Background

Applies to any power project producing electric power as its main product.  Power Generation projects are characterised by:

• Output dependent on demand, may be base load or swing.
• Significant equipment and material which may need to be imported
• Product sold to a closed market.
• Product cannot usually be exported and cannot usually earn any foreign exchange
• Tariffs Negotiated with escalation and indexation clauses
• Tariffs split into capacity (fixed) and fuel (variable) elements.
• Technically simple (becomes more complex with coal firing or cogeneration with steam product)
• Annual maintenance shutdown which will reduce revenues and variable operating costs for about a month. 

How Promoter handles Power Projects

It produces the cash flows for any power station using a hydrocarbon or related fuel, but not hydroelectric or nuclear plant (future).

Typical Project Cash Flows

The revenues for a base load power plant with a power purchase agreement (as shown above) will typically have a capital cost recovery element and an operating and maintenance element.  The capital cost element may be repaid over the life of the project or over a shorter period.

The cash flows for a merchant power plant are similar to the cash flows for a downstream project.