Page 317 - Fluid Power Engineering

Financial Modeling of W ind Projects 283

Line Item in Income Statement Values for Year i
Annual revenue
R1 Revenue from selling electricity kWh produced multiplied by energy
price in $/kWh
R2 Revenue from production tax kWh produced multiplied by tax
credits credit in $/kWh
R3 Revenue from renewable energy kWh produced multiplied by price of
credits or carbon credits REC or other credit in $/kWh
RA Total revenue R1 + R2 + R3
Annual operating expenses
O1 Operations and maintenance kWh produced multiplied by
scheduled maintenance charges
$/kWh + annual reserve fund
payment based on TIC
O2 Insurance Annual insurance charges
O3 Leaseholder payments Payment usually based on
percentage of revenue
O4 Admin/financial/legal General and administrative charges
O5 Other expenses (transmission) kWh produced multiplied by
transmission charge (if applicable)
OE Total operating expenses O1 + O2 + O3 + O4 + O5
Annual depreciation and interest
D1 Depreciation TIC multiplied by an annual
depreciation schedule
D2 Interest Total outstanding loan multiplied by
interest rate
DA Total depreciation & interest D1 + D2
TI Annual taxable income RA – (OE + DA)
TA Taxes TI tax rate
∗
NIA Net income RA – (OE + DA + TA)
CF After tax cash flow NIA + D1-Principal payment on
debt
TABLE 13-3 Structure of an Income Statement for a Typical Wind Project

Financial Performance
Financial performance of a wind project is measured in terms of the
following parameters: Levelized cost of energy, net present value, pay-
back period, and internal rate of return.