openCCS
A collaboratively developed handbook for delivering CCS projects
Register to contribute to openCCS
openCCS » Activities » Storage » Evaluate » Financial Analysis for Storage in the Evaluate Stage
This page was last reviewed on 12 November 2012 by Neil Bates, and last edited on the 12 November 2012 by Neil Bates
This page has been approved by the assigned reviewer.
Reviewers assigned to this page
Geoff Rumble
Christopher Short
Reviews
Registerto view reviews.

Financial Analysis for Storage in the Evaluate Stage

Objective

To identify and communicate the likely range of financial outcomes for the storage aspect of the project

Major Deliverables

  • Financial model and assumptions book
  • Project preliminary financial modelling and sensitivity analysis to support the selection of a preferred option to take forward into the Define (FEED) stage and to evidence the value for money case in relation to risk sharing positions

Tasks

Specific tasks include the following:

  • Development of a the financial model to allow evaluation and modelling of cash-flow, profit and loss and balance sheet aspects of the storage options for the project
  • The model should be stated with a six monthly resolution. In summary the model would be able to take account of:
    • More complex tax treatments (e.g. tax losses)
    • Investment relief available (e.g. R&D allowances)
    • Debt repayment profiling
    • Senior and subordinated debt structures
    • Equity investment timings
    • Risk factors (e.g. performance pre- and post- proving, effects of increased regulatory certainty on project returns etc)
  • Outputs from the model would include:
    • rate of return (pre- and post- tax)
    • net present value of storage options
    • cost per tonne of CO2 stored to achieve required returns
    • quantum of external (grant) funding required to make project ‘economic’
  • Using the updated capital and operating costs data-book and revenue projections, analyse the P(10), P(50) and P(90) cost cases for each of the storage options being considered for the project.   This should seek to understand the relative sensitivity of each of the options to the capital and operating costs, revenue drivers, regulatory risks and expected project performance profile
  • Analysis of the value to the project of various outcomes of key storage risks which remain open.  This will need to understand the likely profile for the impact of any mitigating actions on model technical or financial parameters. The output of this will be useful in presenting the added value to the project (and sponsoring entities) of prioritising mitigation of certain risk factors.   It will also help to present the case where risks are shared, how this can impact the overall value for money (cost per unit CO2 stored) of the project

Examples

Key Personnel

  • Project Manager
  • Financial work-stream lead
  • Cost estimation work-stream lead
  • Commercial work-stream lead
This content expresses the point of view of individuals in the CCS community and not necessarily the views of their organisation or the Global CCS Institute.