IPH Single Owner with 10$/MMBtu strange behavior

[sjanzou]

From @taylorbrown75

I was running the IPH tower single owner model and noticed strange behavior related to the ppa_price on the Revenues page.

If you set the price to $10/MMBtu, the calculated LCOH is negative, and the IRR is close to 300%.

However, if you set the price lower or higher than $10, the results seem to behave normally.

Below is a table of parametric results, with the default IPH tower single owner case where I varied the ppa price from 8-30 $/MMBtu.

[sjanzou]

@taylorbrown75, this is actually a DSCR sculpted debt artifact.

If you run the parametrics with 50% debt instead of a DSCR of 1.3

You get the "expected" results:

In the default case (DSCR = 1.3) with the parametric runs,

If you look at the suspect $10/MMBtu case in detail (right click on row header - "3" in the case shown and select "Create new case"

You can run and examine the suspect $10/MMBtu case in detail

Also, when running the case, you get the simulation messages

And then examination of the Cash flow, shows the suspect "Debt principal payment" line

Which leads to the suspect cash flow after tax graph on the "Summary" results page

In summary, if you run in DSCR more for the debt, always be suspect of 0% "Debt percent" reported in the metrics table

@cpaulgilman - anything to add?

[sjanzou]

SAM project file used to create the aforementioned results...
SAM_1924.zip

[cpaulgilman]

The sculpted debt (DSCR) method with the Maximum debt fraction checkbox enabled creates unexpected results and should be used with care (if at all) because it masks the effect of varying revenue on financial metrics.

Parametrics with sculpted debt (DSCR input) and Maximum debt fraction checkbox clear. These results show that you need a price of heat of between about 16 and 18 $/MMBtu for reasonable financial returns. Anything less does not earn sufficient revenue to cover costs and anything more results in unreasonably high returns. For those of us used to cents/kWh, that's a range between 5 and 7 cents/kWh.

Note that for price of heat bewteen 8 and 10 $/MMBtu, the debt percent is negative. However, when Maximum debt fraction is checked with a value of 60% maximum debt fraction, the debt percent is zero, so that constraint is somehow affecting results when revenue is insufficient to cover the cost of debt.