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Sutton Bridge Power Project Calculations

The document outlines the terms of a power purchase agreement including fixed and variable payments, operating assumptions, and spark spread calculations for different gas and electricity price cases. Key terms include a £9 million upfront payment and £68.8 million annual fixed fee over 15 years. Variable costs are £357.50 per half hour period with minimum annual generation of 5,362,500 MWh. Spark spreads are calculated for different gas and electricity price scenarios to determine profitability of power generation.

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Abhishek Palav
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271 views7 pages

Sutton Bridge Power Project Calculations

The document outlines the terms of a power purchase agreement including fixed and variable payments, operating assumptions, and spark spread calculations for different gas and electricity price cases. Key terms include a £9 million upfront payment and £68.8 million annual fixed fee over 15 years. Variable costs are £357.50 per half hour period with minimum annual generation of 5,362,500 MWh. Spark spreads are calculated for different gas and electricity price scenarios to determine profitability of power generation.

Uploaded by

Abhishek Palav
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Term Fixed Payements One time up-front Annual

15 years

9,000,000.00 68,800,000.00 payable on a daily basis

Variable Payments Rate Startup/Shutdown Minimum

Maintenance Min Max Maximum Contract Volume Summer (April-Sept) Winter (Oct-May)

357.50 per half-hr 2 Half hour periods (per each event) 15000 Half hour periods 5,362,500.00

12 Days 30 Days

700 MW 735 MW

Off-take Instructions By 8 AM # of Half hour periods and contractual volume for each period # of shutdowns 1 shutdown 4 Half hour periods Total startups per 3 years 600 Contractual Heat Rate Min Max

6.8 MMBtu/MWh 7.6 MMBtu/MWh

Assumptions/Input Gas Price Electricity Price Heat Rate Gas Transportation Cost Average Capacity Spark Spread

1.25 per MMBtu 25.00 per MWh 7.20 MMBtu/MWh 10% 717.5 MW

Year 1

16.00 per MWh Year 2-15 15000 5381250 MWh 15000 5381250 134,531,250.00 0 68,800,000.00 68,800,000.00

Annual Operating Half hr Periods Annual Power Generation Revenue from Power Gen Fixed Costs

134,531,250.00 9,000,000.00 68,800,000.00 77,800,000.00

Variable Costs Gas Amount Gas cost Delivery costs - 5,362,500.00 38,745,000.00 MMBtu 48,431,250.00 3,874,500.00 57,668,250.00 937,000.00 5,362,500.00 38,745,000.00 48,431,250.00 3,874,500.00 57,668,250.00 8,063,000.00

Operating Income

MWh

MMBtu

Black - Scholes Model


Current Gas Price, P Exercise Price, EX Risk Free Interest Rate No. of Periods till Exercise Date No. of Periods till Exercise Date Std. Deviation per period PV(EX) d1 d2 N(d1) N(d2) Call Option Value 1.25 3.330357143 7.57% 1.0000 0.0027 0.55 3.3297 -34.0180 -34.0468 0.0000 0.0000 6.3631E-257

Exhibit 5 Day year From Exhibit A6, daily gas price volatility

Put Option Value

2.0797

= [(1 ) ] [(2 ) ()]


Heat rate Power price Spread Cost of operation No. of periods of Operation Capacity Power produced Power revenue Operating cost Gas Amount Gas Price below which profitable to convert gas into power (Exercise Price) 7.2 25 16 357.5 per half hr 48 700 MW 16800 MWh 420000 GBP 17160 GBP 120960 MMBtu

3.330357 GBP/MMBtu

Term Fixed Payements One time up-front Annual

15 years

9,000,000.00 68,800,000.00 payable on a daily basis #DIV/0!

Variable Payments Rate Startup/Shutdown Minimum

Maintenance Min Max Maximum Contract Volume Summer (April-Sept) Winter (Oct-May)

357.50 per half-hr 2 Half hour periods (per each event) 15000 Half hour periods 5,362,500.00

12 Days 30 Days

700 MW 735 MW

Off-take Instructions By 8 AM # of Half hour periods and contractual volume for each period # of shutdowns 1 shutdown 4 Half hour periods Total startups per 3 years 600 Contractual Heat Rate Min Max Assumed Gas Price Case 1 Case 2 Electricity Price Case 1 Case 2 Spark Spread Case 1 Case 2

6.8 MMBtu/MWh 7.6 MMBtu/MWh 7.2 MMBtu/MWh

1.25 per MMBtu 2.50 per MMBtu

25.00 per MWh 15.00 per MWh

16.00 per MWh 3.00 per MWh

135456750 715 5362500 25.26

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