Financial evaluation of Kızıldere Geothermal Power Plant

Abstract

A capacity increase is of concern in the Kızıldere Geothermal Power Plant-the first geothermal plant in Turkey. In this study, the feasibility of possible future investments in Kızıldere has been analyzed financially using methods such as internal rate of return, net present value, payback and benefit-cost. Two scenarios with different financial structures have been formed and both scenarios have been applied to 20MW, 40 MW, and 60 MW power plants. The choice among different alternatives has been made according to the unit energy cost, which is a significant parameter in power plants. The first scenario represents a government project which establishes the project finance on a debt ratio of 75%. The debt term has been taken as 12 years and the debt interest rate as 7%. In this scenario, unit energy cost has been estimated as 4,33 cent/kWh for 20 MW, 4,10 cent/kWh for 40 MW and finally 3,88 cent/kwh for 60 MW. The second scenario represents a private project with a debt ratio of 50%, where the debt term is 8 years and the debt interest rate is taken as 5%. As for the unit energy cost for this particular scenario, it has been estimated as 3.8 cent/ kWh, 3.59 cent/kWh and 3.40 cent/kWh for 20 MW, 40 MW and 60 MW respectively. Kızıldere geothermal Plant has been financially evaluated in this study and it has been concluded that although both scenarios are feasible, the best alternative is 60MW private project.