Type of Model:
Business Financial Planning
Electricity – High Voltage DC Transmission
The North West Mineral Provence in Queensland is being constrained by Electricity supply – both MW and cost. Xstrata is making non optimal decisions about processing sites based on availability of energy. Mt Isa is reliant on a combination of gas and diesel which is very expensive and Darwin Electricity Price are subsidised by the Federal Government – based on high cost diesel generation. The State Government cannot afford to extend the AC Grid and there are problems with stability and cost of AC Grid extension as it is long and skinny with little embedded generation. A complete financial model was developed to show the benefit of investing in a HVDC line from Stanwell Power Station through Mt Isa and Macarthur River to Darwin.
The model was a complete P and L , Balance Sheet and Cash flow analysis with various combinations of line configuration and load assumptions. Maintenance strategies and different expansion profiles were all modelled and allowed to be user driven. Total Capital Cost circa $2bn. 30 year life models were calculated and NPV, IRR and total value add were all calculated.
The model allowed for different funding strategies and included cost of capital calculations and NPV analysis over 30 years.
The project was affected by the Global Financial Crisis and the client decided not to proceed.