On-Grid PV Opportunities in University Campuses: A Case Study at Nazarbayev University in Astana, Kazakhstan

AITKULOV, Daniyar

ASSYLOVA, Zhuldyz

SUANBEKOVA, Elnara

ROJAS-SOLORZANO, Luis

Split-Croatia May 14-17, 2017

ContentIntroduction

2

IntroductionRelated Work

Assessment Methodology (LCCA)

Feasibility Analysis Scenario I

Scenario II

Scenario III

LCCAInitial Costs

Annual Costs

Periodic Costs

Conclusions

IntroductionRelated work

3

Total capacity: 28 MW

Aims to:

545 MWh/year by 2017

Many university campuses around the world are installing PV systems in theirpremises as fully operative projects to demonstrate their commitment withcurrent environmental issues using viable technologies.

Substantial encouragement coming from the government:US Renewable Energy Incentive Program that helps to cut up to half the cost of thesolar system.

Total capacity: 23.6 MW

Total capacity: 17.4 MW

IntroductionRelated work

4

System aims to generate 10% of total

Campus demand.

Expected output: 240 MWh/year

RE incentives program initiated by

government of Malaysia

State University of New Jersey

The total capacity of 17,417 kW

Many projects ongoing to implement mid-size photovoltaic plants

integrated into main university buildings to “teach by example”.

• Gained experience is valuable in further

analysis and future projects around the

world.

• What about Nazarbayev University?

Is it viable?

Introduction5

Nazarbayev University: Astana-Kazakhstan

• Founded: June 2010 in the “heart of Eurasia”.

• Research university aiming to develop as a prestigiousworld-class university combining education, researchand innovation.

https://monitor-cdn5.icef.com/wp-content/uploads/2014/09/Kazakhstan-map.jpg

• 3268 students.

• Academic Excellence: Integration of educationand research in a common ecosystem.

• Clean Energy Technologies: one StrategicResearch and Technology area.

• Kazakhstan EXPO-2017: “Future Energy”

Nazarbayev University is a suitable candidate

Introduction6

Economic-technical

evaluation of the project

Natural resources assessment

Technology selection

Life Cycle Cost Analysis on

Proposed Case vs. Base Case

Base case: Grid electricity (72% from coal-fired power plants)*

Proposed case: On-grid PV FIT / On-grid PV FIT + Grant / On-Grid PV FIT++

Assessment Methodology/LCCA

Assessment Methodology (LCCA)

RETScreen 4.0 platform

(*) https://www.export.gov/article?id=Kazakhstan-Electrical-Power-Generation

Introduction7

Assessment Methodology (LCCA)/ Natural Resources Assessment

• 87.5% electricity from fossil fuels, 12.3%hydro and 0.2% others. 72% of electricityfrom coal-fired power plants.

• Solar energy is abundant. 2200-3000sunny hours per year.

• 6x50MW solar plants in construction insourthern region Zhambyl 2016-17.

• 1300-1800kWh/m2/year solar insolation.

source: http://www.reegle.info/policy-and-regulatory-overviews/KZ Based on REEEP Policy Database

http://solargis.com/assets/graphic/free-map/GHI/Solargis-Kazakhstan-GHI-solar-resource-map-en.png

LocationEngineering Block 6

Deployment

Ground location was discarded becauseof ongoing construction an potentialuncontrolled shadowing.

Accessibility issues

Roof offers difficulties for maintenance work.

Where in NU campus is it possible to install PV?

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Block 8 Block 6 Block 4 Block 2

Close up of Block 6

IntroductionAssessment Methodology (LCCA)/ Technology Selection

9

Parameters for energy model

Technical specifications of PV panels (as extracted from RETScreen)

PV Capacity 24 kWp

Solar tracking mode Fixed

Slope 30 °

Azimuth 0 °

Electricity Export

Rate (FIT) (KZT/MWh)

36,410

Capacity Factor 14.7%

Astana Solar PV Panels KZ PV 230M60, efficiency: 12.4%, 100 units, total 24 kWp on 194 m2

IntroductionAssessment Methodology (LCCA)/ Technology Selection

Life Cycle Cost Analysis (LCCA)Initial costs

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Contract negotiations, permits & approvals, site survey & land rights,

GHG validation & registration, project financing, legal & accounting. Free

consulting from NU.

Development

Spare parts cost (30 % percentage of the total equipment cost): 3,312,000 KZT. Thus, total CAPEX = 16,469,200 KZT. Contingencies = 1,497,200 KZT.

Balance of system & miscellaneous“Astana Solar” LLPmanufactures PV in Kazakhstan

Feasibility study

PV panels by “Astana Solar” using Kazakhstani silicon. “KazPV” LLP (1kWp ≈ 315,000 KZT).

Power system

Low-maintenance PV system typically require little maintenancewith lifetime of 25 years

Annual costs

Support to be provided by NU.

Additional expenses of 200,000 KZT.

EngineeringInverter lifecycle = 10 years

Periodic costs

24 kWp PV array: 7,560,000 KZT

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Current FIT in Kazakhstan: 36,410 KZT/MWh

Scenario I Scenario II Scenario III

Brief

description

Current FIT

36,410

KZT/MWh / No

incentives

Current FIT +

30% Total

CAPEX GG

Upgraded FIT

70,000

KZT/MWh

/No incentives

Scenarios to be assessed

Scenarios

Life Cycle Cost Analysis (LCCA)

Scenario I (On-grid PV FIT)Financial parameters

Inflation rate % 9.7%

Discount rate % 12.0%

Project life yr 20FinanceIncentives and grants KZTDebt ratio % 25.0%Debt KZT 4 117 300Equity KZT 12 351 900Debt interest rate % 15%

Debt term yr 20

Debt payments KZT/yr 657 786

Financial viabilityAfter-tax IRR - equity % 15.1%Simple payback yr 17.6Equity payback yr 8.8Net Present Value (NPV) KZT 4 587 237Benefit-Cost (B-C) ratio 1.37

Cumulative cash flows (as extracted from RETScreen)

12Feasibility Analysis (via LCCA)

Financial parameters

Fuel cost escalation rate % 3.0%

Inflation rate % 9.7%

Discount rate % 12.0%

Project life yr 20

Financial viability

Pre-tax IRR on equity % 20.9

Simple payback yr 12.3

Equity payback yr 7.2

Net Present Value (NPV) KZT 5 849 558

Benefit-Cost ratio 1.47

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Scenario II (On-grid PV FIT + 30% CAPEX GG)Cumulative cash flows (as extracted from RETScreen)

Feasibility Analysis (via LCCA)

Financial parametersInflation rate % 9.7%Discount rate % 12.0%Project life yr 20Debt ratio % 25.0%Debt KZT 4 117 300Equity KZT 12 351 900Debt interest rate % 15%Debt term yr 20Debt payments KZT/yr 657 786

Financial viabilityAfter-tax IRR - equity % 28.3%Simple payback yr 8.3Equity payback yr 5.0Net Present Value (NPV) KZT 32 298 837Benefit-Cost (B-C) ratio 3.61

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Scenario III (On-grid PV Upgraded FIT )

Cumulative cash flows (as extracted from RETScreen)

Feasibility Analysis (via LCCA)

Summary of 3 scenarios

Scenario I Scenario II Scenario III

Scenario brief description no incentives,

actual feed in

tariff 36,410

KZT/MW

30 % incentives

from government

with actual feed in

tariff

new proposed feed

in tariff 70,000

KZT/MW

Pre-tax IRR on equity (%) 15.1 20.9 28.3

Simple payback (years) 17.6 12.3 8.3

Equity payback (years) 8.8 7.2 5

Net Present Value (NPV) (KZT) 4 587 237 5 849 558 32 298 837

Benefit-Cost ratio 1.37 1.47 3.61

13Feasibility Analysis (via LCCA)

Concluding remarksFinancial impact via LCCA of On-grid PV system at Nazarbayev University campus wasexplored under 3 scenarios: (I) Current FIT; (II) Current FIT + Grant; and (III) Upgraded FIT.

Results show that:

• Scenario I, under current FIT of 36,410 KZT/MWh, is marginally attractive with largeEquity and Simple paybacks and a modest Benefit-Cost ratio of 1.37.

• Adding an incentive of 30% of CAPEX (scenario II) improves the project financial outcome,but still in a modest level, keeping Equity and Simple paybacks above 10 years.

• Nearly duplicating the current FIT (scenario III), with no grant, led to a dramatic change infinancial outcome, turning the project into a highly attractive investment.

• Results have proven that subtle changes in Kazakhstan’s FIT policy may create theappropriate scenario to bring on-grid PV systems to campuses and facilitate the “teachingby example”.

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Any comments or questions?

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Thank you