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Team: “RU Clean Energy”
THE ECONOMIST ENERGY CASE STUDY:
CLEAN ENERGY IMPLEMENTATION IN
DOBBS FERRY,NY
Christine Monroy – Chemical Engineering
Kieran Kemmerer – Mechanical Engineering/MBA
Pranay Kumar – Candidate, MCRP
1
Contents
Abstract…..2
Proposal….3
Sources….11
Appendix…12
2
Abstract
The Village of Dobbs Ferry, New York in Westchester County is considered in the
implementation of two solar projects and three commercial grade Tesla Batteries. The total
project cost is estimated using referenced assumptions and projects of similar size. The financial
model includes an upfront cost of $10.9 M to be funded up front by NRG and paid back in yearly
installments of $810,000 by the municipality over the course of thirty years. This proposal
evaluates the benefits and risks for both parties as well as considers plans for implementation and
alignment with both NRG and New York State energy goals. Energy savings are recognized in
the offset of on-peak energy consumption, calculated using NYISO load data and technical
specifications of the equipment used.
Acknowledgements
Special thanks to Beatrice Birrer of the Rutgers Energy Institute for shedding light upon this
opportunity.
3
Meeting the growing electricity needs of modern society presents several challenges from
a policy, regulatory, technological, economic perspective and affects every individual daily.
These problems are compounded by the unique character of the utility industry requiring large
capital investment with long gestation periods, interconnection with grid infrastructure, and
strong interrelationship with other energy systems. Additionally, rapid technological changes and
the impact on the surrounding environment and long term effects on climate have become an
increasingly pressing issue. One must also consider financial obstacles arising out of a natural
monopoly of regulated transmission and distribution infrastructure and the associated sunk costs.
Given these challenges, it was difficult to arrive at a practical and financially viable solution,
which considers of all these concerns for the entire useful lifetime of the project at an affordable
cost. This proposal puts forth a model which attempts to optimize the benefits and minimize the
concerns utilizing PV solar and battery storage technology for implementation within a regulated
tariff for thirty years. The project focuses on providing a clean-energy solution for a 40 MW
community in New York State. The proposed generation assets are in-line with both NRG and
New York State environmental goals, looking to decrease emissions as well as provide additional
solar generation on the grid. The model assumes regulatory certainty for this period and will
have the flexibility to account for the evolving technologies in the field of PV solar, battery
storage and smart metering systems to appropriately value the electricity being used and
generated.
In order to create a realistic model, the team first searched for a region in New York
which demonstrated a need for suitable technology. Westchester County was selected, based on
its proximity to the Indian Point Nuclear Power Plant. The Indian Point facility is set to close in
2021, because of the apparent danger it poses in close proximity to New York City, and currently
4
has a net power output of about 2,000 MW per day, generating about a quarter of the energy
required by New York City and Westchester County [1]. With the loss of such a massive energy
supplier, new energy sources will need to be added to the grid, making this a suitable focus
region. Based on average household energy consumptions, it was estimated that 11,623 homes or
31,500 people would amount to a 40 MW community. Taking into account the variable energy
consumption from municipal buildings, schools, hospitals, restaurants, etc., that estimate was the
mean power consumption of the community. The town of Dobbs Ferry was selected for
modeling purposes based on its population. The community is already recognized as a Bronze
Level Climate Smart Community [2] and the town’s recent leadership in solar solutions implies
the township may be more receptive to a larger-scale project.
The first technology to be implemented in this project is PV solar. PV solar is well
understood and establishing a financial model on a variety of scales is a realistic option. Solar is
favorable in the state of New York; the state ranks impressively for its solar electric capacity [3]
and solar tax credit [4]. Solar is a desirable source of energy because it is noiseless and only
requires sunlight. Panels may be installed in a variety of ways including, but not limited to,
residential rooftops, solar fields, and parking lot “canopies”. The second technology used in this
project will be commercial scale battery storage. Batteries will play a key role in softening the
utility daytime peaks. This technology allows for energy to be allocated more efficiently and
reduces dependence on a single source. Recently, battery storage has made large technological
advances allowing for more capacity and longer sustained discharged rates. Tesla Motors has
been a pioneer in this industry, and for the sake of simplicity the Tesla Powerpack is being
utilized in this proposal, although it is acknowledged there are other equally feasible alternatives.
5
Certain technologies will not be explored in this scenario for specific reasons. Biomass is
an unrealistic source of energy given the geographical selection. Obtaining a large volume of
biomass feed on a consistent basis would be extremely difficult in Eastern New York. Whether
combusting biomass directly or gasifying it to create fuel, it is an expensive process and
disruptive to the community. Additionally, biomass technology is not developed enough on a
distributed energy scale to guarantee profitability [5]. Although New York State has invested in
wind turbine technology projects recently, the model town of Dobbs Ferry does not have a
sufficient land space for wind turbine installment. Most of the available land is park space, on
which installment would face a great deal of push-back from the community. The wind
conditions in Dobbs Ferry are unfavorable and the fluctuating nature of wind makes the
profitability unpredictable. Investment in wind in this community would require field and
potential site audits, which prove impractical in this case.
Fuel cell and gas turbine technologies were also considered. Currently, both options are
utilized with natural gas as a fuel source; mainly because it is very inexpensive and easily
obtainable. Both technologies are fairly efficient when heat recovery is implemented, however
they still result in CO2 emissions. Fuel cells have been implemented, with positive results, on
sites where natural gas isn’t as valuable, such as natural gas wells with leakage [6]. A combined-
cycle gas turbine with a heat recovery steam generation would produce a great deal of power,
depending on the size, but in the model community finding space for a large project would be
difficult. These generation assets also require frequent maintenance and must be managed and
operated.
The proposed project consists of two “solar canopies” covering the parking lots at Mercy
College and the Dobbs Ferry Train Station and three commercial scale Tesla “Powerpacks” that
6
are to be distributed throughout the town to provide the community with energy during peak
hours. This combination of generation assets provides for both utilization of green energy and
resiliency in generation. Given the nature of this community, it is impractical to implement
sufficient diversified generation capable of powering the entire village. Such an effort would
consume valuable property and require higher infrastructure costs incurred in developing the
land to make it suitable for various forms of generation. Rather, this proposal takes a less
invasive approach with the goal of reducing the costs of electricity for the town and its
inhabitants. Additionally, both battery storage and PV solar are available on a residential scale.
The beneficial impact of the proposed project is also intended to encourage homeowners to
invest in similar technologies in their own homes, which would magnify the effect the proposed
project has on the community. It is reasonable to believe that this effect would be prominent, as
the town has already made efforts to conserve energy at a municipal level and is enjoying the
benefits.
The solar canopies were chosen given the size of the two lots. Figures 1 and 2 show the
proposed lots and the approximated area (see Appendix). Both locations are public and are not
invasive to the citizens, as well as will provide the added benefit of shelter from outdoor
elements when walking to and from a car. The Mercy College site is estimated to provide an
average of 725.9 kW and the Train Station site an average of 290.9 kW. These sites are proposed
to be tied into grid to serve the surrounding area.
The Tesla Powerpack’s are 500 kW/5-hour discharge batteries designed to charge in the
overnight when power is the least expensive and discharge at set times during the day to offset
the consumption of more expensive on-peak energy. Both the solar assets and batteries will have
the effect of putting energy on the grid during the peak hours; lowering the need for expensive
7
generation during the on-peak hours and providing the township with clean, reliable energy. The
batteries are to be placed strategically throughout the township to provide power evenly
throughout Dobbs Ferry and remain minimally invasive. At its peak, this model provides 1.72
MW for the community. As stated previously, this is not intended to provide sufficient
generation for the entire community, but rather provide local and reliable generation during the
times of highest consumption during the day.
Using several basic assumptions this option is demonstrated to be financially beneficial
for both NRG and the municipality. The financial model utilizes cash flows from the
municipality paid to NRG for ownership of the assets at the end of thirty years. This period
represents the approximate useful life of the generating equipment (useful life of infrastructure is
assumed to be much longer) and thus the transfer in the full ownership assets at Year 30 will
benefit both NRG and the Village of Dobbs Ferry. NRG will be responsible for any repairs
inside the lifespan of the equipment while Dobbs Ferry will use the savings in energy to offset
the cost of the annual installments made to NRG. In essence, NRG will act as the lessor of this
equipment to Dobbs Ferry, transfer of ownership will be at the end of the useful life of the
equipment, and NRG will not be sacrificing the value of the asset at the end of the thirty years.
This ensures that NRG is repaid in full that the township receives the full benefit of the
generation assets for the perceived future.
The costs of the project total $10,942,015.60 (See Appendix for calculations and
assumptions). This amount is to be fronted by NRG to implement and install the necessary
infrastructure. Although rough estimates are used in this calculation, for the sake of calculating
cash flows it is assumed that if the process were to begin in the beginning of 2017, the project
would be installed and operational by January of 2018. Given a thirty-year payback period the
8
annual installment owed to NRG would be $810,000, the cost of which will be offset by both
NYSUN solar incentives and savings in net generation. In Year 1, the municipality would have a
net loss of $184,000; followed by a net loss of $645,000 yearly until year thirty. After that is
assumed that the savings will act in perpetuity, bringing the NPV of the project to ($9.4 MM).
The municipality has options for financing this debt. The simplest option is simply to pass it on
the homeowners in the form of a tax which would amount to $560 a year per household. Being
that property taxes in this area are above average, this would result in small increase in annual
taxes that in theory should be offset by the reduction in power costs for the inhabitants. If the
municipality opted not to pass it on in the form of a tax, they could issue a municipal bond in the
amount of the net payment. This is another viable option as the payments would be made
regularly and the security would be asset-backed. In this model, however, the risk-free market
rate is used to discount the cash flows so the bond value may not be attractive to potential buyers
as the coupon rate could not be too high.
NRG will see a NPV of $35,000; discounting the future cash flows made by the
municipality by the approximated Weighted Average Cost of Capital (WACC), estimated using
public information. Due to the high number of approximations, there is definitely uncertainty in
this model, but most approximations were made conservatively. The biggest contributor to
uncertainty for NRG is costs; the largest source of uncertainty for Dobbs Ferry is savings. Given
a proper evaluation and investment-grade audit, further decisions could be made on the extent
and time frame of the proposed generation assets.
NRG may also consider incentivizing the formation of similar projects or expanding the
current proposed projects by offering better payment terms in exchange for additional products.
This will increase NRG’s foothold in the area as well as ease the debt taken on by Dobbs Ferry.
9
For the successful implementation of any project, it is essential that the risks associated
with it are balanced and shared equitably amongst the different stakeholders. Further, the model
should account for the technological innovations and associated price impacts on the investment
carried out for the entire useful lifetime of the project. While the present policy and regulatory
framework is quite encouraging in terms of the taxation and other incentives associated with PV
solar and battery storage technologies, they must be secured by regulatory oversight for the
future. It is also contended that any solution, which puts extra burden on the existing distribution
utility (Con Edison) and causes loss of revenue to them will not be sustainable. Accordingly, this
model will have to be adopted and implemented with ConEd in such a manner so that they are
able to recover the cost from their consumers through a competitive tariff.
This model also presupposes enabling smart and net metering regulatory framework in
which the consumers are made aware and responsive to the price variations and the
incentive/disincentive structure associated with energy savings and overall benefits of renewable
energy technologies. In addition, while opting for this model, the price of PV solar is assumed to
have been based on the current market rates. In case the same continues to decline further, as has
been the past trend, or any new technology results in very competitive prices; the sunk
infrastructure cost of the project will have to be insured by suitable regulatory intervention.
For the 40 MW load requirement of a community in New York, the proposed model
electric system based on PV solar and battery storage technology appears to be the optimal
solution in light of the competing requirements of cost and technology and stakeholders
involved. The solution is based on the calculations of the average load requirements of the
community interconnected with the grid, having battery storage facility with intelligent
infrastructure in terms of smart metering and a responsive community. The model can be
10
implemented by an upfront investment by NRG at a project cost of $10,942,015.60, to be paid
back in installments of $810,000 to the developer over a period of thirty years. As the per unit
generation cost of PV solar is expected to be very near the rates of conventional electricity rates,
there will be minimal excess expenditure in the existing cost of electricity. It is expected that the
project model will not just promote the clean technologies but also will be beneficial to the
community in terms of their total cost of electricity and drive investment for economic growth.
11
Sources
[1] McGeehan, Vivian Yee and Patrick. "Indian Point Nuclear Power Plant Could Close by
2021." The New York Times. The New York Times, 06 Jan. 2017. Web. 01 Mar. 2017.
[2] "Climate Smart Communities Certification Program." Climate Smart Communities
Certification Program - NYS Dept. of Environmental Conservation. Department of
Environmental Conservation. n.d. Web. 07 Mar. 2017.
[3] "Top 10 Solar States." SEIA. Solar Energy Industries Association, n.d. Web. 04 Mar. 2017.
[4] "2017 United States Solar Power Rankings." Solar Power Rocks. N.p., n.d. Web. 28 Feb.
2017.
[5] Jin, H.; Larson, E. D.; Celik, F. E. Performance and cost analysis of future, commercially
mature gasification-based electric power generation from switchgrass. Biofuels,
Bioproducts and Biorefining 2009, 3 (2), 142–173.
[6] Phillips, Gabriel. "Natural Gas Fuel Cells: Technology, Advances, and ..." Department of
Energy. GP Renewables and Trading, 04 Mar. 2014. Web. 02 Mar. 2017.
12
Appendix
Community Size ………………….13
Solar Locations……………………14
Estimation of Solar Output………..15
Estimation of Project Costs………..16
Load Profile of Dobbs Ferry………18
Savings Estimates………………….20
Financial Calculations……………..23
Savings Cash Flow.………………..26
Cash Flow Analysis………………..27
13
Calculation of Community Size
103000000 Btu/(yr-home) * (0.000293071 kWh/ 1 Btu) = 30186.3 kWh/(yr-home)
1000 kWh/yr = 114.077116 W = 0.000114 MW
40 MW/community / (0.000114 MW * 1000 kWh/yr) = 350877193 kWh/(yr-community)
350877193 kWh/(yr-community)/30186.3 kWh/(yr-home)= 11623.7 home/community
11623.7 home/community * 2.71 people/home = 31500 people/community
14
Proposed Solar Locations
Figure 1: Mercy College (shown above). Approximately 250,000 ft2 or 5.74 acres
Figure 2: Dobbs Ferry Train Station: Approximately 100,000 ft2 or 2.3 acres.
15
Solar Output Estimation
Energy (kWh/day) = Area (m2) x Efficiency x Geographical Energy Density (kWh/m2-day)1 2
Available Wattage (W) = Energy (kWh/day) x 1000 (W/kW) / 24 (h/day)
1 Equation provided by http://photovoltaic-software.com/PV-solar-energy-calculation.php
2 Energy Density provided by https://maps.nrel.gov/re-atlas
Available Wattage Calculation Mercy College Train Station
Energy (kWh)/day 17421.56 6980.83
Area (m^2) 23228.75 9307.78
Efficiency 0.15 0.15
kWh/m^2/day 5.00 5.00
Available Wattage
Mercy College 725,898.34
Dobb's Ferry Train Station 290,868.06
Total 1,016,766.40
16
Estimation of Project Costs
Cost of Solar
Using a similar NRG Solar Canopy Project at ASU Lot 593 the cost estimation for the project
was projected on a size basis. The 2.1 MW ASU Lot 59 solar project totaled $10,500,000 for a
5.25 acre lot. The project total cost was subdivided into the cost of the solar panels and
accompanying equipment, and the costs of building the infrastructure and other associated costs.
In 2016 the cost of solar in the US was roughly estimated to be $4/Watt,4 implying that a 2.1
MW project would equate to roughly $8,400,000. Thus the remaining $2,100,000 was attributed
to infrastructure and other costs.
Considering the ASU Lot 59 is 5.25 acres in size, the infrastructure and other cost per unit area is
$400,000/acre.
Using $4/Watt and $400,000/acre the costs of the solar project are projected accordingly.
3 See link for project details https://asunow.asu.edu/content/innovative-solar-structure-shades-sun-devils
4 According to energysage.com in 2016 the average solar project cost $2-$4 per Watt. Being that this is a rough estimation the
high-end was used. http://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/
Total Cost of 2.1 MW Project 10,500,000.00$
Cost of Solar 8,400,000.00$
Infrastructure and Other Costs 2,100,000.00$
Available Acreage Infrastructure and Other Costs Available Wattage $ Based on Estimated Wattage Total Project Cost
Mercy College 5.74 2,296,000.00$ 725,898 2,903,593.35$ 5,199,593.35$
Dobb's Ferry Train Station 2.3 920,000.00$ 290,868 1,163,472.25$ 2,083,472.25$
Total Wattage 1,016,766 7,283,065.60$
17
Cost of Tesla Batteries
The Tesla Powerpack was chosen because of the ease in access to performance specs and cost
information.5 The breakdown of costs is shown below.
5 Information pertaining to Tesla PowerPack acquired at https://www.tesla.com/powerpack/design#/
Tesla Powerpack
Power 500 kW
Duration 5 hour duration
Price per Setup 1,069,650.00$
Total 3,208,950.00$
18
Development of Load Profile
To appropriately address the energy consumption of the community and calculate energy
savings, a load profile for the community must be developed. Using 40 MW as the reference, it
was assumed that the daily total energy consumed by the community was 960 MWh (40 MW x
24 hr). Secondly, two model days were chosen to represent a winter and summer day’s load in
New York. Spring/Fall dates were not considered to keep the approximation simple. Using
public NYISO data, load profiles were obtained for the entire RTO on 1/15/2017 and 7/15/2016
to represent summer and winter, respectively. The temperatures on these days reflected average
New York weather conditions.6 Using the hourly loads in the NYISO RTO and dividing by the
sum of the 24 hour integration, a percentage of total usage was obtained on an hourly basis for
both the summer and winter scenario. These percentages were then multiplied by the 960 MWh
to obtain load curves that reflect proportional usage in Dobbs Ferry.
6 On 1/15/2017 the mean, max and min temperatures in Westchester County were 30 F, 37 F, and 23 F; respectively. On
7/15/2016 the mean, max and min temperatures in Westchester Country were 81 F, 90 F, and 73 F; respectively. Weather data
obtained from wunderground.com.
19
Winter Load Profile
Summer Load Profile
20
Savings Estimates
The savings estimates are a rough approximation of what the town saves on electricity.
Actual savings are contingent upon how the generation assets are metered (by net metering or
feed-in tariff) and how ConEdison chooses to classify the generation assets. For the sake of this
proposal, the generation was classified as “Bulk Power” by ConEdison’s standards and the
market rates are based purely upon market supply charges. The tariff undoubtedly incorporates
other elements including transmission and generation type, however for the scope of this project
incorporating other parts of the tariff was impractical.
Furthermore, market supply charges are typically consistent by season; however, this
proposal only considers a summer and winter case to simplify the calculation. For the sake of
estimation this should suffice; the transition months can be assumed to be the average of the
summer and winter months.
Winter pricing was obtained using the ConEd market supply rate average from 12/1/2016
to 3/1/2017. Summer pricing was obtained using the ConEd market supply rate average from
6/1/2016 to 9/1/2016. Both on- and off-peak pricing were given for these time periods.7 The
pricing is displayed below per MWh.
Given winter and summer pricing, savings could be calculated using the generation produced on
the grid. For the solar generation, it is assumed that the savings are directly proportional to the
output, implying that any energy on the grid is energy that the user is not paying for. Due to
sunlight conditions in the winter and the summer, it is assumed that the solar generation operates
7 Pricing obtained using ConEd rate estimating tool. http://apps.coned.com/CEMyAccount/csol/MSCcc.aspx
Winter Summer
On Peak 57.09$ 41.84$
Off Peak 41.61$ 28.49$
21
at 100% load for three hours a day (tapering on and off before and after) and in the summer,
operates at 100% load for six hours a day in the same manner. These approximations do not
account for availability of sunlight in the geographical location, and rather serve as a rough
estimate for the sake of demonstrating the savings potential.
The savings associated with the batteries are calculated in a similar manner. The batteries
charge during the non-peak hours (i.e. in the overnight) when market supply charges are lower
and discharge during peak hours when market supply charges are higher. The difference in these
two rates multiplied by the net operating hours results in the overall savings. It is assumed that
the batteries charge and discharge at equal rates and that the power discharge is constant.
The total winter and summer savings are as follows:
Solar Savings Battery Savings Total Winter Savings
313.45$ 116.07$ 429.52$ per day
12,885.51$ per month
Solar Savings Battery Savings Total Summer Savings
357.37$ 100.16$ 457.52$ per day
13,725.62$ per month
22
Taking Typical NYISO Winter Load Day 1/15/2017
Hour Ending % of Daily Load Energy Usage (MWh) Net Solar Output (MWh) Battery Discharge (MWh)
1 3.88% 37.24 -1.5
2 3.74% 35.89 -1.5
3 3.65% 35.06 -1.5
4 3.61% 34.67 -1.5
5 3.61% 34.68 -1.5
6 3.68% 35.30
7 3.80% 36.48 0.5
8 3.93% 37.74 0.5
9 4.10% 39.33 0.508 0.5
10 4.22% 40.55 0.712 0.5
11 4.29% 41.19 1.02 0.5
12 4.30% 41.28 1.02
13 4.28% 41.06 1.02
14 4.24% 40.72 0.712
15 4.23% 40.64 0.508 0.5
16 4.28% 41.05 1
17 4.44% 42.67 1
18 4.75% 45.65 1
19 4.79% 46.01 1
20 4.71% 45.23 0.5
21 4.62% 44.38
22 4.49% 43.06
23 4.28% 41.11
24 4.06% 39.01
Taking Typical NYISO Summer Load Day 7/15/2016
Hour Ending % of Daily Load Energy Usage (MWh) Net Solar Output (MWh) Battery Discharge (MWh)
1 3.42% 33 -1.5
2 3.21% 31 -1.5
3 3.06% 29 -1.5
4 2.95% 28 -1.5
5 2.92% 28 -1.5
6 3.02% 29
7 3.29% 32 0.5
8 3.70% 36 0.508 0.5
9 4.01% 39 0.712 0.5
10 4.32% 41 1.02 0.5
11 4.52% 43 1.02 0.5
12 4.68% 45 1.02
13 4.82% 46 1.02
14 4.89% 47 1.02
15 4.97% 48 1.02 0.5
16 5.11% 49 0.712 1
17 5.14% 49 0.508 1
18 5.17% 50 1
19 4.96% 48 1
20 4.75% 46 0.5
21 4.59% 44
22 4.47% 43
23 4.19% 40
24 3.85% 37
23
Financial Calculations
From the perspective of NRG the total cost of the project must be recovered in order to justify
relinquishing the rights to the energy produced by the assets. The costs of implementing this
project are detailed below, including the cost of the solar and battery projects with overheads and
a contingency included to fund the completion of this project. The contingency is presumed to
account for any repairs that would fall outside the warranty period of the equipment.
In order to fund this cost, NRG is owed by Dobbs Ferry the amount listed above. The
amount could be repaid in a variety of different ways, however being that Dobbs Ferry will
recognize annual savings, it is reasonable for NRG to receive annual payments from Dobbs Ferry
that can be deducted by the savings and incentives Dobbs Ferry will benefit from. In order to
properly discount these payments, a weighted average cost of capital, or WACC, was developed
for NRG using public information. The details of this calculation are shown on the following
page. Correspondingly the WACC for NRG was calculated to be 6.146%. Using this discount
rate it was determined that the annual payments needed by NRG to recover the initial cost of
investment amounts in $803,383.53 per year. However this results in a net present value of zero;
Total Cost to NRG
Solar
Mercy College 5,199,593.35$
Dobb's Ferry Train Station 2,083,472.25$
Overhead 100,000.00$
Battery
3x Tesla PowerPack 3,208,950.00$
Overhead 100,000.00$
Contingencies 250,000.00$
Total Cost 10,942,015.60$
24
in order to account for downside risk this payment was increased to $810,000 resulting in a net
present value of $35,459.57 for NRG.
Dobbs Ferry is assumed to have a discount rate of the risk free market rate (using the 10 year
treasury yield as a proxy) equating to 2.37%. Due to the difference in discount rates the savings
in energy are far more valuable to Dobbs Ferry than they are to NRG, as shown below.
NPV of Project for NRG
Discount rate PV Year 0 PV Years 1-30 NPV
0.06146 (10,942,015.60)$ $10,977,475.17 35,459.57$
NPV of Savings/Incentives for Muni 4,108,288.68$
NPV of Savings/Incentives for NRG 2,791,745.16$
25
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s18,006,000,000.00
$ M
orn
ingstar
9.72%9.13
999.86.80%
0.0990.006762275
De
bt
19,226,000,000.00$
S&P
500 Utilitie
s9.61%
9926.29%
0.0990.006206305
Do
w Jo
ne
s Utility
10.99%990
5.80%0.098
0.005711287
Valu
e24,449,736,262.16
$ A
verage
10.11%869
6.32%0.086
0.005462704
Expe
cted
Re
turn
on
Equ
ity (Re
)13.44%
8197.30%
0.0810.005946721
Taxes
7336.24%
0.0730.004549455
35%IR
S398.2
2.42%0.040
0.00095849
371.46.71%
0.0370.002478764
224.77.59%
0.0220.001696351
205.66.70%
0.0200.001370152
0.8357.44%
0.0006.17917E-06
0.2416.88%
0.0001.64921E-06
6.41%
No
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rate b
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therefo
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determ
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corp
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s
Bo
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data p
rovid
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by M
orn
ingstar
26
Savings Cash Flows
The cash flows due to the savings are calculated per month and discounted to be recognized by
the municipality at the end of each year as shown below. It is assumed that by 2020 the market
supply rate of energy will increase due to the absence of the generation supplied by Indian Point
and the result will be a 10% increase in spread between on- and off-peak market supply rates.
Thus Dobbs Ferry can expect to recognize $161,403 in savings for the first two years and
$165,337 for the remaining twenty-eight. It is likely that prices will fluctuate and the savings
numbers will not be consistent year to year, but an increase at the time of Indian Point’s
decommission is likely.
Additionally, Dobbs Ferry can recognize savings from NYSUN incentives; a division of
NYSERDA funded by New York State to incentivize the production of solar energy. Using
NYSUN’s incentive calculator and the corresponding “block” rate in which this capacity would
fall, the expected NYSUN payments are outlined below.
Proposed Savings Assume that Municipality Recognizes savings at the end of every month
Month End of Month Savings Year-end Value 2020+ 10% increase in spread
Jan 12,885.51$ 13,168.23$ 13,815.95$
Feb 12,885.51$ 13,142.28$ 13,728.66$
Mar 12,885.51$ 13,116.37$ 13,641.92$
Apr 12,885.51$ 13,090.52$ 13,555.73$
May 13,725.62$ 13,916.51$ 14,348.30$
Jun 13,725.62$ 13,889.08$ 14,257.65$
Jul 13,725.62$ 13,861.70$ 14,167.57$
Aug 13,725.62$ 13,834.38$ 14,078.05$
Sep 13,725.62$ 13,807.11$ 13,989.11$
Oct 13,725.62$ 13,779.89$ 13,900.72$
Nov 12,885.51$ 12,910.96$ 12,967.44$
Dec 12,885.51$ 12,885.51$ 12,885.51$
FV at End of Year for Proposed Cash Flow 161,402.53$ 165,336.62$
Incentives Estimated Using NY-SUN CI Block Incentive Estimator
Location Year 0 Year 1
Mercy College 110,558.43$ 331,675.30$
Train Station 44,300.87$ 132,902.60$
27
Cash Flow Analysis
Accounting for both the savings and incentives, as well as the installments made to NRG, a
statement of cash flows is developed below.
The net present value of these cash flows can be evaluated from the perspective of Dobbs Ferry,
discounting back the first two cash flows to Year 0; treating the Payments from Year 2 to Year 3
as an annuity and discounting back to Year 0, and treating the remaining energy savings as a
perpetuity and discounting back to Year 0. Although these calculations are indeed rough
estimations they serve to encapsulate the nature of this proposal from a financial perspective.
The total net present value for Dobbs Ferry in Year 0 is ($9,446,800.50), as shown below.
From the perspective of the municipality it is reasonable to pass the annual cost along as a tax, as
the residents are the ones recognizing the savings on the energy bill. Assuming approximately
11,624 homes as calculated previously, the annual cost per household would be $557.67.
Cash Flows for Municipality
Year Payment to NRG Savings in Energy Expenditure NY SUN Solar Incentives EOY Cash Flow
0 -$ -$ 154,859.30$ 154,859.30$
1 810,000.00$ 161,402.53$ 464,577.90$ (184,019.57)$
2 810,000.00$ 165,336.62$ -$ (644,663.38)$
3 -> 29 810,000.00$ 165,336.62$ -$ (644,663.38)$
30 810,000.00$ 165,336.62$ -$ (644,663.38)$
31 -$ 165,336.62$ -$ 165,336.62$
31+ -$ 165,336.62$ -$ 165,336.62$
NPV of Project for Municipality
Discount rate PV Year 0 PV Year 1 PV Years 2-30 PV Years 31+ NPV
0.0237 154,859.30$ (179,759.28)$ (12,796,847.19)$ 3,374,946.67$ (9,446,800.50)$
^Assuming savings cash flows in perpetuity