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economic model

The economic model takes as input the CAPEX and OPEX values [€], as well as the yearly produced energy [kWh/y] and calculates the discounted cash flow for each year of the economic lifetime of the geothermal system.

The well CAPEX is not distributed over the drilltime in years but all assummed in first year of ECONlifetime, jointly with additional investments for stimulation if applicable. The other CAPEX times which are assumed to be at the start of the economic lifetime.

OPEX is assumed to be paid at the end of each year, and is calculated based on the total OPEX for the year. OPEX terms are corrected for inflation, affecting the second and following years.

The produced energy is calculated from the product of geothermal POWER and the loadhours per year, and is corrected for the tax rate.

Discounted cashflow model

The heat production is discounted to the present value with the IRR, and the net income is calculated for each year. The following steps are made:

  • present value of loan is calculated as CAPEX . debt
  • yearly payment is calculated as the annuity payment for the present value of the loan taking interest rate and ECONlifetime as loan term
  • depreciation cost is calculated as CAPEX divided by the ECONlifetime in years
  • tax deduction: is minus ( sum of inflated OPEX, depreciation cost and interest payment ) times tax
  • netincome is calculated as sum of inflated OPEX, yearly payment and tax deduction
  • yearly energy produced is taxated by multiplication by (1 - tax), resulting in the taxated energy produced

The yearly netincome and yearly taxated energy produced is subsequently discounted based on the IRR rate resulting in discounted income and discounted taxated heat produced.

Unit Technical Cost (UTC) or Levelized Cost Of Energy (LCOE)

The UTC (Unit Technical Cost) or socalled LCOE (Levelized Cost Of Energy) is calculated as:

UTC [€cts/kWh] = 10^-2 ∙ the discounted income [€] / discounted taxated energy produced [kWh]

Net Present Value (NPV)

The NPV (Net Present Value) is calculated in pythermogis as:

*NPV[€] = discounted taxated heat produced [kWh] ∙ (utc_cutoff - UTC) ∙ 10^-2 *

or afterwards by using Hprod from the KPI as:

NPV[€] = hprod [MWh] ∙ (1-tax) ∙ (utc_cutoff - UTC) ∙ 10^4

where: - utc_cutoff is the UTC value which is commercial or garanteed to r operator of the geothermal system calculated afterwards as the sum of the discounted income minus the CAPEX.