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

1 Dr. Alaa Olama, Project consultant 1

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

1- Objectives of the Study 3 Technical Study • Design DC systems for two locations • Best energy efficiency. • Obtain cost Parameters to use in the Financial Part. Financial/ Economic 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. Institutional Regulatory Framework Study • Compile all international DC regulations available • Propose an Institutional Regulatory Framework for DC projects. • Conduct a Public hearing to discuss results.

No Item Criteria Points 2- The Technical Study – Criteria for New City = 20 Selection of sites New District in existing City = 1 New developed city/district. 20 15 Existing District = 5 < 5,000 TR = 5 5,000 – 10,000 TR = 7 2 Minimum Cooling Capacity 10 10,000 – 30,000 TR = 8 > 30,000 TR = 10 Within or less than 5Km = 30 Proximity to: 5-10 Km = 20 a. Sea side More than 10 Km = 10 3 20 b. Waste Heat Source (elect. power station) Target Proximity to NG Within connected proximity 4 10 Market downstream line Concept phase = 20 5 Current status of city/district Design phase = 10 20 development Contract phase = 5 Governmental = 20 Type of application Residential = 5 (residential, commercial, Commercial =15 6 20 governmental, industrial, Industrial = 15 mixed) Mixed Use = 20 Map of Egypt showing the location of Capital One & New El-Alamein City Total 100 4

2- The Technical Study El Alamein City: • Design of a District Cooling system using Technical The Point Not In Kind Cooling technology. Information • System Applying Deep Sea Cooling technology- the Survey Criteria for Scandinavian model. selecting • Obtaining actual quotes foe DSC and all equipment. potential sites for • Calculating Cost Parameters: Installed capacity, EFLH, the District Capex, Opex, etc. Cooling Feasibility You can edit Study Target this text. Capital One City: Results, Market • Financial Design of a District Cooling system using Not In Two Cities: Information Kind assisted by In Kind Cooling technology. • El Alamein • Obtaining actual quotes for all equipment. Survey • Capital One • Calculating Cost Parameters: Installed capacity, EFLH, Capex, Opex, etc. 5

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2- The Technical Study – Al-Alamein City 7 7 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 – Capital One City Capital One- Details of Government service areas. 8

2- The Technical Study – Capital One City 9 Capital One City- Basic schematic diagram of Chilled Water for two DC plants. 9

3- The Financial Study Net Present Value – NPV 10 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 10 fund/investment.

3- The Financial Study (cont.) District Cooling Projects are usually constructed by specialized companies on a Build, 3- The Institutional regulatory Study 11 Own and Operate (BOO) basis for 20 years concession. Connection Charge Capacity Charge Consumption Charge Payable once and upfront upon Calculated based on a The actually consumed contract signature by contracted minimum capacity dedicated to energy per ton per hour customer of energy. Estimated at each specific customer. charged monthly. 10% of the total investment cost of Multiplied by the set tariff to the station . be paid monthly/quarterly. 11

3- The Financial Study – Financial Analysis The Suggested Tariff EGP 9.4/TR/hr, (i.e. USD 0.53/TR/hr) 3- The Institutional regulatory Study 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. 1 st year of operation shall be EGP 355.4 Million (USD 19.97 Million), then reach EGP 467.3 Annual Revenues Million (USD 26.25 Million) in 8 th year then stabilizes onwards. 1 st year of operation is EGP 190.8 million (USD 10.72 Million) and escalates to reach EGP 300.1 The net profit after Million (USD 16.86 million) in the 12 th year and stabilizes onwards taxes 12

3- The Financial Study – Financial Analysis EGP Millions Capacity Charge (Minimum charge) Consumption Revenues Charges 350 Capacity Charge is calculated based 300 on the minimum charge for each 250 user/customer multiplied by the 200 number of users/customers vs. the 150 consumption charge which is collected 100 based on energy consumed. 50 - EGP Millions 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 20 600 Revenue Gross Profit EBITDA Net Income The Income Statement Summary 500 The second year shows a drop in revenues due to the non-recurrence of 400 the connection charge which is paid 300 once by the clients. Net profit has decreased sharply due to the higher 200 Opex incurred versus the low 100 operating capacity. - 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 13 13 EBITDA= earning before interest, taxes, depreciation and amortization.

3- The Financial Study – Financial Analysis 14 EGP Millions Balance Sheet Summary TOTAL ASSETS TOTAL LIABILITY TOTAL OWNER'S EQUITY 6,000 3- The Institutional regulatory Study The balance sheet shows a 5,000 continuous increase in its footings 4,000 due to the increased equity form 3,000 one side and higher cash in the current assets from the other. 2,000 1,000 - 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 Cash Flow Statement EGP Millions Cash flow from operations Cash flow from investments Cash flow from Financing Closing Cash Balance 6,000 The cash flow of the project 5,000 witnessed slower growth due to the 4,000 ramp-up of the project capacity until 3,000 year 8 of operation which shows a 2,000 sharp increase in its cash closing 1,000 balances thus making the project - cash rich. 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 (1,000) (2,000) 14

5- Concluding Results (3)  A comparative study was conducted to compare between installing Central Chilled 15 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. 15

5- Concluding Results (1) 5- Results For El Alamein City User NPV User Benefit 16 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 (2) For Capital One City User NPV User Benefit District Cooling Station USD 335 Million 35% Reduction in NPV 17 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

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