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Economic Evaluation Product Design Guide

This section provides you with operation suggestions of the economic evaluation design product V1.0 in Greenwich and related references. The related references of design is also offered. Read this section to get acquainted with the design procedures and regulations.

The Greenwich economic evaluation design product V1.0 connects the economic evaluation scheme with the unit project design schemes and budget estimation scheme. Two calculation types are offered: associating with budget estimation scheme and customizing budget estimation parameters. In the current version, the centralized onshore, distributed onshore, and centralized offshore wind farm projects are supported in economic evaluation.

Design References

• Methods and parameters for economic evaluation of construction project (third edition)
• Wind Farm Project Economic Evaluation Standards 2016
• Notice of VAT rate adjustment from State Administration of Taxation of Finance Ministry (财税[2018] No. 32)

Operation Procedure and Related Suggestions

This section introduces the main operations in economic evaluation design and related parameter setup guidelines.

Basic Operation

For main operation steps in Greenwich economic evaluation product V1.0, refer to the user guide in Greenwich documents.

Economic Evaluation Type

When you configuring wind farm budget estimation and power sales parameters:

• Associate budget estimation scheme: Select associated budget estimation scheme. Its information such as cost, power production hours, capacity is automatically synchronized. Both designed and customized budget estimations are supported. The result can be applied directly in automatic generation of feasibility study report.
• Customize budge estimation parameters and wind farm parameters: Directly input the estimated cost, power production hours, capacity.

The regulations to set up economic evaluation parameters are listed in the following table:

Economic Evaluation Parameter		Parameter Setup Principle	Wind Farm Project Economic Evaluation Standards 2016	Parameter Setup Recommendation (If the project has special requirements, it is recommended to fill in the parameters based on the actual condition)
Interface Parameter	Benchmark on-grid wind power price (RMB/kWh)	Benchmark on-grid power price published by the nation		Fill it in based on the project condition
	New energy subsidy power price (RMB/kWh)	New energy subsidy = benchmark on-grid power price - local benchmark coal fuel power price of current year		Fill it in based on the project condition
	New energy subsidy deferral time	New energy subsidy deferral time		Fill it in based on the project condition
	Other subsidy power price	Outgoing self-built power price subsidy and other subsidies		Fill it in based on the project condition
	Other subsidy deferral time	Other subsidy deferral time		Fill it in based on the project condition
	Power consumption time range of corporate user	Set it up based on the power price time range purchased by corporation		Refer to the peak, valley, and flat time range of local great industry power consumption
	Power price of sale & consumption enterprises	Refer to the current power sales price of enterprise and give a discount		Refer to the power price discount defined by enterprise, and the discount can be set as 95%
	Ratio of wind power sales	Sold to enterprise user: Calculate the ratio of enterprise user according to enterprise power load and power production. Sold to grid: Generally, the redundant power other than that sold to enterprise user can be delivered to grid.		Fill it in based on the project condition
	No. of shareholders	Fill it in based on the project financing scheme		Fill it in based on the project condition
	Ratio of shareholding (%)			Fill it in based on the project condition
	Ratio of investment (%)			Fill it in based on the project condition
Basic Parameter	Reference template	Select the appropriate template according to the project condition
	Construction period (year)	For capacity within 100 MW, generally set the construction period as one year. For distributed wind farm with small capacity, consider set it as 0.5 year. The parameter should be consistent with the construction period defined in construction organization design.		1-2
	Operation period (year)	By default, set 20 years for onshore wind farm and 25 years for offshore wind farm	20	20
	Construction period investment ratio (%)			Fill it in based on the project condition
	Financing channel	Configure it according to financing channel representing long-term loan type	1	1
	Registered equity ratio in total investment (%)		>=20	20
	Long-term loan rate (%)	Confirm based on enterprise actual financing condition		4.9
	Loan term (year)			15
	Repayment method			Average capital plus interest
	Loan grace period	Generally it is equal to construction period		2
	Loan ratio	Various long-term loan ratio in total long-term loan sum		100%
	Liquidity (RMB/kW)		30-50	30
	Liquidity ratio in capital (%)			30
	Loan rate of liquidity (%)			4.75
	Short-term loan rate (%)			4.75
	Equity base return rate (%)		8	8
	Total investment base return rate (%)		5	5
Revenue and Tax	Power production coefficient	Modify it according to actual output.		100
	Power price discount coefficient	Future power price prediction		100
	VAT deduction ratio of mechanical facilities (%)			12
	Deduction ratio of maintenance cost input tax (%)			11.2
	City maintenance & construction tax (%)	Downtown 7%, county or town 5%, others 1%		5
	Surtax of education expenses (%)			5
	Income tax (%)	Define it according to the national policy and local, industrial, or enterprise preferential policies.		25
	VAT (%)			16
	Freed or halved income tax			Yes
	Halved VAT			Yes
Operational Cost	Depreciation method			Linear depreciation
	Depreciation period (year)		12-18	15
	Residue rate (%)		5	5
	Intangible assets			0
	Other assets			0
	Amortization period			10
	Repair expense rate (%) in first five years	Define it according to turbine operation experience	Define it as 0.5 within the guarantee period, and increase into at most 2% by stage each of which consists 5-10 years.	0.5
	Repair expense rate (%) in the 6th - 9th years			1
	Repair expense rate (%) in 10th - 14th years			1.5
	Repair expense rate (%) in 15th - 20th years			2
	Fixed number of employees (person)	Define it according to actual operation situation. Input 5 persons for each 50 MW, and increase 2 persons for each additional 50 MW		5
	Annual average salary 10k RMB/person/year	Define it according to the local salary level and that of the owner’s unit or company		10
	Welfare expense rate (%)			62.6
	Annual land rent	Configure this parameter when you need to pay land rent by year during operation period
	Constant annual extra expense			0
	Premium rate	Adopt the premium rate negotiated with insurance company by onshore wind farm. When it is not specified, define it as 0.25% - 0.35%. For offshore wind farm, define it as 0.35% - 0.60%.
	Material expense (RMB/kW)		10-20	15
	Dismantling expense (RMB/kW)			10
	Other expenses (RMB/kW)		20-30	25