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Techno-economic investment framework for REIPPPP utility-scale PV plants in SA
Thesis (MEng)--Stellenbosch University, 2016.
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| Format: | Thesis |
| Language: | en_ZA |
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Stellenbosch : Stellenbosch University
2016
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| _version_ | 1867613825876885504 |
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| access_status_str | Open Access |
| author | Mmushi, Isaac K. |
| author2 | Von Leipzig, Konrad |
| author_browse | Mmushi, Isaac K. Von Leipzig, Konrad |
| author_facet | Von Leipzig, Konrad Mmushi, Isaac K. |
| author_sort | Mmushi, Isaac K. |
| collection | Thesis |
| dc_rights_str_mv | Stellenbosch University |
| description | Thesis (MEng)--Stellenbosch University, 2016. |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/100270 |
| institution | Stellenbosch University (South Africa) |
| language | en_ZA |
| last_indexed | 2026-06-10T12:42:17.808Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from SUNScholar — Stellenbosch University Repository |
| publishDate | 2016 |
| publishDateRange | 2016 |
| publishDateSort | 2016 |
| publisher | Stellenbosch : Stellenbosch University |
| publisherStr | Stellenbosch : Stellenbosch University |
| record_format | dspace |
| source_str | SUNScholar — Stellenbosch University Repository |
| spelling | oai:scholar.sun.ac.za:10019.1/100270 Techno-economic investment framework for REIPPPP utility-scale PV plants in SA Mmushi, Isaac K. Von Leipzig, Konrad Stellenbosch University. Faculty of Engineering. Dept. of Industrial Engineering. Photovoltaic power plants -- Capital assets pricing model Photovoltaic power plants -- Construction and design -- Finance Photovoltaic power generation Photovoltaic power generation projects -- Finance UCTD Thesis (MEng)--Stellenbosch University, 2016. ENGLISH ABSTRACT: The South African department of energy forecasts generation capacity to reach 89.5GW by 2030, and the objective is to have 8.4GW generated from solar Photovoltaic (PV) renewable energy plants. The department created an enabling environment for the private sector to invest through the Renewable Energy Independent Power Producer Procurement Program (REIPPPP). The REIPPPP has been hailed as one of the best renewable energy programs world-wide and has stimulated investment in this sector in South Africa. The questions considered in this research were: how is project viability of PV utility power plants assessed? Are conventional capital budgeting and project financial evaluation parameters sufficient to perform a preliminary analysis? How should investors account for risk associated with PV plants in South Africa? And finally, how should the risk be calculated or what tools and or techniques should be considered applicable? The aim of this research was to propose and develop an investment framework and model that private investors could use during the preliminary phase of utility scale solar photovoltaic projects. The first focus of the study was the development of a financial model which employs the conventional capital budgeting parameters such as the net present value (NPV), the rate of return (IRR), the return on investment (ROI), and the Debt Service Coverage Ratio (DSCR). @Risk® simulation package was used to simulate financial uncertainty through varying some of the inputs randomly, to see the effect on required financial output and probability of viability. The second phase of the study expands on the NPV values that were calculated, through the use of real options analysis. The significance of real options is the fact that, the volatility factor which is incorporated in the formulae, best represents all risks which are not catered for in most project financial formulas. Real options analysis provides the decision makers of a project with the flexibility to actively evaluate the project’s financial viability and undertake the risk based on all available information. The study uses project data obtained from REIPPPP window two PV project to evaluate the investment feasibility using conventional project finance evaluation parameters, an @Risk® analysis is performed and then expanded upon to do a real options analysis. A real options analysis (ROA) active mapping framework is adopted to map and analyse the viability of the project. This dynamic study of project financial evaluation in the form of the ROA of the case study, provided volatility and NPV ratios that yielded a ‘maybe invest now’ decision. The project used as a case study is already constructed and the volatility used in this study was based on risks experienced during the construction phase. The results support the decision made to invest in this project, as a good investment opportunity undertaken three years ago. The research objective proposing that three techniques; conventional capital budgeting methods, risk analysis and real option analysis should be combined in financial analysis of renewable energy utility scale PV projects was confirmed through this study. The advantage of combining the three techniques is that the financial due diligence now incorporates the risks associated with such projects which conventional capital budgeting methods does not account for. AFRIKAANSE OPSOMMING: Die Suid Afrikaanse Departement van Energie voorspel dat Suid Afrika se opwekkingskapasiteit 89.5GW sal bereik teen 2030, met die doelwit om 8.4 GW hiervan met sonkrag photovoltaise (PV) energie projekte op te wek. Die departement het ‘n finansierings vriendelike omgewing geskep waarin die privaat sektor kan investeer deur die Hernubare Energie Onafhanklike Kragvoorsiener-program (REIPPPP). Die REIPPPP word wyd geloof as een van die beste hernubare energie programme ter wêreld en het aansienlike investering in Suid Afrika teweeggebring. Die vrae wat in hierdie navorsingstuk ondersoek is was: hoe word die projek lewensvatbaarheid van grootskaalse PV projekte geassesseer? Is konvensionele kapitale begrotings en projek finansiële evaluasie parameters voldoende om 'n voorlopige analise uit te voer? Hoe behoort beleggers voorsiening te maak vir die risikos wat met PV projekte in Suid Africa geassosieer word? En laastens hoe behoort die risiko bereken te word en watter tegnieke moet oorweeg word ten einde ʼn ingeligte besluit te kan neem? Die doel van hierdie navorsing was om 'n finansiële model te ontwikkel en voor te stel wat privaat beleggers kan gebruik om die lewensvatbaarheid van grootskaalse PV projekte tydens die ontwikkeling fase te bepaal. Die eerste fase van die model het die tradisionele finansiële parameters in ag geneem, onder andere die netto huidige waarde (NPV), interne opbrengkoers (IRR), opbrengs op belegging (ROI) en die skuld vereffenings dekking verhouding (DSCR). Die @Risk® simulasie pakket is gebruik om die finansiële onsekerheid te simuleer deur die inset parameters lukraak te wysig en sodoende die effek op finansiële uitsette en die waarskynlikheid van lewensvatbaarheid te bepaal. Die tweede fase van die projek brei uit op die NPV waardes wat bereken is, deur die gebruik van die reële opsies benadering (ROA). Die waarde van reële opsies is die feit dat die formule 'n wisselvalligheids faktor bevat wat alle risikos assesseer, iets wat nie deur die meeste projek finansiële formules in ag geneem word nie. Reële opsies benaderings voorsien aan die besluitnemers van projekte die buigsaamheid om aktief die projek se lewensvatbaarheid te analiseer en die riskio te ontleed met alle moontlike informasie tot hulle beskikking. Projek data wat ingesamel is van 'n projek uit die tweede rondte van die REIPPPP is in 'n gevallestudie gebruik om die finansiële lewensvatbaarheid van die projek te bepaal. Dit is gedoen deur die gebruik van konvensionele projek finansierings evaluasie parameters. ‘n @Risk® analise is uitgevoer en daarna uitgebrei om die reële opsies benadering toe te pas. 'n Reële opsies benadering aktiewe kartering raamwerk is gebruik om die lewensvatbaarheid van die projek uit te beeld en te analiseer. Hierdie dinamiese studie van die projek se finansiële evaluasie deur middel van 'n ROA van die gevallestudie, het wisselvalligheid en NPV verhoudings opgelewer wat 'n "investeer moontlik nou" besluit teweeg gebring het. Konstruksie is reeds voltooi op die projek wat as gevallestudie gebruik is en die wisselvalligheid wat in hierdie studie gebruik is is gebaseer op risikos en kwessies wat tydens die konstruksie fase ervaar is, en nie risikos wat bekend was tydens die ontwikkelings fase nie. Die resultate bevestig die besluit wat 3 jaar gelede gemaak is om in hierdie projek te belê as 'n goeie beleggingsgeleentheid. Die navorsings doelwit wat aanbeveel dat die drie tegnieke; die konvensionele kapitale begrotings metode, risiko analise en die reële opsies benadering metode gekombineer moet word tydens die finansiële analise van grootskaalse hernubare energie PV projekte is deur hierdie studie bevestig. Die voordeel teweeggebring deur die kombinering van hierdie drie tegnieke is dat die finansiële omsigtigheidsondersoek nou die risikos insluit wat met hierdie projekte geassosieer word, waar konvensionele kapitale begrotings metodes nie hierdie risikos in ag neem nie. 2016-12-22T13:34:22Z 2016-12-22T13:34:22Z 2016-12 Thesis http://hdl.handle.net/10019.1/100270 en_ZA Stellenbosch University 118 pages : illustrations application/pdf Stellenbosch : Stellenbosch University |
| spellingShingle | Photovoltaic power plants -- Capital assets pricing model Photovoltaic power plants -- Construction and design -- Finance Photovoltaic power generation Photovoltaic power generation projects -- Finance UCTD Mmushi, Isaac K. Techno-economic investment framework for REIPPPP utility-scale PV plants in SA |
| title | Techno-economic investment framework for REIPPPP utility-scale PV plants in SA |
| title_full | Techno-economic investment framework for REIPPPP utility-scale PV plants in SA |
| title_fullStr | Techno-economic investment framework for REIPPPP utility-scale PV plants in SA |
| title_full_unstemmed | Techno-economic investment framework for REIPPPP utility-scale PV plants in SA |
| title_short | Techno-economic investment framework for REIPPPP utility-scale PV plants in SA |
| title_sort | techno economic investment framework for reipppp utility scale pv plants in sa |
| topic | Photovoltaic power plants -- Capital assets pricing model Photovoltaic power plants -- Construction and design -- Finance Photovoltaic power generation Photovoltaic power generation projects -- Finance UCTD |
| url | http://hdl.handle.net/10019.1/100270 |
| work_keys_str_mv | AT mmushiisaack technoeconomicinvestmentframeworkforreipppputilityscalepvplantsinsa |