1 Dr. Alaa Olama, Project consultant 1 1- Objectives of the Study - - PowerPoint PPT Presentation

• Dr. Alaa Olama, Project consultant

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4- The Institutional regulatory Framework Study 3- The Financial Study 1- Objectives of the Study 2- The Technical Study 6- Conclusion and Way Forward

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• Design DC systems for two locations
• Best energy efficiency.
• Obtain cost Parameters to use in the Financial Part.

Technical Study

• Create an economic model, BOO, for each DC project.
• Calculate the economic indicators of the systems using the cost parameters of the

technical part.

• Make a cost comparison between an NIK and IK system to obtain NPV.

Financial/ Economic Study

• Compile all international DC regulations available
• Propose an Institutional Regulatory Framework for DC projects.
• Conduct a Public hearing to discuss results.

Institutional Regulatory Framework Study 1- Objectives of the Study

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Target Market 2- The Technical Study – Criteria for Selection of sites 4

Map of Egypt showing the location of Capital One & New El-Alamein City

No Item Criteria Points 1 New developed city/district.

New City = 20 New District in existing City = 15 Existing District = 5

20 2 Minimum Cooling Capacity

< 5,000 TR = 5 5,000 – 10,000 TR = 7 10,000 – 30,000 TR = 8 > 30,000 TR = 10

10 3 Proximity to: a. Sea side b. Waste Heat Source (elect. power station)

Within or less than 5Km = 30 5-10 Km = 20 More than 10 Km = 10

20 4 Proximity to NG downstream line

Within connected proximity

10 5 Current status of city/district development

Concept phase = 20 Design phase = 10 Contract phase = 5

20 6 Type of application (residential, commercial, governmental, industrial, mixed)

Governmental = 20 Residential = 5 Commercial =15 Industrial = 15 Mixed Use = 20

20 Total 100

Target Market You can edit this text.

El Alamein City:

• Design of a District Cooling system using

Not In Kind Cooling technology.

• Applying

Deep Sea Cooling technology- the Scandinavian model.

• Obtaining actual quotes foe DSC and all equipment.
• Calculating Cost Parameters: Installed capacity, EFLH,

Capex, Opex, etc. Capital One City:

• Design of a District Cooling system using Not In

Kind assisted by In Kind Cooling technology.

• Obtaining actual quotes for all equipment.
• Calculating Cost Parameters: Installed capacity,

EFLH, Capex, Opex, etc.

2- The Technical Study

Technical Information Survey The Point System Financial Information Survey

Results, Two Cities:

• El Alamein
• Capital One

Criteria for selecting potential sites for the District Cooling Feasibility Study

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District Cooling by Deep Sea Cooling for New El Alamein City.

New el Alamein City Basic chilled water schematic diagram of DSC and chiller system

2- The Technical Study –Al-Alamein City

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Capital One- Details of Government service areas.

8 2- The Technical Study –Capital One City

Capital One City- Basic schematic diagram of Chilled Water for two DC plants.

9 2- The Technical Study –Capital One City

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3- The Financial Study

Net Present Value – NPV

A way to calculate the time value of money as money in the present is worth more than the same amount in the future. Thus, It is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Internal Rate of Return - IRR

The IRR is the discount rate that will bring a series of cash flows (positive and negative) to a net present value (NPV) of zero (or to the current value of cash invested)

Break even analysis

Determine the price level of various levels of demand to determine what level of sales are needed to cover its associated fixed costs

Return on investment - ROI

It is the ratio that measures the return (Net profit) of a project to its total invested fund/investment.

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3- The Institutional regulatory Study

3- The Financial Study (cont.) Connection Charge Capacity Charge Consumption Charge

Payable once and upfront upon contract signature by contracted customer of energy. Estimated at 10% of the total investment cost of the station. Calculated based

• n

a minimum capacity dedicated to each specific customer. Multiplied by the set tariff to be paid monthly/quarterly. The actually consumed energy per ton per hour charged monthly.

District Cooling Projects are usually constructed by specialized companies on a Build, Own and Operate (BOO) basis for 20 years concession.

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3- The Institutional regulatory Study 3- The Financial Study – Financial Analysis

The Suggested Tariff EGP 9.4/TR/hr, (i.e. USD 0.53/TR/hr) Financing Scheme % USD EGP Connection Charge Advance Payment 10% 5,132,250 91,354,050 Equity 30% 18,404,068 327,592,406 Debt 60% 30,793,500 548,124,300 Assumed Interest Rate 18% fixed rate. Annual Revenues 1st year of operation shall be EGP 355.4 Million (USD 19.97 Million), then reach EGP 467.3 Million (USD 26.25 Million) in 8th year then stabilizes onwards. The net profit after taxes 1st year of operation is EGP 190.8 million (USD 10.72 Million) and escalates to reach EGP 300.1 Million (USD 16.86 million) in the 12th year and stabilizes onwards

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Charges

Capacity Charge is calculated based

• n the minimum charge for each

user/customer multiplied by the number of users/customers vs. the consumption charge which is collected based on energy consumed.

• 50

100 150 200 250 300 350 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 EGP Millions

Capacity Charge (Minimum charge) Consumption Revenues

The Income Statement Summary

The second year shows a drop in revenues due to the non-recurrence of the connection charge which is paid

• nce by the clients. Net profit has

decreased sharply due to the higher Opex incurred versus the low

• perating capacity.
• 100

200 300 400 500 600 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 EGP Millions

Revenue Gross Profit EBITDA Net Income

13 3- The Financial Study – Financial Analysis

13 EBITDA= earning before interest, taxes, depreciation and amortization.

3- The Institutional regulatory Study Balance Sheet Summary The balance sheet shows a continuous increase in its footings due to the increased equity form

• ne side and higher cash in the

current assets from the other.

• 1,000

2,000 3,000 4,000 5,000 6,000 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 EGP Millions

TOTAL ASSETS TOTAL LIABILITY TOTAL OWNER'S EQUITY

Cash Flow Statement The cash flow

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the project witnessed slower growth due to the ramp-up of the project capacity until year 8 of operation which shows a sharp increase in its cash closing balances thus making the project cash rich.

(2,000) (1,000)

• 1,000

2,000 3,000 4,000 5,000 6,000 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 EGP Millions

Cash flow from operations Cash flow from investments Cash flow from Financing Closing Cash Balance

14 3- The Financial Study – Financial Analysis

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5- Concluding Results (3)

• A comparative study was conducted to compare between installing Central Chilled

Water system in the individual buildings of the Project namely, mixed use between hotels and commercial Buildings.

• The comparison investigates the capital expenditure of the Equipment and network

installations with its associated financing cost and its operation expenses, versus paying for a service provided by District Cooling Plant.

• This involves paying Connection, Capacity and Consumptions charges only.
• After calculating the cost incurred by the user in both scenarios, we calculate their

Net Present Value to reach a conclusion on the saving achieved over the 20 years project lifetime.

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5- Results For El Alamein City User NPV User Benefit District Cooling Station USD 84 Million 20% Reduction in NPV Stand-alone Building Annual Payments USD 99 Million

• Results shown in favor of the district cooling plant.
• With a DC NPV of USD 84 Million versus an NPV of USD 99 Million for individual building chillers cost

incurred by the user, which is a 20% reduction calculated at around USD 15 Million in the capital cost.

• The NIK deep Sea Cooling System is more energy efficient than same capacity In Kind system and shows i

saving of 20 % in user NPV. 16

5- Concluding Results (1)

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For Capital One City User NPV User Benefit District Cooling Station USD 335 Million 35% Reduction in NPV Stand-alone Building Annual Payments: USD 523 Million

• Results shown in favor of the district cooling plant. With an NPV for DC system of USD 0.335 Billion

versus an NPV of USD 0.523 Billion for individual building chillers.

• This is a 35% reduction calculated at USD 188 Million in the capital cost.
• The NIK DC system assisted by IK System is more energy efficient than same capacity In Kind system

and shows saving of 35 % in user NPV. 17

5- Concluding Results (2)

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4- The Institutional & Regulatory Framework Study

Institutional Regulatory Framework Proposal

• Proposes regulatory framework identifying guidelines and minimum

requirements of buildings connected to district cooling systems.

• Proposes regulatory framework providing recommendations on the

design of consumer’s air conditioning installation, to ensure such systems are compatible with connected district cooling service.

• Identifies Local institutional and regulatory framework requirements

to be taken into consideration.

• Conduct a Public hearing to discuss results.

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4- The Institutional & Regulatory Framework Study

Item Hong Kong Singapore Egypt

Part 1 Preliminary

• 1. Short title

I N/I

• 2. Interpretation

I N/I I

• 3. District cooling system in relation to which this Ordinance applies

I N/I N/I

Part 2 Provision of District Cooling Services

• 4. Approval of consumer of district cooling services

I N/I N/I

• 5. Contract cooling capacity

I N/I N/I

• 6. Provision of district cooling services

I N/I N/I

• 7. Suspension or termination of district cooling services

I N/I N/I

• 8. Application for resumption of suspended district cooling services

I N/I N/I

• 9. Ceasing to be approved as consumer of district cooling services

I N/I N/I

Part 3 Charges for District Cooling Services

• 10. Charges for district cooling services

I N/I I

• 11. Determination of actual cooling capacity and actual cooling energy consumption

I N/I I

• 12. Testing of meter

I N/I N/I

• 13. Deposit

I N/I N/I

• 14. Due date for charge, fee and deposit

I N/I N/I

• 15. Reduction etc. of charge, fee and deposit

I N/I N/I

• 16. Recovery of charge and fee

I N/I N/I

• 17. Application of charge and fee received etc.

I N/I N/I

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4- The Institutional & Regulatory Framework Study

Part 4 Administration of District Cooling Services

• 18. Improvement notice

I N/I N/I

• 19. Authorized officers

I N/I N/I

• 20. Access for inspection and maintenance

I I N/I

• 21. Offences

I N/I N/I

Part 5 Appeal

• 22. Appeal to appeal board

I N/I N/I

• 23. How to lodge an appeal

I N/I N/I

• 24. Appeal board panel

I N/I N/I

• 25. Appeal board

I N/I N/I

• 26. Proceedings of appeal board

I N/I N/I

• 27. Hearing of appeal

I N/I N/I

• 28. Reappointment of appeal board in case of certain vacancies

I N/I N/I

• 29. Appeal board may authorize inspection of installation etc.

I N/I N/I

• 30. Determination of appeal

I N/I N/I

Part 6 Miscellaneous Matters

• 31. Presumptions and evidence in writing

I N/I N/I

• 32. Delegation by Director

I N/I N/I

• 33. Director may specify forms

I N/I N/I

• 34. Secretary may amend Schedules

I N/I N/I

Item Hong Kong Singapore Egypt

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4- The Institutional & Regulatory Framework Study

Concept & Tariffs Design License Contract Construction Commission- ing Operation Dispute

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4- The Institutional & Regulatory Framework Study Concept & Tariffs

DC Committee

Design

Owners/Consultants

License DC Committee & Authorizing Entity Contract

DC Committee

Construction DC Providers & Authorizing Entity Commissioning

Owners/Consultants

Operation

DC Providers

Dispute DC Committee

Four Main key players:

• 1. DC Committee
• 2. Authorizing Entities
• 3. Owners/Consultants
• 4. DC Providers

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ITEM

• A. Concept

A.1. Forming a DC committee. A.2. Calculating the usage tariffs. A.3. Using of purpose made financial model

• B. Design

B.1. Revising the contract cooling capacity. B.2. Preparation of the Load Demand ‎ Curves, daily, monthly and yearly. B.3. Using of refrigerants that comply with Montreal Protocol and its amendments. B.4. Treatment of Water. B.5. Defining the chilled water temperature ‎ difference.

• C. License

C.1. Getting the licence.

• D. Contract Template

D.1. Template of the application form for approval. E.2. Paying the connection, capacity and consumption charges. E.3. Improvement notice E.4. Inspection of installation for determination of an appeal.

4- The Institutional Regulatory Framework Study (cont.) 25

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• E. Interference Items (Constructions, Commissioning and Operation)

E.1. Necessary actions to protect life, or property, or the performance of an installation for the building, made by the consumer that is jeopardizing or could jeopardize the operation or reliability of the DC services. E.2. Paying the connection, capacity and consumption charges. E.3. Improvement notice E.4. Inspection of installation for determination of an appeal.

• F. Disputes

F.1. Refusing to provide DC services to a building. F.2. A person obstructs an authorized officer. F.3. Notice of appeal.

26 4- The Institutional Regulatory Framework Study (cont.)

6- Conclusions and Way Forward

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 NIK Technologies are technically Feasible DC and Central Applications.  Components and Services can be easily obtained in Egypt and similar countries.  Commercial, Administrative and Institutional Sectors should be the main focus for DC applications. Residential Sectors are not always suitable for DC.  Some technologies can offer substantial reduction in power demand.  Deep Sea Cooling technology is very promising and can be easily applied for new cities at the Mediterranean and Red Sea.

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6- Conclusions and Way Forward (2)

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Finalize and Issue the Institutional DC Regulatory Framework (Public Hearing/Comments and Issuance)

Mobilize support from local and internation al finance institutions High-Level engagement to ensure inclusion in the ongoing national development plan

Develop Toolkit to promote the DC and NIK concepts amongst consultants and

• wners

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