydroelectric dam
Hydroelectric Dam
  • 4 MW
  • 68% Capacity Factor or 24000 MWh / year
  • 25 year
  • $6.75 million
hydroelectric dam1
Hydroelectric Dam

Expert User – “Fin_Calcs”

  • Change in price received for electricity
    • years 1 to 10: 26 Drams/kWh
    • years 11 to 25: 29 Drams/kWh
  • Increasing operation and mantainance costs
    • 5% each year
hydroelectric dam2
Hydroelectric Dam

Expert User – “FinAnal”

  • Instead of equal installment loan payments:

*Thousands of dollars, 9% interest

hydroelectric dam3
Hydroelectric Dam

Expert User – “FinAnal”

  • Only depreciate a portion of total costs
    • $6,015,656
  • Sale of potential
    • $280,000 /year 10
    • $336,000 /year thereafter
district heating cogeneration
District Heating Cogeneration
  • 90 MW Yerevan District Heating Boiler to be replaced with Combined Heat and Power Plant.
  • Electricity generated displaces grid natural gas.
  • Capacity factor =5000 hours/8760 hours per year = 57%
cement efficiency project
Existing Equipment

950 tons clinker/day

3.4 GJ fuel oil / ton clinker

133 kWh/ton clinker

80% capacity

New Equipment

2200 tons clinker/day

2.8 GJ fuel oil / ton clinker

96 kWh/tons clinker

80% capacity

Cement Efficiency Project
cement efficiency project1
Cement Efficiency Project

Calculating the Base Line

  • Existing Kiln:

3.4 GJ/ton * 950 ton/day * 365 days/year * 0.8 = 943160 GJ/year

  • New Kiln:

2.8 GJ/ton * 2200 ton/day * 365 day/ year * 0.8 = 1798720 GJ/year

The new kiln uses more energy than the existing one. But it is much bigger!

cement efficiency project2
Cement Efficiency Project

Calculating the Baseline

  • Base Line Kiln:

3.4 GJ/ton * 950 ton/day * 365 days/year * 0.8 * 2200/950 = 2184160GJ/year

1798720 < 2184160

  • To produce the same quantity of cement, the new kiln is more efficient!
cement efficiency project3
Cement Efficiency Project

Displaced Investment

  • Comparing units with the same level of service

New Equipment: 2200 tons/day

Existing Equipment: - 950 tons/day

Displaced Investment: 1250 tons/day

  • Displaced Investment = Cost of baseline equipment that would be needed to produce 1250 more tons of cement each day – distinguish between cost to equalize service levels and cost to achieve improved energy efficiency
proform web site
ProForm Web Site
  • ProForm version 4.0 is distributed free of charge at
    • http://poet.lbl.gov/Proform
  • Other tools and related publications are available at
    • http://eetd.lbl.gov/ea/EA_C_I.html