Ann: 50MW Kidston Solar Project Reaches Practical Completion, page-8

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dyeman

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09/12/18

22:14

Post #: 36800119
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Originally posted by Atlas_J ↑

I'm running the numbers on the stage one solar project and I'm a little confused.

Based on the below assumptions, the project is profitable and contributes around 5-10 cents to the share price (I'm setting aside the pumped hydro and other projects until later, this is just for KS1). However, this calculation doesn't include the cost of repaying the $100 million debt facility that was used to finance the construction of KS1. If I include the debt repayment cost the NPV for the project is negative.

I'm sure my calculations are flawed somehow because if this was actually the case the CEFC and ARENA wouldn't be touching it with a ten foot pole. So can anyone identify which of the below assumptions are wrong?

1) Annual generation = 145,000 MWh
2) Guaranteed electricity price ($/MWh) = $88 (up to 2038)
3) Annual operating costs = $2 million
4) Annual depreciation costs = $3.8 million (assuming full depreciation of $115 project value over 30 years)
5) Tax rate = 30%
6) WACC = 15%
7) Debt = $100.1 million (repaid by 2023 according to page 49 of 2018 annual report)

Together these assumptions give me an NPV of -$28 million. Again, this is just KS1 and not the stage two projects. I'm thinking the WACC is too high or the electricity price is too low.

Cheers

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Thanks for doing this work!

Might be worth comparing your assumptions and figures with the corresponding data in some of the broker reports looking at Kidston Stage 1 :

https://www.genexpower.com.au/broker-reports.html

GNX Price at posting: 24.5¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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