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My NPV values show negative values

  • Wengpin
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27 Jul 2021 06:38 #9875 by Wengpin
My NPV values show negative values was created by Wengpin
Dear Paul,

Good day, I actually posted a question about this negative NPV problems few months ago but cannot find the relevant post now.

I actually simulated a CSP-PTC system under Malaysia's weather but I found the NPV value is negative. May I know does this mean that CSP-PTC is not suitable to be employed in Malaysia, or is there anything I did wrongly in this simulation?

I have attached the SAM file here, hope that I can get your help on this. The file I referred to is the "untitled" file. 
Thank you and stay safe!

Yours Sincerely,
Weng Pin.

File Attachment:

File Name: SAMlabuan2...27-2.sam
File Size:1,374 KB
Attachments:

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  • pgilman
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27 Jul 2021 18:43 #9880 by pgilman
Replied by pgilman on topic My NPV values show negative values
Hi Weng Pin,

In general, a negative NPV value means that the project costs more than it earns in revenue (or saves in electricity bill reductions).

A negative NPV could be caused by many factors, including a poor system design, high installation or operating costs, high cost of debt, high income taxes, or other factors.

Best regards,
Paul.

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  • Wengpin
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08 Aug 2021 06:01 #9915 by Wengpin
Replied by Wengpin on topic My NPV values show negative values
Hi Paul, 

Thanks for your response!
I actually used 2 different financial models to run the same simulation case again. When I use the "Merchant" model, the NPV is still negative while the NPV is positive when I used another model called "Single Owner". May I know what factor or difference between these 2 models actually contribute to different NPV values?

Best regards, 
Weng Pin.

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  • pgilman
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16 Aug 2021 21:46 #9950 by pgilman
Replied by pgilman on topic My NPV values show negative values
Hi Weng Pin,

If you set the Merchant Plant market price for all hours to the same value of the PPA price for the Single Owner model and all other inputs are identical, you should get the same results for the two models. This assumes the cleared capacity for all hours is 0 MW.

Best regards,
Paul.

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  • Wengpin
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17 Aug 2021 06:51 #9953 by Wengpin
Replied by Wengpin on topic My NPV values show negative values
Dear Paul, 

Thanks for your reply! May I know what you mean by "cleared capacity"?

Thank you!

Best regards, 
Weng Pin.

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  • pgilman
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17 Aug 2021 16:00 #9958 by pgilman
Replied by pgilman on topic My NPV values show negative values
Hi Weng Pin,

Please see the "Example Compensation Scenarios" in the Help topic for the Merchant Plant Revenue page (you can find that by pressing the F1 key on the Revenue page for a Merchant Plant project, or in the Help table of contents under "Revenue, Merchant Plant".

That shows several examples of how the merchant plant model calculates revenue based on the generation, cleared capacity, and energy price.

Best regards,
Paul.

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