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Pro Formas for On Site Power Generation

Pro Formas for On Site Power Generation

Pro Formas for On Site Power Generation

Can someone assist me with some guidance on Pro Forma calculations. I am to evaluate the "economics" of a Natural Gas power plant. This is what I think I need to do:

a) Calculate my overall investment for ths plant ( Design,Procurement and Construction costs ).I CAN GET THESE COSTS.

b) Electrical Power and Gas rates by the Utility. Including future rate changes.I CAN THESE COSTS.

c) Associated costs for maintenance and operation. UNKNOWN VALUE TO ME.

d) Depreciation Costs. UNKNOWN TO ME.

Can someone help me with this type of calculations, is there standard spreadsheets for this type of calc. Any help is appreciated.

RE: Pro Formas for On Site Power Generation

In this short forum the maintenance and/or deprediation costs can not be determined. It will all hinge on the size, type, and/or site application. Reciprocating or turbine plants? Load demand, single or multiple units, etc. If you have narrowed your search to a specific unit(s) the generator manufacturer should be able to answer your questions.

RE: Pro Formas for On Site Power Generation

Suggestion: Probably, the fastest way to find out will be to see a similar recent project performed by some one specialized in this area. The specialist will have all those figures available as a rule of the thumb, which in some instances suffices. The owner of such power plants could also provide useful information in terms of maintenance and operation cost and depreciation costs.

RE: Pro Formas for On Site Power Generation

The vendor of the gas turbine can tell you what the maintenance requirements of the unit are.  This would include lubricants, burner injector replacement schedule and cost.  The vendor will have all these cost.  If they are reluctant to give them to you it is probably because they are not as good as their competition.  In todays market they may not care to give them to you because it is a sellers market. If they give your the frequency and material cost apply manhours to each task and put labor dollars on it.
It's smart to have some maintenance done by the vendor or a specialized contractor.
Be carefull, I have never had a vendor lie to me %^).

Depreciation depends on the schedule you use.
Be sure to have all the cost associated with your project captured and applied to the capitol cost of the project.  This would include engineering. construction cost,  consultants, your new computer, your new software etc.  Get every cost you can into that bucket.
Any equipment that you can make protable can be depreciated at a faster rate than fixed equipment.  Switchgear and control rooms in portable buildings depreciate faster than "permenant" buildings.  If you need a diesel generator for black starts get one on skids or a trailer.
The way you depreciate the equipment will determine how much depreciation cost offset real earnings.  Your company probably has a schedule they are now useing.  I don't think the IRS will let you change from project to project without justifing it.
Depreciation is not a real cost, that is you don't have to send someone a check for it every month. It is the initial cost of the project ( that is why I recomment you put everthing you can in that cost) spread over the life of the asset.  The rate you spread the cost depends on the depreciation schedule you use.  If its a $10,000,000 project with a 10 year life you can deduct $1,000,000 a year using straight line depreciation.  If you use sum of the years scedule you can deduct 10/55 of $10,000,000 the first year and 9/55 of $10,000,000 the second year.  Double declining ballance is the fastest way and gives you more up front deductions.
Depreciation cost offset earnings.  Get a proforma income statement and try the numbers to get a feel for depreciation cost.  Its usually best to get an accelerated depreciation rate.

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