Manuscript - Financing Modeling of Renewable Energy Projects

KPI of Renewable Projects - 2
3. Capacity Factor
• The major risk of renewable projects after they are built is the question of how
much they will operate or what is the capacity factor
• For conventional projects known as IPP’s capacity factor is not a big risk because
the capacity factor is controlled by the entity that buys the power. Since the
entity controls the power, it must take the capacity factor risk.
• For wind projects, consultants make estimates of the capacity factor which have
sometimes not been very good. Consultants make forecasts of the probability
that the capacity factor will be lower than a given number. For example if the
probability that the capacity factor will be above 20% is 90%, this capacity factor
is called the P90 capacity factor.
• For solar projects, the capacity factor is less of a risk because there is less
variability for changes in sunlight and there is less fluctuation in the amount of
power that comes from the sun.
Energy yield measurement
the result of an energy yield prediction in term of an Annual Energy Production (AEP) is called
the P50. The probability of reaching a higher or lower AEP is 50:50. P75 is the AEP which is
reached with a probability of 75%. The risk that an AEP of P90 is not reached is 10%. The P90
value is currently being used in analysis of these projects.
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