The Renewable Energy IPP Programme (REIPPPP) has grown South Africa’s renewable energy footprint, which started with the announcement of Bid Window One in December 2011. The first renewable energy IPP, a solar PV project, started supplying electrical power to the grid in November 2013; and by the end of September 2021, 5 423 MW of electricity capacity, from 83 IPP projects, were connected to the national grid and supplying energy to Eskom.

Between October 2020 to September 2021, IPPs have contributed around 7% of total electrical energy in South Africa.

A Municipality compared the costs with benefits by implementing a 54 MW solar photovoltaic (PV) plant. The total cost was quoted at R900m in year 0 and would have a life of 25 years. The benefit of the project was estimated to be the savings of electricity payments to ESKOM of R85m in year 1 and that the savings would grow by 15% per year for 25 years. M&O is estimated to be R1m for year 1 and wil grow at 6% per year for 25 years. A disbenefit was the use of municipal ground that could have been used to rent to companies at R3m per year in year 1 and would be expected to increase by 6% per year for 25 years. Assuming the inflation rate is stable at 8% for the next 25 years, Calculate the modified B/C ratio using PW values.

A Municipality compared the costs with benefits by implementing a 54 MW solar photovoltaic (PV) plant. The total cost was quoted at R900m in year 0 and would have a life of 25 years. The benefit of the project was estimated to be the savings of electricity payments to ESKOM of R85m in year 1 and that the savings would grow by 15% per year for 25 years. M&O is estimated to be R1m for year 1 and wil grow at 6% per year for 25 years. A disbenefit was the use of municipal ground that could have been used to rent to companies at R3m per year in year 1 and would be expected to increase by 6% per year for 25 years. Assuming the inflation rate is stable at 8% for the next 25 years, Calculate the payback period using PW values and interpolation.

Answer rating: 100% (QA)

a The total cost of the project is R900m in year 0 The benefit of the project is the saving of elect... View the full answer