A case study in formulating financial modeling for evaluation of levelised unit cost of a new power and water plant for the Ministry of Electricity and Water, Kingdom of Bahrain

Abstract

The decision makers in the power and water utilities are often faced with challenging situation for selecting bids from various bidders. The capital cost in it self is a driving force for such decision. However, plants of lower capital cost are often higher in maintenance cost and lower efficiency. The bidders try to optimize their plant configuration and select the most optimum efficient technology type, such as combined cycle gas turbine (CCGT) or conventional power steam plant. The long-term impact of the selection can not be released based on the capital and operation cost but rather on consideration of a variety of parameters such as the capital cost, maintenance cost, operation, inflation, gas cost efficiency, availability, load factor. Comparison of bids is best done on levelised unit cost techniques, which takes into consideration. In this methodology, the finance cost of the capital, banks fees and premium, insurances interest during construction (IDC) are considered for export credit agencies (ECA) and commercial loans. The levelised unit cost is a technique applied by the techno-commercial analyst to calculate the unit cost through out the economic life of the project. Major cost such as c-inspection and mid life rehabilitation are included for the specific cycle offered by each bidder. This paper examine a case study in developing a financial spreadsheet model to calculate the levelised unit rate with due consideration to the cycle specifics and parameters identified earlier.