geothermal power plant projects in central america - Orkustofnun

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NET INJECTION BY SOURCE (2010)INSTALLED ELECTRICITY GENERATION CAPACITY (1990 - 2010)Imports70.7 GWh1.0 %2,5002,000HydroThermalThermal3,027.5 GWh41.4%Hydro4,220.9 GWh57.7 %MW1,5001,00050001990199520002004200520062007200820092010FIGURE 7: Panama: Net injection by source in 2010;installed electricity generation capacity 1990-2010electricity, and the construction of a transmission line of 230 kV, 18,000 kilometers in length along theisthmus, which will allow the interchange of 300 MW between countries. The MER is the seventhmarket, superimposed over the six markets or existing national systems, with regional regulation, inwhich the agents of EOR (Ente Operador Regional) make international transactions of electricalenergy in the Central American region. It is expected that the SIEPAC project will begin operating in2013, expanding the potential of regional energy trade and the regional development of renewablegeneration.2.2.8 Market analysisIn El Salvador, Guatemala, Nicaragua and Panama, generation costs are determined by the sum of thecosts of energy production and the capacity of energy supply contracts in the long term (competitivebidding) and the cost of the purchasing spot market (economic dispatch based on the cost), with someleveling mechanism to mitigate the volatility of generation costs.Spot prices in wholesale markets competitive in the region increased significantly after 2004 due tosoaring bunker prices. In Honduras and Costa Rica, generation costs used to regulate retail prices werelower and more stable than in Panama, Nicaragua and El Salvador. These three countries were facedwith a tight balance between supply and demand in 2006 and 2007. The spot price increase was morepronounced as they were dispatched by less efficient generating plants and so were more expensive; asa result, the annual average spot price increased by approximately 140 USD/MWh (Lecaros et al.,2010).Due to the fact that most ofthe regulators in the regiondo not publish the prices oftheir contracts, this marketanalysis is based on historicalprices, statistics collectedfrom managers of thewholesale market of eachcountry as shown in Figure 8.Based on this data, in thisstudy an average price of 115USD/MWh in the wholesalemarket in the CentralAmerican countries wasestimated for year 2010 withan expected growth rate of5%.FIGURE 1: Central America: Annual energy prices in thewholesale market for years 1998-2010; Note: a) Costa Rica:average price paid to private geothermal generator Miravalles III.b) Honduras: projected short-term marginal costs7
2.3 Corporate taxThe Central Americancountries’ tax system isbased on the territorialityprinciple, and all standarddeductions are allowed indetermining taxable income.As shown in Figure 9, thecorporate tax rates in thesecountries are around 25%and 30% (Deloitte, 2010). Inthis analysis, 30% ascorporate tax is used.35%30%25%20%15%10%5%0%Costa RicaCentral American countries,with the exception of El FIGURE 9: Central American corporate tax income rates 2010Salvador, have a commonpractice of allowing companies to carry forward losses, although compensation rules vary from onecountry to another. Depreciation is allowed for a standard range of fixed assets and is generally on astraight line basis. Each country has different annual depreciation rates for the major groups, and themost similar standard rates are 5% for buildings, 20% for machinery, 25% for vehicles, 25% forsoftware, and 50% for other movable assets (UNCTAD, 2010).El SalvadorCorporate Income TaxGuatemalaHondurasNicaraguaPanama2.4 Tax incentives for renewable energyIn the last decade (2000-2010), Central American countries have created public incentives regardingthe development of renewable energy. In this section a summary is presented of the main laws thatsupport and promote the development of new power generation projects from renewable sources foreach country, highlighting income tax incentives and particular conditions.2.4.1 GuatemalaThe Law of Incentives for the Development of Renewable Energy Projects Decree 52-2003(Ministerio de Energía y Minas, 2003) establishes the exemption in customs duties for imports,including Value Added Tax (VAT) charges and fees on imports of machinery and teams. In addition,there is an exemption on income tax for a period of 10 years. These incentives are effective from theexact date the project begins commercial operation.2.4.2 El SalvadorThe Law of Fiscal Incentives for the Promotion of Renewable Energies in Electricity Generation(Decreto Legislativo No. 462, 2007) states that for those projects up to 20 MW, there is an exemptionfor a period of 10 years on tariffs on imports of machinery, equipment, materials and supplies for thestages of pre-investment and investment in the construction of power plants, including subtransmissionlines. There is an exemption on income tax for a period of 10 years for projects up to 10MW of capacity. For projects of 10 to 20 MW, this exemption shall be for a period of 5 years. Allincome derived from the disposal of primary Certified Emissions Reductions (CERs) are tax exempt.2.4.3 HondurasThe Incentives Act on Generation with Renewable Resources (Decreto No. 70-2007, 2007) establishesan exemption in import duties and taxes during the period of study and construction. There is anexemption in income tax, solidarity contribution, temporary tax on net assets, and those related to8
Page 1 and 2: GEOTHERMAL TRAINING PROGRAMMEHot sp
Page 3 and 4: This MSc thesis has also been publi
Page 5 and 6: ACKNOWLEDGEMENTSMy gratitude to the
Page 7 and 8: TABLE OF CONTENTSPage1. INTRODUCTIO
Page 9 and 10: PageAPPENDIX A: FINANCIAL MODEL ...
Page 12 and 13: 1. INTRODUCTIONRecent research on r
Page 14 and 15: 2. CENTRAL AMERICAN DATA2.1 Power p
Page 16 and 17: 2.2.3 HondurasThe Honduran electric
Page 20 and 21: income taxes for a period of 10 yea
Page 22 and 23: annual temperature ranges from 17 t
Page 24 and 25: egional reconnaissance in 1981ident
Page 26 and 27: 4. GEOTHERMAL ELECTRICAL POWER ASSE
Page 28 and 29: The net contribution of that power
Page 30 and 31: Introducing , = , and , = ,
Page 32 and 33: 9ProductionWellBoiler5Turbine~1046P
Page 34 and 35: TABLE 3: Parameters and boundary co
Page 36 and 37: eaches the maximum limit, and for h
Page 38 and 39: 160180140160tc vap[i], th vap[i]120
Page 40 and 41: average results, and combining them
Page 42 and 43: The base cost ( ) can be calculate
Page 44 and 45: calculation for another separator c
Page 46 and 47: mass flow rate (kg/s) on the plant
Page 48 and 49: Table 11 shows a summary of costs f
Page 50 and 51: 5.6.4 Comparison of capital costs b
Page 52 and 53: 6. FINANCIAL FEASIBILITY ASSESSMENT
Page 54 and 55: 6.2 Model structureThe financial fe
Page 56 and 57: CCF = EBITDA − ∆Working Capital
Page 58 and 59: Interest on loansFleischmann (2007)
Page 60 and 61: IRR30%25%IRR CapitalIRR Equity20%Si
Page 62 and 63: FIGURE 42: Allocation of funds for:
Page 64 and 65: 340IRR Free Cash Flow to Equity [ %
Page 66 and 67: flash technology is between 0.3 and
Page 68 and 69:
Energy Price Availability Factor O&
Page 70 and 71:
FIGURE 50: Density and cumulative p
Page 72 and 73:
In Chapter 6, Figure 44 illustrated
Page 74 and 75:
The internal rate of return is offs
Page 76 and 77:
Cengel, Y. and Tuner, R., 2005: Fun
Page 78 and 79:
IEAb, 2011: Technology roadmap: Geo
Page 80 and 81:
Salmon, J., Meurice, J., Wobus, N.,
Page 82 and 83:
APPENDIX A: SUMMARY OF FINANCIAL MO
Page 84 and 85:
APPENDIX C: INVESTMENT AND FINANCIN
Page 86 and 87:
APPENDIX E: BALANCE SHEETBALANCE SH
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