ProForm: A Tool for PreFeasibility Analysis of Renewable Energy and Energy Efficiency Projects

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ProForm A Tool for Pre-Feasibility Analysis of
Renewable Energy and Energy Efficiency Projects

• Bill Golove
• WHGolove_at_lbl.gov
• Lawrence Berkeley National Laboratory
• Yerevan, Armenia
• April 19 23, 2004

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Agenda

• Introduction to ProForm and Carbon Trading
• Partnerships Roles, Rights, Responsibilities
• Analyzing projects using ProForm
• Explainations and Examples
• Renewable Electric Basic and Expert User
• Cogeneration Basic User
• Energy Efficiency Basic User
• Project Analysis
• Evaluation

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Major International Carbon Funds

• World Banks Prototype Carbon Fund 29 projects,
  US 180 million
• World Banks Community Development Carbon Fund
  target size US 100 million
• World Banks BioCarbon Fund target size US 100
  million
• Dutch government 19 projects
• Japanese companies 14 projects
• Swedish government 3 projects
• Canadian companies 2 projects
• Finnish government 2 projects
• UK companies 2 projects

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I. Introduction to Proform
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What is ProForm?

• A computational spreadsheet tool for clean energy
  projects that
• Calculates basic energy and financial indicators
• Quantifies emission reductions
• Calculates the financial impact of the sale of
  carbon credits on a project

• Designed to evaluate a multitude of project types
• Generation, efficiency, co-generation, fuel
  switching, methane capture

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Rationale for the Development of ProForm

• Need for a common framework to conduct assessment
  of clean energy projects (i.e., projects with
  greenhouse gas reduction benefits)
• Lack of familiarity among small entrepreneurs in
  developing countries with financial
  analysis/pro-formas
• Lack of access among local developers to
  expensive project analysis software
• Requirement for evaluation of the impact of
  potential revenue from carbon credits under
  alternative project financing arrangements
  (additionality)

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Who Should Use ProForm?

• Entrepreneurs in developing countries and EITs
• National climate change/energy and regulatory
  agencies
• Individual/multi-lateral investors and financial
  institutions
• Consultants/analysts

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Benefits of Proform

• Simple, transparent and precise methodology
• Lowers project preparation costs
• Reduces complexity and subjectivity in the
  process of estimating financial and environmental
  benefits.
• Can be used both for preparing project proposals
  and for evaluating project proposals

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Types of Projects (I)

• Renewable energy projects that
• Generate and sell electricity to the grid
• Generate and use electricity internally
• Renewable non-electric projects that displace
• Electricity
• Fuel
• Cogeneration projects

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Types of Projects (II)

• Energy efficiency projects that
• Reduce electricity consumption
• Reduce fuel consumption
• Reduce electricity and fuel consumption
• Fuel switching projects
• Landill methane gas capture projects

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Pre-Feasibility Scenario Analysis

• ProForm aids the user in evaluating a variety of
  scenarios
• 3 scenario capability built-in
• Values for carbon credits
• Discount rates
• Other financial and technical variables, such as
• Loan terms
• Electricity price
• Capacity factor, etc.

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Results

• Financial (pre- and post-tax)
• Net Present Value
• Internal Rate of Return
• Cash Flow
• Debt Service Coverage Ratio

• Emissions reductions
• C, NOx, SOx, PM

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Additional Information

• ProForm is a tool in development for a market in
  development
• Financing ProForm
• Seed money from the U.S. Department of Energy
• Continuing development, distribution, and
  training funds from USAID
• ProForm is distributed free of charge
• Training in the use of ProForm will be offered if
  there is sufficient interest and funding also
  customized versions

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Partners

• Roles, Rights, and Responsibilities

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Types of Partnerships
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Endorsement Partners

• Accept project proposals which use ProForm in
  their preparation
• Use ProForm to evaluate the project proposals
  received
• Distribute ProForm from own internet site, if
  desired

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Training and Distribution Partners

• Distribution of ProForm to users

• Train and provide technical assistance to users
• Collect example project data

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Logistics Partners

• Establish contacts within the country or region
• Coordinate training workshops
• Collect example project information

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Individual Users

• Use ProForm for project preparation and analysis
• Share project data, at their discretion

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LBNL

• Training of the trainers
• Customizing software to meet specific needs of
  partners
• Distribution of ProForm to users

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III. Analyzing Projects Explanations and
Examples
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Minimum Data Requirements

• Minimum requirements workbook is available to
  help in preparing data for input into ProForm
• ProForm denotes minimum required cells with an
  asteric

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Opening Dialogue Box Project Types (I)

• Renewable Electric
• Projects that generate and sell electricity to
  the grid
• Renewable Non-Electric
• Co-Generation
• Natural gas - single cycle

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Opening Dialogue Box Project Types (II)

• Efficiency
• Reduce the use of energy
• Generate electricity for internal use
• Fuel Switching
• Landfill Methane Gas Capture Projects

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Opening Dialogue Box - Options

• Biomass fuel
• Baseline Energy types
• Electricity
• Fuel
• Both
• Source of Cogeneration
• Steam
• Project Developer
• Utility
• Energy Services Company (ESCO)
• End User

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Opening Dialogue Box - User Mode

• Basic
• Rapid and easy analysis
• Expert
• Allows user to change input values over time, for
  example
• Capacity
• Efficiency
• Financial elements

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Opening Dialogue Box - Financial Analysis

• Basic
• All revenues and costs are aggregated in to a
  single flow
• Advanced
• Allows for two different project sponsors and
  financial flows

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ProForm Structure

Project Specific Data
Results
Calculations
Baseline Data
Technical Data
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Worksheets

• Input Data I
• Calculations _Calc
• Base Baseline
• RenE, RenN, Eff, CoGen, FuelSwitch, Landfill
  Project technology
• Fin Finances
• GHG Greenhouse gas emissions
• Results
• Appendix
• Approximate global values
• Conversion Factors

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Cells and Protection

• Yellow cells Data entry
• Grey Cells Calculations
• Can only be changed in expert user mode
• Purple Cells Results

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Three Scenarios of CER Price
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Example Projects

• Renewable Electric
• Small Hydroelectric Expert User
• Cogeneration
• District Heating Basic User
• Efficiency
• Cement Production Basic User

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Hydroelectric Dam

• 4 MW
• 68 Capacity Factor or 24000 MWh / year
• 25 year
• 6.75 million

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Hydroelectric Dam
Expert User Fin_Calcs

• Change in price received for electricity
• years 1 to 10 26 Drams/kWh
• years 11 to 25 29 Drams/kWh
• Increasing operation and mantainance costs
• 5 each year

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Hydroelectric Dam
Expert User FinAnal

• Instead of equal installment loan payments

Thousands of dollars, 9 interest
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Hydroelectric Dam
Expert User FinAnal

• Only depreciate a portion of total costs
• 6,015,656
• Sale of potential
• 280,000 /year 10
• 336,000 /year thereafter

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District Heating Cogeneration

• 90 MW Yerevan District Heating Boiler to be
  replaced with Combined Heat and Power Plant.
• Electricity generated displaces grid natural gas.
• Capacity factor 5000 hours/8760 hours per year
  57

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Cement Efficiency Project

• Existing Equipment
• 950 tons clinker/day
• 3.4 GJ fuel oil / ton clinker
• 133 kWh/ton clinker
• 80 capacity

• New Equipment
• 2200 tons clinker/day
• 2.8 GJ fuel oil / ton clinker
• 96 kWh/tons clinker
• 80 capacity

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Cement Efficiency Project
Calculating the Base Line

• Existing Kiln
• 3.4 GJ/ton 950 ton/day 365 days/year 0.8
  943160 GJ/year
• New Kiln
• 2.8 GJ/ton 2200 ton/day 365 day/ year 0.8
  1798720 GJ/year

The new kiln uses more energy than the existing
one. But it is much bigger!
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Cement Efficiency Project
Calculating the Baseline

• Base Line Kiln
• 3.4 GJ/ton 950 ton/day 365 days/year 0.8
  2200/950 2184160 GJ/year
• 1798720 lt 2184160
• To produce the same quantity of cement, the new
  kiln is more efficient!

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Cement Efficiency Project
Displaced Investment

• Comparing units with the same level of service
• New Equipment 2200 tons/day
• Existing Equipment - 950 tons/day
• Displaced Investment 1250 tons/day
• Displaced Investment Cost of baseline equipment
  that would be needed to produce 1250 more tons of
  cement each day distinguish between cost to
  equalize service levels and cost to achieve
  improved energy efficiency

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IV. Evaluation
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ProForm Web Site

• ProForm version 4.0 is distributed free of charge
  at
• http//poet.lbl.gov/Proform
• Other tools and related publications are
  available at
• http//eetd.lbl.gov/ea/EA_C_I.html