geothermal power plant projects in central america - Orkustofnun

IRR30%25%IRR CapitalIRR Equity20%Single Flash CycleTemperature Resource: 240°CMass Flow : 300 kg/sNet power Output : 27.7 MW15%10%5%0%1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33YearIRR30%25%20%Single Flash CycleTemperature Resource: 240°CMass Flow : 600 kg/sNet power Output : 55.5 MW15%10%5%0%1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33YearFIGURE 40: IRRs for project and equity for: a) Scenario 1 (27.7 MW): 300 kg/s and 240°C;b) Scenario 2 (55.5 MW): 600 kg/s and 240°CThe IRR graph could help to define the horizon plan needed for consideration of a viable project. Asshown in Figure 40, IRR rises rapidly in the beginning, then slows down and in the end remains thesame year after year. This planning horizon analysis also can be done using the NPV charts, becausethe IRR is a related concept to NPV; IRR is defined as the discount rate for when NPV is equal tozero.6.4.3 Accumulated Net Present ValueThe accumulated NPVs are shown in Figure 41. In this analysis, future cash flows are discounted byappropriate discount rates. Discounting the CCFs with the MARR for a project reflects the NPV of theinvestment at the firm level and discounting the FCFEs with the MARR of equity reflects the NPV ofthe investment at the equity level.As seen in Figure 40, a large size project will first reach a positive NPV, and indicates that this projecthas a lower risk. The NPV of CCF and NPV of FCFE are positive over the planning horizon for thetwo different sized developments. In both geothermal developments the loan received, which is for70% of the investment cost and working capital, is paid over 10 years after operations begin, but thetwo geothermal developments meet the return requirement at different periods of time. The necessarypayback period for recovering investments is lower for the project than for the equity investors.49