The levelised cost formulas developed in the other sheets have made the unrealistic assumption that the construction is made in exactly one year. To include the financing costs during the construction period (debt as well as equity costs) that change as the construction period changes, you can increase (or decrease) the capital cost with and adjustment. You can move values around with present value and future value with (1+discount rate)^ Thisconstruction period. The adjustment can be done with the FV formula if you assume a flat S-curve. The manner in which you can make adjustments for the construction period are demonstrated using simple examples below. I also explain how you can incorporate a specific S-curve in the analysis.
.
Basics of Including Construction Timing in Levelised Cost
The calculation is illustrated in the screenshot below. As with other exercises, the formula is proved with a little financial model. The key formula to make this work is the FV formula shown in row 16 and in row 21.
.
Capacity Charge and O&M Adjustments for Construction Period
This example is for a transmission where the levelised cost is computed at the start of the construction period. I have included various formulas that can be used to make the various adjustments with the FORMULATEXT function. The transmission case also includes proof of alternative ways to compute the levelized cost.
.
.
.
.
.
.
.
,
,
