Cash Flow and Send to Excel Bugs

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69L46
Cash Flow and Send to Excel Bugs

Hi,

I love the new Send to Excel with formulas option. But playing around with it (mainly trying to reconcile SAM with NETL's Power System Financial Model so I could use SAM's parametric and sensitivity studies), I noticed a couple of bugs, particularly with the generic system and the biomass power system.

1. This has more to do with the SAM calculation of cash flow. The cash flow presented in SAM and sent to Excel with the Send to Excel option calculates fuel costs incorrectly. It calculates the fuel cost based on 100% capacity, not on the capcity given by the user. Therefore, when fossil fuels are used, all of SAM's financial metrics are incorrect.

2. The Send to Excel with Formulas produces zero fuel costs (and ridiculously high NPV and IRR) because it does not transfer the heat rate to the input sheet (cell G20). Once this is entered, then the fuel cost calculation is correct, but different from the incorrect one generated in SAM and sent to Excel with the Send to Excel option.

3. For the IPP financial model, SAM appears to assume that the IPP can use any losses in the simulated project to offset profits in other operations of the IPP. However, this is unlikely to be the case as separate corporate entities would likely be used for each power project. If there is no tax investor or if the IPP is not a pass-through entity, there is no way that a loss can generate a positive contribution to cash flow as SAM prodcues. While a reduction of taxes by refundable incentives or refundable tax credits can add to the cash flow during a loss year, operating losses and non-refundable tax credits would not. I would suggest that SAM report losses as losses and let them pass through to investors as losses or carry them forward for non-pass-through entities rather than adding to the equity cash flow the amount of taxes that would have been paid on the operating loss. It is very misleading and messes up NPV, IRR, and ensuring non-zero cash flow. For the tax investor model, this may be appropriate (if the tax investor's other investments are taxed on average at the same rate as the project), but for the IPP model it is not appropriate.

Bug no. 1 can be worked around by reducing the fuel price by the capacity factor.

Bug no. 2 can be worked around by entering the heat rate manually

Bug no. 3 can be worked around by ignoring the results reported in SAM and modifying the cash flow in Excel to calculate equity cash flow properly. However, this bug makes using SAM for parametric or sensitivity studies rather shaky. It also means that the financing options for determining PPA price, PPA price escalation, optimum debt fraction, and requiring positive cash flow will not give the correct results (espescially requiring positive cash flow).

Thanks,
Ken

Paul Gilman

Hi Ken,

Thank you for the detailed feedback. It looks like the generic system model is not passing values to the spreadsheet as you noted in Items 1 and 2 of your message. I am working with the development team to address those bugs.

We don't consider Item 3 to be a bug, although your observation is correct. We designed SAM to help facilitate comparisons between different project options rather than to exactly replicate real financial structures. The advanced IPP financing models (partnership flip and sale leaseback) do calculate separate cash flows for two entities involved in a project, but in the current version of SAM, the Send to Excel feature does not work with those models.

Best regards,
Paul.

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