"Internal Rate of Return" not accounted in Financial model

Hi, Paul
In the financial model assumptions to calculate the Fixed Charge Rate in following:



The "Internal Rate of Return" is Not taken account in calculating the Fixed Charge Rate (changing values does not affect calculated FCR). Can you explain it is not accounted for? If we need to account for it, do does SAM to include it?

Thank you!
Harry

Hi Harry,

Please see the equations in Help on the "LCOE Calculator" topic (press the Help key from the Financial Parameters page). There, you'll see that when the debt percent is 100%, the internal rate of return term in the WACC equals zero.

Best regards,
Paul.

Hi Paul

I see on the help menu that the FCR is used to calculate the LCOE in the physical trough model. 

Where does one find the FCR in the physical trough model? It says that it's given under "Financial Assumptions", but I believe that the physical trough model (version 2020.2.29 r3) does not have this option, as I cannot find it?

Best wishes
Louw

Hi Louw,

The method SAM uses to calculate the LCOE depends on the financial model you choose. The PPA financial models (single owner, partnership flip, sale leaseback) and distributed financial models (residential, commercial, third party ownership) calculate the LCOE from an annual cash flow. The "LCOE Calculator" financial model uses a simple fixed charge rate (FCR) method to calculate the LCOE.

If you want to use the FCR method with the Physical Trough model, you should choose the LCOE Calculator model when you create the case:

Note that you can change the financial model by clicking Change model command on the case menu. For example, if you change the model from Physical Trough / Single Owner to Physical Trough / LCOE Calculator, SAM will preserve the performance model inputs for the trough model and only change the financial model inputs:
Best regards,
Paul.