Feasibility of Wind Power Plant

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R.A.Mohan Prasanna

Feasibility study of a Wind power plant

Table of Contents
1. Introduction3

2. Assumptions 6

3. Capital requirement of the project9

4. Forecasted Profit and Loss account10

5. Forecasted Balance sheet10

6. Cash flow of the project14

7. IRR/NPV analysis17

8. Conclusions 18

9. References18

10. Appendices20

1. Introduction
After 30 years of civil war, Sri Lankan economy is one of the fasters growing economies in the world. As a country, need for electricity also in high side in relation with the economic growth. Investors from all over the world are looking for opportunities in the country while Sri Lankan government is strongly involving to develop infrastructure ground works all over the Island including highway transportation and Power generation. [pic]

Source: Energy for all, (2012). Wind Power Technology and the Potential for Application Sri Lanka is hugely depended on Hydro power and Fossil fuel power generation. With current climate changes Hydro power supply chain is not moving or the increase capacity from the Hydro power sector is minimal. On the other hand Fossil fuel is much limited resource and its prices are always not in sustainable trend pattern. Fossil fuel power generation is highly environmental risk operation. World is looking for renewable energy. As a Island, Sri Lanka is blessed with Wind power.

Sri Lanka’s wind pattern is driven by the monsoon system and as a part of Indian ocean, it is always supporting the steadiness of the wind pattern. [pic]
Source: Energy for all, (2012). Wind Power Technology and the Potential for Application

Mr. Mahipala has selected a land from Mannar and author observed it is a great location in terms of wind pattern in Sri Lanka throughout the year where South West monsoon winds are stronger than North East monsoon winds. [pic]

As we can see below, South West Monsoon winds are equally distributed throughout the day and it will be a definite benefit for undisrupted steady power generation. [pic]
Source: Energy for all, (2012). Wind Power Technology and the Potential for Application

Approximately 75% of related costs of the wind project are upfront costs and It is fairly a capital intensive project compared to conventional power generation projects. Normally 60% of the costs are due operation & maintenance costs and balance 40% is equally shared by insurance, Land, overheads. Consistent nature of wind power cost justifies the relatively higher price of wind power compared to uncertain risky future costs of conventional power generations methods of fossil fuel.

This wind power investment gives, more diversification to Mr. Mahipala’s business portfolio as he is already enjoyed his share in Apparel/ Leisure and Consumer product business.

2. Assumptions

• Conversion rate of $1= Rs. 135
• Cost of one turbine= $ 2million
• Equity providers- Mr. Mahipala- 60%, Bank of Ceylon- 40% • Inflation rate- 8%
• Barrowing interest rate- 14.5%
• Operation & Maintenance cost incensement- 9% per year

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Plant load factor-
As a norm it is consider that optimum wind speed below 25%. Due to several reasons plant would have a capacity factor unused. The capacity factor is mostly determined by the availability of wind. The annual electricity production is only 25% of

(24 hours X 365 Days X10 Mw) = 21,900Mwh.

3. Capital requirement of the project
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4. Forecasted profit and loss account

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5. Forecasted Balance sheet

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6. Cash flows

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7. IRR and NPV analysis
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8. Conclusion
As per the above...
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