PREFEASIBILITY STUDIES GUIDELINES - Energistyrelsen
PREFEASIBILITYSTUDIES GUIDELINESMethodology overview on how toconduct a prefeasibility assessment ofrenewable power generation technologies
PROJ EC TS MAT URES OV ER FOU R PH A S ES ; F RO M I D EA ,CO NCEPT A ND B U SI NESS D E VELOPMENT TO E XECUTI mentProjectexecutionThe idea development phaseconsists of brainstorming andidea generation activities togive the project a morerounded shape.The concept developmentphase usually consists of twostages and related studies:i. a prefeasibility study (PFS)ii. a feasibility study (FS).The business developmentphase usually consists of twostagesi. a validation stageii. a preparation stageThe main purpose of thisphase is to flesh out selectedbusiness ideas and structurethe rest of the project.The PSF is a rougher version ofa FS. The purpose of a PFS is todiscard unattractive ideas andchoose the best among many.The best feasible idea isvalidated with detailedanalyses of design andoperations. Sourcing ofpermits and licenses follows.The project execution phaseentails construction andinstallation of the plant, plus anyother civil work needed for theproject operations.The number of possible projects shrinks during the project development phase, as different options are assessed. One (or a subset) of initial ideas will go to execution.Final Investment Decision (FID)Source: AACE International recommended practices; Ea Energy Analyses and Viegand Maagoe analysis.2
T H E CONCEPT DE VELOPMENT PH A S E U S UALLY CO NS I STSO F A P R E FEASI BI LI TY ST UDY A ND A F EA SI BI LI TY ST pmentProjectexecutionThe concept development phase usually consists of two stages and related studies; a prefeasibility stageand study (PFS) and a feasibility stage and study (FS).PrefeasibilitystudyvsFeasibility studyScopeA prefeasibility study scans a series of options and determinesthe best one in the set. The feasibility study analyzes in depththe best solution from the prefeasibility phase.UncertaintyUncertainty in the prefeasibility study is often much higherthan for the feasibility study, e.g., -35%to 65% for PFS, and -22% to 35% for FS for Capital Cost.FinancingFinancial security is usually not mandatory for a PFS (though apreliminary assessment is generally made), whereas financialbankability must be ensured at the end of the FS.Source: AACE International recommended practices; Ea Energy Analyses and Viegand Maagoe analysis.3
PR E FEA SI BI LI TY ST UDI ES A R E S C R EENI NGS T H ATI DENTI FY T H E B EST F EASI BLE OPT I ON( S ) O U T O F A S E TPrefeasibilitystudyA prefeasibility study is rough screening aiming at identifying the most promising idea(s) and discard the unattractive options. This reduces the number ofoptions that are chosen to proceed with a more detailed feasibility study and eventually with business development, ultimately saving time and money. Often, thepre-feasibility study returns only one most promising option.The assessment of the business idea has different focuses: technical, regulatory, environmental, economic and financial aspects are analysed. A pre-feasibilitystudy is a preliminary systematic assessment of all critical elements of the project – from technologies and costs to environmental and social impacts.Questions to be answered in a pre-feasibility study include: Is the expected revenue enough to proceed with evaluating the project more in depth? Are there any regulatory issues of decisive importance for the project? Is it economically (and financially) worthwhile to go further with this idea? What is the project’s expected environmental and social impact? What are the risks and uncertainties connected to the idea?Usually, a feasibility study concerns the analysis of an individual project only, normally with well-defined boundaries. The whole energy system is usually assumedas given and thus related data can be used as input to the analysis.Source: Ea Energy Analyses and Viegand Maagoe analysis.4
THE 8 STEPS OF A PREFEASIBILITY STUDYThe content and topics of a prefeasibility study can be broken down in 8 steps. The last 3 steps build on the project details analysed in the first 5 steps.1Background & scopeScope of the study, investment context, casedescriptions, power system and stakeholderoverview.6Business caseEconomic attractiveness for the investor (NPV, IRR.), robustnessof the case (sensitivity analyses). Rough financial analysis.2Revenue streamsRevenue sources, markets, support schemes ortariffs, other important regulatory aspects73Resource evaluationSourcing of fuel and fuel price (e.g. biomass),assessment of natural resources and expectedenergy yieldFinancial & technicalkey figuresEstimation of CAPEX, OPEX,technical parameters (efficiency, lifetime)Environmental & social aspectsEvaluation of the potential impacts on the area’s environmentand other social implications.45Project size &restrictionsGrid and system perspective, physical planningissues, space requirements, other relevant barriersSource: Ea Energy Analyses and Viegand Maagoe analysis.8Risk assessmentAssessment of project risks and potential mitigation factors.5
DETAILED STEPSDescription of each stepof a prefeasibility study6
1BACKGROUND & SCOPEBackground &scopeThe outset of a prefeasibility study should introduce the case study and shed light on the project context, touching on:RevenuestreamsResourceevaluationLocationPower system contextInfrastructure and logisticsGeography, weather,demographicsSystem description, annual demand andgeneration, installed capacity, futureprojectionsPorts, roads, availability of services, gridinfrastructure (strength of the grid atconnection point)Financial & technicalkey figuresProject size &restrictionsBusinesscaseEnvironmental &social aspectsPolitical contextRegulationStakeholdersRE and other policy targets, investmentlandscape, political stabilityKey regulation in place and how itaffects the projectSystem operators, off-takers,governmental bodies, local population,environmental groupsRiskassessmentTo the Business CaseEvaluation of project boundaries and energy system considerationsProject boundaries need to be defined at the project’s outset. This approach clearly states to which extenttechnical, economic and environmental aspects are considered. Project boundaries can differ across themes.For example, cost figures might concern only the facility under study (up to the grid connection point) butenvironmental studies can extend to larger areas impacted by the project.Source: Ea Energy Analyses and Viegand Maagoe analysis. Parameters affecting businessrobustness (systemdevelopment, regulation,investment landscape etc.). Cost of capital, financialenvironment.7
2REVENUE STREAMBackground &scopeOne of the most important aspects of a prefeasibility study is understanding the source of revenue for the project. The main ones are:Merchant project – power marketsVertically integrated systemExisting Subsidy SchemesNeed to collect information on historicalpower prices and make a projection offuture power prices, or negotiate a PPAwith off-takersNeed to collect information on averagegeneration cost in the system and currentprocurement regulation, assess potentialoff-taker of PPAAnalyse subsidy scheme, includingduration, remuneration, contractualconditions, taxation and risksRevenuestreamsResourceevaluationFinancial & technicalkey figuresProject size &restrictionsBusinesscaseRevenues can also be stacked, i.e., they can be sourced from different support schemes, agreements and/or markets.Environmental &social aspectsRiskassessmentOther factors to consider include:Currency denomination (local vs international), taxation level, inflation index, possible local content requirements,other potential revenue stream (e.g. sale of process heat, residues, by-products)To the Business CaseEvaluation of future power demand and/or power pricesIt is important to assess whether the revenue stream is stable over the years. This would involve an estimation of, for instance, thedevelopment in future power prices (if in a power market context) or the risk of a stagnation of power demand and related risk ofovercapacity in the system, which could reduce the utilization of the power plant under investigation.Both yearly demand projections and load profiles are key aspects to be considered in relation to power demand, especially innon-hedged contexts. For merchant projects, the average power price, as well as its hourly distribution, should be considered.Official projections by system operators can be used and uncertainities assessed in relation to the project size.Source: Ea Energy Analyses and Viegand Maagoe analysis. Quantified revenue sourcesfor the entire project lifetimePower price(USD/kWh)Demand(TWh)year Stability of revenue sourcesover time to assessrobustness of the businesscase (including outages,maintenance needs, demandprojections etc.)8
3RESOURCE EVALUATIONBackground &scopeRevenuestreamsRE mappingTools like GIS are good for detailed mapping of wind/solar resource, hydro catchments, as well as forestry/biomass resource.At a prefeasibility stage, simpler tools like available resource maps or online databases are usually sufficient.For biomass, it is important to not only map the potential resource, but also interview potential fuel suppliersExample of mapping tools:Global Solar Atlas (include a tool for estimation of PV production)Global Wind Atlas (include an energy yield calculator)Google EarthResourceevaluationFinancial & technicalkey figuresProject size &restrictionsBusinesscaseEnvironmental &social aspectsRiskassessmentTo the Business Case Potential annual powergeneration, expressed as fullload hours or capacity factor(incl. uncertainty) Total avaiability and price offeedstock for biomass andbiogasSource: Ea Energy Analyses; Global Solar Atlas; Global Wind Atlas; Ea Energy Analyses and Viegand Maagoe analysis.9
RESOURCE EVALUATIONEvaluationparameterTechnology3Background &scopeRevenuestreamsWind powerSolar PV plantBioenergy powerHydro powerResourceevaluationGeothermal powerFinancial & technicalkey figuresPower generationsource/fuelWindPotential forpower generationdependencyDistribution of windspeeds at site,preferably overmultiple yearsAnnual powergenerationSunOrganic waste fromplants and animalsWaterGlobal HorizontalIrradiation at site(GHI), preferably overmultiple yearsFeedstock (fuel)availability, includingquality of feedstockFalling water havingcertain head and flowrate, preferably overmultiple yearsWell conditions(temperature andmaterial makeup ofcrust)Wind speeddistribution combinedwith power curveProjections for solarirradiation combinedwith technicalconditionsPlant efficiency andavailability (outages,maintenance,feedstock etc.)Turbine efficiency,water inflow andavailability (outages,maintenance, wet/dryyears), environmentalrestrictionsPlant efficiency andavailability (outages,maintenance etc.)Fuel priceNoneNonePrice of feedstock andtransportation costNoneNoneAvailablesoftwareWindPro, WaSPGlobal Wind AtlasPVsim, Pvgis,Global Solar AtlasSource: NEC, BPPT Engineering, Ea Energy Analyses and Danish Energy Agency; Ea Energy Analyses and Viegand Maagoe analysis.Thermal energy withinEarth’s crustProject size &restrictionsBusinesscaseEnvironmental &social aspectsRiskassessment10
3RESOURCE EVALUATIONDistribution (%) of wind speeds (m/s)at locationBackground &scopeWind speed (m/s) turbine power(MW) curveAnnual power generation ncial & technicalkey figuresPower(MW)Share %Wind Speed (m/s)Wind Speed (m/s)Total annualpower generation(MWh) of turbineProject size &restrictionsBusinesscaseEnvironmental &social aspectsRiskassessmentDetermine feedstock availabilityBioenergypowerGiven location, prices and capacity Determine the type of biomassDetermine potential of the available feedstockMapping of the available feedstockDetermine the optimal location and size(capital cost vs. transport) Determine a reasonable price for biomassSource: Ea Energy Analyses and Viegand Maagoe analysis.Total potentialcapacity (MW)OptimallocationFeedstockpriceTotal amountof biomassHeating valueof biomass11
4KEY TECHNOLOGY AND FINANCIAL FIGURESTechnology figuresFinancial figures Typical capacity of power plants (MW)Technical lifetime (years)Plant availability, outages (%, days)Efficiency (Condensing and CHP, where appropriate) (%)Space requirement (m2/MW)Capacity factor ranges (%)Other technical info (e.g., power curve for wind, performance ratiofor PV) relevant for the project purpose and expected operationsRevenuestreamsResourceevaluationCapital cost (CAPEX and DEVEX) (USD/MW)Operation and maintenance cost (OPEX) (USD/MW, USD/MWh)Weighted average cost of capital (WACC) (%)Corporate tax rate (%)Depreciation rate and amortization approach, if relevantInflation rate (%)Economic lifetime of project (years)Financial & technicalkey figuresProject size &restrictionsBusinesscaseEnvironmental &social aspectsRiskassessmentUncertaintyAt the PFS stage of the project development, a large amount of parameters are characterized by a substnatial level ofuncertainty. In the business case analysis, it is important to understand the impact of the change in key parameters (e.g.CAPEX, WACC, lifetime) on the economical feasibility of the project. It is therefore very important to include uncertaintyranges on as many figures as possible, to allow for detailed sensitivity analyses.To the Business Case Technology estimates for theproject lifetimeSources for technologicaland financial figuresIn PFS, the main sources can includeexisting studies in the literature andaudits with industry experts andrelevant stakeholdersBackground &scope Financial figures for theproject lifetimeLiteratureSource: Ea Energy Analyses and Viegand Maagoe esInterviews withmanufacturers Uncertainty ranges for asmany figures as possible12
4KEY TECHNOLOGY AND FINANCIAL FIGURESCapital Expenditures (CAPEX)CAPEX breakdown (%)In most energy projects, especially capital-intensive ones such as PV andwind, CAPEX are the most important cost figure and thus are key todetermining the feasibility of the project. CAPEX includes alsodevelopment expenditures (DEVEX) in this guide.DEVEXTo be considered when defining CAPEX:CAPEX ial & technicalkey figuresSoft costsProject size &restrictionsBusinesscaseInclude each CAPEX component Background &scopePre-construction costs (DEVEX), such as development andplanning, land acquisition, permitting and logistics and soforth, which occur before the Final Investment Decision (FID)CAPEX breakdown example (%)DEVEXConstruction costs, which comprise equipment, gridconnection costs, civil works etc. (occurring after the FID)Civil workOther soft expenditures such as financing, overhead costs andeventual decommissioning costsInstallationConsider cost changes overtime and installation date, especially fortechnologies whose costs evolve quickly like PVConsider distance to the grid and cost of connection, includingevaluation of regulation on the matter (e.g., does the developer payshallow or deep connection costs?)Estimate the uncertainty, which can be used to test the caserobustnessEnvironmental &social aspectsFoundationWindpowerRiskassessmentGrid connectionRotorNacelleTowerLand acquisitionLogisticsSoft costsCAPEXSource: KPMG, Danish Embassy in Jakarta, Danish Energy Agency; Ea Energy Analyses and Viegand Maagoe analysis13
5PROJECT SIZE & SITING: SYSTEM AND GRIDEach technology has a list of considerations for determining a first estimation of the optimal site and size of a project, which will be finally determinedin the FS.Background &scopeRevenuestreamsResourceevaluationPowerplant sizingLocationconsiderationsGridintegrationWind powerSolar PV plantBioenergy powerHydro powerGeothermal powerTurbine rating andnumber of turbinesSurface area of panelsTotal availability offeedstockSize of reservoir orriver flow rateSize of wellWind resourcedistribution, spacelimitations, obstaclesthat can disruptairflow and visualimpact on landscapeNon-dispatchable –weather dependent,considerations onsecurity of supply andlimits of gridintegrationSpace limitations,shading between rowsand surface slope ofthe siteNon-dispatchable –weather dependent,considerations onsecurity of supply andlimits of gridintegrationTrade off for distance:capital cost (lower forlarger project) vstransport cost (lowerfor small projects),alternative uses offeedstockWater reservoirs orrivers, local water life,environmentalrestrictions on use ofwaterDispatchable – plantscan be ramped up anddown, considerationson security of supplyDispatchable – rapidramp rates and largeramp ranges,considerations onsecurity of supplyFinancial & technicalkey figuresProject size &restrictionsBusinesscaseTemperature of crust,risk of mudslidesduring drillingEnvironmentalaspectsRiskassessmentTo the Business CaseSource: NEC, BPPT Engineering, Ea Energy Analyses and Danish Energy Agency; Ea Energy Analyses and Viegand Maagoe analysis.Dispatchable – besteconomical case asbase load (flexibilityincreases costs),considerations onsecurity of supply Expected central estimate forproject size Range of potential projectsizes for eventual sensitivityanalysis14
6BUSINESS CASE: INPUTS FOR BUSINESS CASE6321Background & scopeRevenue streams4Resource evaluationFinancial & technicalkey figuresBackground &scopeRevenuestreams5Project size &restrictionsResourceevaluationFinancial & technicalkey figuresFrom studyParameters affectingbusiness robustness(system development,regulation, investmentlandscape etc.).Cost of capital, financialenvironment.Input to Business caseWACCCAPEXFrom studyQuantified revenuesources for the entireproject lifetimeStability of revenuesources over time toassess robustness of thebusiness case (includingoutages, maintenanceneeds, demand projectionsetc.)Input to Business caseRevenue over timeDemandOutageSource: Ea Energy Analyses and Viegand Maagoe analysis.From studyPotential annual powergeneration, expressed asfull load hours or capacityfactor (incl. uncertainty)Total availability and priceof feedstock for biomassand biogasInput to Business caseGenerationFeed stock pricePotential capacityFrom studyTechnology estimates forthe project lifetimeFinancial figures for theproject lifetimeFrom studyExpected central estimatefor project sizeRange of potential projectsizes for eventualsensitivity analysisUncertainty ranges for asmany figures as possibleInput to Business caseCAPEX and OPEXWACCEfficiencyLifetimeOutageLand requirementProject size ssessmentInput to Business casePotential capacityLand requirement15
6BUSINESS CASE: METHODDiscounted Cash Flow (DCF) method Cash flows in the earlier periods are weighted higher than cashflows in the later periods𝟏 Achieved with the discount factor:𝒕Background &scopeDiscounted Cash Flow (DCF) methodRevenuestreamsResourceevaluationCash flow [ ]𝟏 𝒓Where 𝑟 is the chosen discount rate and 𝑡 is the number ofyears The discount rate has a large impact on the evaluation and isalso referred to as the Cost of CapitalFinancial & technicalkey figures12345Project size The importance of the Cost of Capital The weighted average cost of capital (WACC) is an essentialelement for calculating the value of a project The WACC is the rate that a company is expected to pay onaverage to all its security holders to finance its assets For a project to be financially feasible its returns (on a projectbasis) must exceed the WACCRiskassessmentDiscounted CAPEXDiscounted RevenueDiscounted OPEXNominal vs Real pricesWACC Cost ofEquity Cost ofDebt In economic language, real and nominal values represents two differentways of expressing monetary terms (i.e., units of currency).(after tax) The WACC is especially important at capital intensive project,such as RE projects.Source: Technical University of Denmark; Ea Energy Analyses and Viegand Maagoe analysis.Nominal PricesReal PricesWhat you pay for a productat any given point in time:Takes inflation intoaccount:The price tag on aproductMeasure ofpurchasing power16
6BUSINESS CASE: EVALUATIONA business case can be evaluated based on various financial metricsKey metrics for evaluationSensitivity AnalysesWhen evaluating the economic feasibility of a project, the following indicatorsare relevant: Often used to assess the robustness of the business case. Usuallydone on key parameters: CAPEX, fuel price, WACC. Also, important to consider technical assumptions (e.g., windproduction estimates) Net Present Value (NPV) – shows what a project is worth to us today basedon discounted cash flows. Enables comparisons of projects with differenttimings and cash flow distributions over the project lifetime.𝑇𝐶𝐹𝑡𝑁𝑃𝑉 𝐶𝐹0 1 𝑟𝑡𝑡 1 Internal Rate of Return (IRR) – shows the annual effective compoundedreturn rate of a project i.e. the annual return a project is expected to yield.The discount rate yielding an NPV of 0.𝑇0 𝐶𝐹0 𝑡 1𝐶𝐹𝑡1 𝐼𝑅𝑅𝑡 Not to be confused with scenario analyses! In scenario analyses we create a certain picture of the future(e.g., “Business as Usual”, “Green Scenario”) In sensitivity analyses we test the robustness of a businesscase against one parameter while keeping all otherassumptions the same.RevenuestreamsResourceevaluationFinancial & technicalkey figuresProject size ssessmentDifferent approaches in business case evaluation Payback Time (PBT) – shows the number of years required to recover aninitial investment based on cumulative cash flows. Comparison of LCOE with potential tariff or PPA Levelised Cost Of Energy (LCOE) – shows the average cost of a project overits lifetime, taking into account the cost of capital. Often used for comparingtechnologies and for tracking economic developments of technologies overtime. Evaluation of absolute value of NPVSource: Technical University of Denmark; Ea Energy Analyses and Viegand Maagoe analysis.Background &scope Comparison of IRR with expected WACC or investor benchmark Comparison of payback time to economic lifetime and investorpreference or duration of PPA17
7ENVIRONMENTAL & SOCIAL ASPECTSBackground &scopeEnvironmental and social impacts are an important part of feasibility study and prefeasibility study that are often overlooked due to a focus on the economics. Thisallows to hedge against serious problem, which might arise during the project implementation and operations. In a prefeasibility study, these issues should bemapped as a minimum. The assessment can be based on current regulation, past experience (when relevant), and acceptance levels. Environmental and socialconsiderations can also feed into the Risk Assessment.Key aspects to consider: Pollution of air, water and soilLand useVisual impact, noise, odorWildlife endangermentEmissions of pollutants (PM, NOx, SOx) and carbon dioxide (CO2)Conflict with other local activities (e.g., agriculture/fishing)Project acceptance from local stakeholdersConsiderations should be made also with respect to current oralternative technologies deployed.RE projects: avoided emissionsCO2NOx PMOften, when investing in RE projects, there are positive environmental externalities forexample in terms of avoided PM, NOx, SOx, and CO2 emissions. It is relevant to quantifythis benefit of the projects.To assess the avoided emission of CO2 and other pollutants, existing or alternativeenergy projects need to be considered. This is often complicated since the powersector is complex and interconnected (import/export), generation patterns changehour-by-hour and the fleet evolves overtime.RevenuestreamsResourceevaluationFinancial & technicalkey figuresProject size &restrictionsBusinesscaseEnvironmental &social aspectsRiskassessmentTwo main approaches exist: Average approach: today’s average emissions for the power sector are calculatedbased on annual production and it is assumed that the project replaces the averageannual generation. Marginal approach: this entails the identification of the marginal productiontechnology that is replaced by the project, hour-by-hour and over time. Energysystems models can support this activity.Source: Technical University of Denmark; Ea Energy Analyses and Viegand Maagoe analysis.18
8RISK ASSESSMENTBackground &scopeRisk is an event or a set of events that, should they occur, will have an effect on the project. Risks are classified within the following categories:Political risks – changes in support schemes, taxation rates,international sanctions etc.Technical risks – efficiency, maintainability, newtechnologies etc.Economic risks – Interest rates, credit risk, option price etc.Social risks – safety, labor, environmental etc.RevenuestreamsResourceevaluationFinancial & technicalkey figuresProject size &restrictionsBusinesscaseThese potential risks should be screened, and main project risks identified – Useful tool is the Risk MatrixFor each risk identified, a dedicated risk mitigation measure (or strategy) should be identified – Useful tool is a Risk RegisterEnvironmentalaspectsRiskassessmentRisk Register Plots Likelihood vs Impact forthe identified risks Likelihood is estimated as a levelof probability Impact is normally estimated interms of potential capital lossSet up as a table that should at least contain the following themes:ImpactRisk MatrixRisk nameDescriptionImpactActionShort name ofthe identifiedrisksBriefdescription ofthe risks –should enable adiscussionDescribe theimpact that therisk can haveon the projectIdentify whichactions to takefor mitigatingthe riskLikelihoodSource: KPMG, Danish Embassy in Jakarta, Danish Energy Agency; Ea Energy Analyses and Viegand Maagoe analysis19
8RISK ASSESSMENT: SPECIFIC RISKBackground &scopeEach power generating technology has its own list of potential risks factors to be consideredRevenuestreamsResourceevaluationWind powerSolar PV plantBioenergy powerHydro powerGeothermal powerPre-construction Change in PPA/tariffstructure Local opposition stop/delayconstruction Land acquisition issues Limits in the infrastructureto deliver materials orconstruct Shortage skilled personnelPre-construction Change in PPA/tariffstructure Local opposition stop/delayconstruction Land acquisition issues Limits in the infrastructureto deliver materials orconstruct Shortage skilled personnelPre-construction Change in PPA/tariffstructure Fail to secure feedstocksupply ahead ofconstruction Land use competition foragriculture land Evaluation of sustainabilityof supply of feedstockPre-construction Change in PPA/tariffstructure Complex licensing andconsent processes Errors in geotechnicalsurveys Limitations due toenvironmental constraints Local opposition stop/delayconstructionPre-construction Change in PPA/tariffstructure Resource characteristicsdifferent than anticipated Complex licensing andconsent processes Errors in geotechnicalsurveys Local opposition stop/delayconstructionPost-construction Wind resource lessconsistent than anticipated Curtailment Damage from extremeevent Increased requirements forforecasting or regulation Technology risk(breakdown, lowerperformance)Post-construction Higher degradation ofpanels Curtailment Damage from extremeevent Increased requirements forforecasting or regulation Technology risk(breakdown, lowerperformance)Post-construction Overlapping activities withthe agriculture sectorreducing availability offeedstock Increase in feedstock price Fuel supply agreements Reduction running hours(e.g., lower power demand) Technology risk(breakdown, lowerperformance)Post-construction Risk of persistence ofconsecutive dry years Post-commissioninglimitations of operations forenvironmental constraints Technology risk(breakdown, lowerperformance)Post-construction Risk of reduction of steampressure/temperature Depletion of the well aheadof time Technology risk(breakdown, lowerperformance)Source: Ea Energy Analyses and Viegand Maagoe analysis.Financial & technicalkey figuresProject size ssessment20
8RISK ASSESSMENT: GENERAL RISKBackground &scopeRevenuestreamsResourceevaluationFinancial risksRegulatory risksGeneral risksFinancial & technicalkey figuresProject size &restrictionsCurrency – unfavorable moves in exchangeratesChange in law – unfavorable lawschangesCybersecurity – risk of hacking and lockdown from cyber-attackInflation – inflation rate higher thanexpectedAmendment of terms – unfavorablechanges in termsTerrorism – risk of terror attack anddamage to the projectInterest rate – interest rate higher thanexpectedRevision of support – unfavorable changesin subsidies and supportNatural catastrophe – risk of naturalevent that will damage the entOff-taker default – sudden and persistentloss of demandSource: Ea Energy Analyses and Viegand Maagoe analysis.21
REFERENCES[1] AACE International. Evaluating Capital Cost Estimation Programs. Chemical Engineering. August 2011[2] Ea Energy Analyses. Biomass for energy - Prefeasibility Study of a Biomass Plant in Java. February 2018[3] KPMG, Danish Embassy in Jakarta, Danish Energy Agency. Lombok - Prefeasibility studies on RE solutions. January 2019[4] Technical University of Denmark. Feasibility studies and assessment of energy technologies. 2020[5] NEC, BPPT Engineering, Ea Energy Analyses, Danish Energy Agency. Technology Data for the Indonesian Power Sector - Catalogue for Generation and Storage of Electricity. December 201722
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