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ProForm: A Tool for Pre-Feasibility Analysis of Renewable Energy and Energy Efficiency Projects. Bill Golove [email protected] 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

[email protected]

Lawrence Berkeley National Laboratory

Yerevan, Armenia

April 19 – 23, 2004


Agenda
Agenda Energy and Energy Efficiency Projects

  • 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 Energy and Energy Efficiency Projects

    • 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


    I introduction to proform

    I. Introduction to Proform Energy and Energy Efficiency 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 that:

    • 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? that:

    • 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 that:

    • 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) that:

    • 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) that:

    • 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 that:

    • 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 that:

    • 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 that:

    • 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 that:

    Roles, Rights, and Responsibilities


    Types of partnerships

    Financing Agencies that:

    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 that:

    • 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 that:

    • Distribution of ProForm to users

    • Train and provide technical assistance to users

    • Collect example project data


    Logistics partners
    Logistics Partners that:

    • Establish contacts within the country or region

    • Coordinate training workshops

    • Collect example project information


    Individual users
    Individual Users that:

    • Use ProForm for project preparation and analysis

    • Share project data, at their discretion


    LBNL that:

    • Training of the trainers

    • Customizing software to meet specific needs of partners

    • Distribution of ProForm to users



    Minimum data requirements
    Minimum Data Requirements that:

    • 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) that:

    • 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) that:

    • 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 that:

    • 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 that:

    • 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 that:

    • 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 that:

    Financial

    Energy

    Environmental

    Environment

    Technical Information

    Financial

    Financial

    ProForm Structure

    Project Specific Data

    Results

    Calculations

    Baseline Data

    Technical Data


    Worksheets
    Worksheets that:

    • 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 that:

    • Yellow cells – Data entry

    • Grey Cells – Calculations

      • Can only be changed in expert user mode

    • Purple Cells – Results



    Example projects
    Example Projects that:

    • Renewable Electric

      • Small Hydroelectric– Expert User

    • Cogeneration

      • District Heating – Basic User

    • Efficiency

      • Cement Production – Basic User


    Hydroelectric dam
    Hydroelectric Dam that:

    • 4 MW

    • 68% Capacity Factor or 24000 MWh / year

    • 25 year

    • $6.75 million


    Hydroelectric dam1
    Hydroelectric Dam that:

    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 that:

    Expert User – “FinAnal”

    • Instead of equal installment loan payments:

    *Thousands of dollars, 9% interest


    Hydroelectric dam3
    Hydroelectric Dam that:

    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 that:

    • 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 that:

    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 that:

    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 that:

    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 that:

    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 that:

    • 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


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