Introduction to RETScreen Clean Energy Management Software

Introduction to RETScreen Clean Energy Management Software


>>Sean Esterly: Today’s webinar, which is
hosted by the Clean Energy Solutions Center in partnership with CanmetENERGY, Government
of Canada. Today’s webinar is focused on “The Introduction to RETScreen Clean Energy Management
Software.” One important note of mention before we begin
the presentation is that the Clean Energy Solutions Center does not endorse or recommend
specific products or services. Information provided in this webinar is features in the
Solutions Center’s resource library as one of many best practices, resources reviewed
and selected by technical experts. And before we begin I just want to go over
some of the webinar features. You do have two options for audio: you may either listen
through your computer or over the telephone. If you choose to listen through your computer
please go to the audio pane and select theoption. Doing that will
just help eliminate any feedback and echo. And if you choose to dial in by phone please
select the telephone option and a box will display the telephone number and the audio
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with the webinar you may contact the go-to webinar help desk at 888-259-3826 and they
can help you out there. If you’d like to ask a question at any point
during the webinar – and we do encourage all attendees to do so, you may go to the
question pane and type in your question where it will be submitted to us. And if you’re
having difficulty viewing the material through the webinar portal we will be posting PDF
copies of the presentations at CleanEnergySolutions.org/Training. And you may download those there. Also, following today’s webinar we will be
posting an audio recording to the Solutions Center Training Page and also adding that
recording to the Solutions Center YouTube channel, where you’ll find other informative
webinars as well as video interviews with thought leaders on clean energy policy topics. Today’s webinar agenda is centered around
the presentations from our guest panelists: Dinesh Parakh and Michael Ross. These [inaudible]
have been kind enough to join us to introduce the powerful capabilities of the RETScreen
suite software which includes the RETScreen for project analysis software and the RETScreen
flex performance analysis software. Before our speakers begin their presentations
I’ll provide a short, informative overview of the Clean Energy Solutions Center initiative,
and then following the presentations we’ll have the question and answer session where
the panelists will address those questions submitted by the audience, followed by some
closing remarks and a very brief survey for attendees. Our slide provides a bit of background in
terms of how the Solutions Center came to be formed, and the Solutions Center is one
of 13 initiatives of the Clean Energy Ministerial that was launched in April of 2011. It’s primarily
led by Australia, the United States and other CEM partners. So now come to this unique initiative, includes
support of developing countries and emerging economies, through enhancement of resources
and policies relating to energy access, no cost expert policy assistance, and peer-to-peer
learning and training tools such as the webinar you’re now attending. And there’s four primary goals for the Solutions
Center. Our first goal is to serve as a clearinghouse of clean energy policy resources. Second is
to share policy best practices, data and analysis tools specific to clean energy policies and
programs, and third the Solutions Center delivers dynamic services that enable expert assistance,
learning, and peer-to-peer sharing of experiences. And then lastly the Center fosters dialog
on emerging policy issues and innovation around the globe. And the primary audience for the Solutions
Center is energy policy makers and analysts from governments and technical organizations
in all countries. But then we also strive to engage with the private sector, NGOs, and
also civil society. One of the marquee features that the Solutions
Center provides is its no-cost expert policy assistance, which is known as the Ask An Expert
service. And the Ask An Expert service has established a broad team of over 30 experts
from around the globe who are each available to provide remote policy advice and analysis
to all countries at no cost. So for example in the area of energy efficiency
policy we’re very pleased to have Jeff Diessen, senior analyst for the Climate Policy Initiative
serving as one of our experts. So if you have a need for policy assistance in energy efficiency
policy, or in the RETScreen software, we do encourage you to use this valuable service.
Again, the assistance is provided free of charge to you. If you have a question for our experts please
submit it to our simple online forum at CleanEnergySolutions.org/Expert, or to find out how the Ask An Expert service
can benefit your work please feel free to contact me directly at [email protected],
or my number: (303) 384-7436. And we also invite you to spread the word about this service
to those in your networks and organizations. So now I’d like to go ahead and provide a
brief introduction for today’s panelists. First speaker we’ll be hearing from is Dinesh
Parakh, a program advisor with RETScreen International, where he manages strategic partnerships, communications
and business development. Dinesh is the lead author of the RETScreen Clean Energy Legal
and Policy Toolkit. And then following Dinesh we will hear from
Mr. Michael Ross. Michael is a training and applications expert with RER Energy, Incorporated.
And Michael has developed much of the training material available on the RETScreen website,
and has been supporting the RETScreen team as a consultant since 2001. And so with those introductions I’d now like
to go ahead and turn things over to Dinesh.>>Dinesh S. Parakh: Okay, good morning everyone.
Good morning, good afternoon, good evening to all of you. Welcome to everyone, and thank
you for coming, especially those of you in far-flung time zones from around the world.
I think you can all see my first slide there: RETScreen Clean Energy Management Software. The seminar today is going to provide a very
basic introduction on how to use the RETScreen Clean Energy Management Software for project
analysis. I’m going to provide a very brief overview of RETScreen, and then Michael Ross,
who is a RETScreen training and applications expert, is going to introduce the software.
And then in the bulk of the presentation he is going to show you a live demonstration
of how RETScreen works in practice. Just a few words, first of all, about RETScreen
for those of you who may not be familiar with it. What is RETScreen? This particular slide
depicts the world of RETScreen. So RETScreen is free software that is provided by the Government
of Canada that significantly reduces the cost, both the financial costs and the time costs
associated with identifying and assessing potential clean energy projects. These time
and financial costs can be substantial barriers to the deployment of clean energy projects.
And so by minimizing or reducing or removing these costs RETScreen reduces the costs of
getting projects on the ground. It removes barriers to doing business in clean energy. So essentially RETScreen enables clean energy
by preserving capital and then redirecting it to more productive purposes. So for example
away from pre-feasibility and pre-feasibility studies and other initial steps such as legal,
accounting, etc. towards the actual construction of viable projects. So this current slide, it’s showing the many
facets of RETScreen. There’s images here of projects being built around the world, a number
of university theses. There are over 700 universities that we know of that are using RETScreen for
teaching and research; probably many more than them. There is a sampling of here are
professional reports, screen shots of how governments have been using RETScreen for
clean energy policy. And also a few photographs here of training seminars and training classes
worldwide on RETScreen. So what does RETScreen really actually do?
What RETScreen does is it allows the user to determine whether or not a proposed renewable
energy or energy efficiency, heating and cooling, or cogeneration project makes financial sense.
If a project is viable, financially viable, or if it is not viable, RETScreen is going
to help the decision maker or the user understand this very quickly, unequivocally, in a user-friendly
format, and at relatively minimal cost. So I’m not going to go through all of these
bullets here but I would like to point out that RETScreen is for clean and cleaner energy.
So for example you can use RETScreen to make a coal plant more efficient, or to do the
analysis. RETScreen can compare the impact of different conventional fuels, for example
coal to natural gas. It can compare conventional to renewable, for example, coal to biomass.
So you’ll see there that we have close to half a million users now all around the world,
and massive amounts of user savings since 1998, well over $8 billion in transactional
cost savings directly through using the RETScreen software. And you can download the software, RETScreen,
right after this webinar by going to the website, which is the top right corner there: www.RETScreen.net.
It’s free of charge and you can download the software in the language of your choice (well,
36 languages anyways). Now this slide quickly demonstrates how RETScreen
has become the de facto global standard for clean energy project and performance analysis.
We find ourselves on an exponential growth curve; RETScreen has by far the largest number
of users of any clean energy software, more than all other clean energy software programs
combined. On the right of the slide there you’ll see
a depiction of the top 20 user countries, and you’ll notice that almost all of the largest
economies of the world are represented in these top countries. Some of them are perhaps
unexpected: Romania, Belgium and Greece, which is quite interesting because it’s pointing
to, or hinting perhaps, at a lot of clean energy activity, whether that’s being stimulated
through projects or through policies, things like that. So it’s interesting to note. So as per an earlier slide and as I mentioned,
RETScreen is available in 36 languages, which are spoken by about two-thirds of the world’s
population. This is a screen capture of the actual software, and this is your first glimpse
before Michael is going to show the software live in just a few moments. And here is another screen capture where the
software interface has been changed to standard Chinese with the click of a button. So this
is interesting because the user can work in his or her own language and send a very small,
RET file to a colleague in another country perhaps, who can work in his or her own language.
So suppose you have colleagues in China in your project team. Well, you can work in English
or in German or in Hindi or Swahili or whatever and send the file to your Chinese colleague,
who can with one click switch the analysis to standard Chinese. And then you can switch
it back. So it’s a great boon for collaborative work worldwide in project teams. Just before I turn over the presentation to
Michael for an introduction to the actual software and then the live demonstration I’d
like to mention one important point, and that’s sort of iterating what Sean has mentioned
in his introductory slides. So Natural Resources Canada has provided the
services of RETScreen experts to the Clean Energy Solutions Center Ask An Expert service,
and that’s what Sean had mentioned in the introduction. So this service is offered completely
free of charge to representatives of developing country governments and technical institutions.
Our experts can help you conduct analyses, review analyses, etc. using RETScreen. So
really it’s like having your own RETScreen consultant even for complicated tasks or analyses
without any cost to you. So if you are from a developing country national,
with any sort of government or technical institute affiliation I definitely encourage you to
have a look at the Ask An Expert service and take advantage of this fabulous resource. These have just been a few glimpse of RETScreen,
a brief introduction. I am now going to turn it over to Michael to tell you more about
the actual software and then get into a live demonstration and show it to you.>>Michael Ross: Hi. Thanks very much, Dinesh.
So I will continue with Dinesh’s presentation here, introducing the RETScreen software suite.
And then I’ll actually give a demonstration of the software. If you visit www.RETScreen.net you can download
from that website a RETScreen software suite that will install two separate programs. We’re
going to talk about one of those programs today, that’s RETScreen 4. It’s the one that
Dinesh has made reference to. So RETScreen 4, as Dinesh said, is a free piece of software
for quickly and easily and inexpensively looking at a proposed energy project and seeing whether
it makes sense technically and financially. The project that you can look at might be
a renewable energy project or an energy efficiency project or a cogeneration project. That’s
the software we’re going to talk about today. But if you install the RETScreen software
suite there is another, completely separate piece of software which we’re not going to
talk about today which is RETScreen Plus. So RETScreen 4 was for looking at the performance
of a proposed project; RETScreen Plus is for following the ongoing performance of an existing
project that you’re collecting data from, either through, say, fuel bills for energy
consumption in a building, or output from a, say, energy producing project, like a photovoltaic
project. So RETScreen Plus is for monitoring the ongoing
performance of an existing project to see whether it meets expectations or whether it’s
improving or deteriorating, and RETScreen 4, this piece of software we’re going to talk
about today, is for looking at the performance of a proposed project. So this RETScreen 4 software deals with many
different technologies, but regardless of the technology you’re treating, the same five-step
analysis is used. So initially there’s a start page where you configure the software with
the settings and site conditions that are applicable to your particular project, and
then you go through a standard five-step analysis. The first step is an energy model where you
determine the energy performance of your proposed system. The second is a cost analysis where
you provide information on the initial, the ongoing and perhaps even the periodic costs
associated with the project. And costs may be negative costs or savings as well. You
may have savings with respect to some base case scenario. The third step is an optional emissions analysis.
You can determine the greenhouse gas emissions reductions associated with your project compared
with a certain baseline. The fourth step is a financial analysis which
ties together the findings from the energy model, the cost analysis, and the emissions
analysis into an assessment of the financial viability of the project. And finally there’s an optional sensitivity
and risk analysis that helps you figure out how sensitive or how much your results in
the financial analysis change, depending on uncertainty in your emissions analysis, your
cost analysis and your energy model. RETScreen has a number of built-in, integrated
features that are really nice. Some of them are helpful just as standalone features; others
are very useful when you’re actually using the software. So the climate data is a database built into
RETScreen that covers the entire globe and provides monthly average data for a wide range
of parameters that are often useful in energy efficiency and renewable energy projects. There’s also a product data database that
is useful for finding, for instance, in the example we’re doing today we’re going to be
doing a wind energy example. Well, to know how much power our wind turbine produces we
need to have a power curve, and you could get this from a manufacturer, or you can find
it in the RETScreen product database. There’s also an online manual which is contact
sensitive. So if there’s a parameter in RETScreen, you’re not sure what to enter, there’s a very
good help typically associate with most parameters that will assist you in picking an appropriate
value for the input. It’s also a great resource for just understanding better the different
terms and the different terms associated with a particular technology and what their importance
is. There’s a page of tools that’s helpful with
things like unit conversion or steam tables or heating value of fuels. And then largely
exterior to the software itself but associated with the RETScreen software and available
on the website. There’s a distance learning course and training materials, so presentations
such as the one we’re giving today are available online. There’s an engineering textbook that
gets into more depth about the technologies, as well as the software itself. And there’s
case studies both built into the software and on the website that help you understand
projects by looking at example projects. For the emissions and financial analysis you
can choose to do a method one analysis, which is somewhat simplified, or a method two analysis,
which goes into more detail. So in a method one analysis there’s a single page that integrates
the emissions, cost, and financial analysis, whereas in method two they’re broken out into
separate pages. And we’ll see that again in a bit. For project types Dinesh mentioned that you
can use RETScreen to look at a wide range of different projects. So energy efficiency
measures is one type of project you can look at. But you can also look at virtually any
type of power project, or a power project that integrates multiple technologies. You
can also look at heating projects and cooling projects and combined heating and power projects. For instance, if you have a power system that’s
combusting a fuel it’s going to have waste heat coming off it. And you can recover that
heat and supply that to heating load. And you can analyze that kind of project with
RETScreen as well. Obviously other combinations of cooling and power, heating and cooling,
or combined cooling, heating and power are possible. And if you just want to use the
cost emissions and financial analysis capabilities of RETScreen with your own energy project
that doesn’t, for whatever reason, doesn’t fit within the RETScreen software, you can
have a user-defined project where you basically specify fuel consumption and costs. And then
you can benefit from those other aspects of the RETScreen tool. I think we’re keeping questions until the
end. Rather what we’ll do is we’ll jump into a demonstration of the software itself because
it’s much more interesting to actually see a piece of software being used or use it ourselves
than to hear someone talk about its capabilities. It’s better to see them online. I’ve put together a hypothetical example that
we can use to demonstrate the software. I’ve made up this example, so it’s a wind farm
proposed for the northeast of Brazil. If you’re very familiar with wind farms in Brazil you
may find that there are certain assumptions I’ve made that aren’t exactly right. I’m not
sure. I haven’t built a wind farm in the northeast of Brazil. But the point of this exercise is to show
you how we can quickly model a project, assess whether it’s an attractive investment or not,
or whether it’s financially viable, and then see what changes we could make to the project
very quickly to determine their impact on the project financial viability. The project I’m proposing consists of ten
three megawatt turbines, so it’s a 30 megawatt wind far. The turbines will have 90-meter
rotors on 90-meter towers. I’ve gone to a wind resource map and seen that in this area
there’s lots of sites that have 7.5 meters per second wind speed, annual average wind
speed. And that’s measured at an 80-meter height. Wind turbine costs tend to be around U.S.
$1,700 per kilowatt, and I’m going to use U.S. dollars because I think it’s a currency
that everyone will be familiar with. But if I was doing this in Brazil I might choose
to do this in Brazilian riyals. Purchasing the turbines is going to cost U.S.
$1,700 per kilowatt of turbine capacity, and installing them is included in that cost.
Then every year I’m going to have to have some ongoing costs associated with maintaining
and operating those turbines. And I’ve assumed that these are going to be $15 per megawatt
hour of output from the turbines. So that’s 1.5 cents per kilowatt hour. For every unit
of electricity that I produce I can sell it onto the grid for $60 per megawatt hour, or
six cents per kilowatt hour. The inflation rate is going to be three percent,
which seems low for Brazil historically but you’ve got to remember I’m doing this with
U.S. dollars, so it’s actually an inflation rate that’s more appropriate for U.S. than
for Brazil. I’m going to assume that my turbines last
20 years, and that I’m going to pay for 30 percent of the initial cost of the project
out of my own funds, so a 30 percent equity payment. And the remainder, this remaining
70 percent, is going to be debt financed. So I’m going to go to a bank or some other
lending institution. And they’re going to lend me the 70 percent remainder of the cost
of the project at an 8.5 percent interest rate over a 15-year period. That’s what I’m
going to look at. Let’s see if this is an attractive investment.
I’m looking at this from the perspective of someone who wants to do this type of project.
Now you may not be a project proponent but it’s useful to be able to do this type of
analysis even if you’re, for instance, a policy person, to see whether particular changes
to policy you might be thinking about doing are going to encourage or reduce interest
in investment in renewable energy projects. I just, you might have seen there, clicked
on the RETScreen for menu item and it opened RETScreen 4 in the Excel software. So as you
can see RETScreen 4 runs under Excel. So if you want to run RETScreen 4 you need to have
Microsoft Excel installed. And when Microsoft Excel opens with RETScreen 4 there is an additional
toolbar across the top. And this is for functionality specific to RETScreen 4. And this kind of
gives us a clue that RETScreen 4 is not just a standard Excel spreadsheet, it’s an RETScreen
spreadsheet with a lot of additional functionality built into it through a code running in the
background. So there’s access to the help, to the databases, and then to things like
Goal Seek, which can be very useful for setting parameter values. When we open the software it drops us in this
first Start page that is the first place that – so this is the part of the software that
we deal with before we do the five-step standard analysis. So on the Start page we can configure
the software to do the type of analysis that we want to do at the location we want to do
it. Also along here you’ll see there’s the energy
model and the tools page. So there’s the energy model and there’s the tools page. When I say
that the Start page configures the software to do the type of analysis that we want I
mean that we can change the contents of these tabs by changing these settings here. So I
mentioned that we have a method one simplified analysis where everything is on a single energy
model, or we have a method two, more detailed analysis, where the cost analysis is broken
down on a separate page from the energy model, the emissions analysis is a separate page,
financial analysis is a separate page, and the risk analysis is a separate page. Today
I’m going to stick with the method one simplified analysis, but that’s an example of how this
permits you to configure the software. You’ll note as well that there’s different
cells with different colors. And there’s some check boxes and there’s some blue hyperlinks.
The different colors are not there simply to make it look pretty they signify that this
is an input, an output or some other information. So these gray cells, for instance, for the
project name, the project location and prepare for and prepared by I could enter anything
I wanted there and it’s not going to affect the calculations that RETScreen does. I can
call my project Project Brazil or I can call it Demonstration Project and my results will
be exactly the same. So gray cell means it’s for informational
purposes. These yellow cells – yellow means it’s an
input. So we have to provide some input there – and there may be a dropdown list to help
us provide that input. But it’s definitely going to affect the calculation when our input
value’s entered there. Down here we’ll see there’s also some blue
cells. Those are also inputs, but the blue indicates that there is a built in database
in the RETScreen software to help us populate the values. So this is climate data location,
or climate data for a particular location. I didn’t have to go through and enter those
values, these are the default values that appear. But because they’re blue I know that
there’s a database, the climate database, that helps me populate these values. And you’ll see at the bottom there’s also
these white cells, and those are outputs. So the outputs I can’t change directly. For
instance if I tried to enter five here for the annual air temperature it would give me
an error message because I can’t change the output except by changing the inputs. So let’s – the other thing you’ll see is
the blue hyperlinks. So here and here. So if I click on one of these it accesses a database,
typically, or it may take you to another part of the project. So I clicked on the project
database, and the project database is how I access built-in example projects – so
you see there’s a wide range of built-in example template projects and case studies that I
can use as examples either to start my analysis from a starting point that is similar to my
existing project, or just to look at similar projects so I can learn from them. And this
is also how I can access my own user-defined projects. So this is an analysis I did a little
while ago for a client. We’ll start from the default screen. So for
project name I’ll simply enter Demo Project, wind, and a project location: Northeast Brazil.
And it’s prepared for CC and it’s prepared by Michael Ross. And this is once again gray
cell information only. The project type, by default, is energy efficiency measures, but
that’s not what I want. I want a power project for a wind turbine. You’ll see I have a wide
range of choices there. And once again this is going to configure
what appears in these energy model and other spreadsheets. So here currently with energy
efficiency I have facility characteristics which are things that I’d be really interested
in looking at if it was an energy efficiency project, so things like the ventilation or
the electrical equipment or hot water pumps, but that has nothing to do with a wind farm.
So if I click here and I go Power, it automatically defaults to wind turbine. And when I go back
to this I see that now I have parameters associated with a wind turbine, and no longer so I have
parameters associated with energy efficiency. As I mentioned, it defaults to wind turbine
but there’s a wide range of choices for the power technology we could look at. So we can
look at fuel cells or ocean current power. There certain technologies that are dealt
with in more depth than others. So the ones that have the most depth in the analysis are
wind turbines, photovoltaic projects, and hydro projects. I can also specify what type of grid connection
my project has. So the grid is the connection of distribution and transmission lines with
generators and dispersed loads. This project in Northeastern Brazil is going to be connected
to the central grid, so it’s going to supply loads all over Brazil with its power. But
if it was not connected to the grid, if I had an off-grid wind farm, or wind project,
I could select off grid here and if it was for an isolated community, so there was a
very small grid but it was not interconnected with the rest of Brazil’s grid I could choose
Isolated Grid. So I’ll stick with central grid here. I mentioned the method one and method two;
I’ll leave that with the method one and method two. And then we get to this heating value
reference. Well, what’s the heating value reference? Well, it’s interesting. In RETScreen
if you don’t know what to enter in a cell it’s good to develop the instinct to click
Help. Because unlike a lot of software, which doesn’t have good help, RETScreen really does
have typically very helpful help. So it’s contact sensitive. I clicked on that cell,
heating value reference, and then I clicked on the Help and it opened the heating value
reference help. Firstly it tells me what it is: “The heating
value is a measure of the energy released when a fuel is completely burned.” And there’s
two different conventions for that: the higher heating value or the lower heating value.
And then it tells me that the higher heating value is typically used in Canada and the
USA while the lower heating value is used in the rest of the world. So it tells me essentially,
“Ah, my project’s in Brazil. I should use the lower heating value.” So I close that
and I pick Lower Heating Value here. Here’s a box for Show Savings. I can choose
the language, as Dinesh said, the user manual, which is that online help that we just looked
at, is available in English and French. And then I can choose the currency that I want
to do this in. I said U.S. dollars, so we’ll leave it at dollars there, but if I was doing
this project in Brazil I’d probably do Brazilian riyal. So I click there. And now when I go to the energy model page
you’ll see that cost savings are in Brazilian riyals. But you can see that there’s a wide
range of currencies, pretty much all the currencies are in there. The only one that’s an obvious
exception is the bitcoin. But as an example of how even that can be accommodated you can
have user-defined currencies. So if I wanted to do my project in bitcoins, for example
– I’m just using that as kind of a fun example, I could use that symbol from Bitcoin, and
then when I go to the energy model I’m specifying my costs in bitcoin. But we will go back to
the dollar here. For units we have a choice between metric units and U.S. customary units.
I’m going to leave it with metric units. So there we’ve configured the software to
do the type of project we want to do: an on-grid wind farm. The only thing that we really need
to specify now is the climate data because if you think about it most renewable energy
projects and energy efficiency projects are – their performance is quite closely related
to the climate they’re being installed with. So it’s important that we have data related
to the climate. And RETScreen has a built-in climate database that covers the entire planet.
So by default it’s for Canada because the software comes from Canada. But every country
is in the database. If I click on Brazil I can see that the different
provinces of Brazil are all present. This project is in the northeast, in Rio Grande
do Norte, and I said it’s at Natal. So I’m going to pick that. And these are then average
annual and monthly climate parameters for this particular location. Now just this climate database can be useful
for a wide range of projects. So even if you don’t end up using the rest of the software
it’s a really nice climate database that covers the entire planet, that provides you with
monthly averages. Here, for example, are the air temperature,
the relative humidity, and the daily solar radiation on the horizontal by January, February,
March, April, May, June, etc. And the other thing you’ll notice is that there’s a column
here called Source, and there’s a row here called Source, which indicates that source
of the data. And there’s two values you’ll see in there: ground, and NASA. Ground means that the data comes from a ground
measurement station, so perhaps there’s an airport that’s measuring these values. And
NASA means that it’s satellite-derived data. So NASA has a very useful set of programs
for deriving climate parameters from satellite observations. And there’s a collaboration
between NASA and RETScreen that integrates that information, that data, directly into
the RETScreen software. When I’ve picked my site I can overwrite the
default values that are in here by clicking on this green check box here, Paste Data.
You’ll see that this selection of data is going to get pasted into the software. So
these all got updated. If I wanted to overwrite one of these values I could. Like if I thought
that the air temperature in January was actually 28 and not 27.6 I could do that. But they
are still just inputs. But there is this helpful climate database that I can us to populate
these values. That’s the Start page. We’ve configured the
software and specified their location. Let’s go on to the energy model now. Right off the top I have to say what my proposed
case power system is. Now RETScreen has built into it the notion that the cost effectiveness
only exists by way of a comparison. So we have to compare our wind farm to something
else. And in this case the something else is simply not doing the project. So does doing
this project make sense compared with not doing the project? That seems a little bit
almost absurdly obvious but for other projects it’s necessary to thinking of using solar water heating. You have to say, “Well is that cost effective
compared with heating your water with natural gas, or heating your water with electricity?”
So in that case it’s really important that you specific what the base case is. This is a proposed case power system. It’s
going to be our wind farm, and there is a selection method one, method two, method three
here, which similarly the method one and method two on the Start page allows us to say how
much detail we want to provide in our analysis. So method one is a very simple analysis based
just on the power capacity and the average output from the turbines. If we pick method two we actually can calculate
the output of the turbines based on the climate data, the annual climate data. And in method
three we can base our calculation on the monthly climate data. I’m going to do it based on
the annual climate database data here. If we look back on the slide here we see that
we’ve got a wind speed of 7.5 meters per second, measured at an 80-meter height.
So we’re going to provide information about our resource. And our resource is measured
in the wind speed, as opposed to the power density, which is another way of specifying
the wind resource. And the annual wind speed is 7.5 meters per second, measured at a height
of 80 meters. So I’ve taken that from a publicly-available map of the wind resource in Brazil, available
online. Then there’s this wind shear exponent that
I have to enter. So once again it may not be a parameter that you’re all familiar with,
so go to the Help. And if I look at Help it tells me, “Ah, this relates wind speeds at
different heights above the ground,” because as you go higher the wind speeds tend to increase.
It says that the range of this varies between 0.1 and 0.4; a value of 0.14 is a good first
approximation when the site characteristics are yet to be determined. So I’m just going
to go with 0.14. That’d be something we might look at in more depth. If we proceeded with
this project we might figure out what the actual wind shear exponent at the site is. For the air temperature I can use the average
air temperature that comes from the climate database. So I click “=” and I select that.
This is running under Excel so I’m using essentially an Excel formula. I’m saying the value of
this cell is equal to the value of this cell, which is being taken from the climate data.
See, this is the 26.7° C average annual temperature that you find on this location here at the
annual air temperature. I can similarly say the atmospheric pressure is equal to the atmospheric
pressure from the climate database. So there we’ve specified the basic parameters
needed to
calculate how much power we can get from the resource, which is the wind. But we also need
to say what type of equipment we’re using to convert this wind energy into power. So
there’s a lot of blue cells in here, which indicates there’s a database built into RETScreen
to help us pick those values. So power capacity, number of turbines, rotor diameter, hub height,
swept area per turbine, these are all available as well as the power curve, so this relates
the power output of the turbine to the wind speed. These are all available from a product
database and that product database is accessed over here by clicking there. And it opens this product database, and if
you look back on that first slide I said that we’re going to use turbines that are three
megawatt with 90-meter rotors installed at 90 meters. So here is a turbine that has that.
And each of these turbines is three megawatts, so we want ten of them to get a 30-megawatt
project. There’s the power curve data built into the database. Here’s the hub height,
rotor diameter, swept area per turbine. I click to paste that in and it updates these
values. And you see now that we’ve actually specified
what our wind turbine is and what its key technical characteristics are. There’s also
this energy curve data which says standard or custom – that essentially permits us
to specify the distribution of wind speeds around the annual average wind speed. So we
said the average annual wind speed is 7.5 meters per second at 80 meters. RETScreen
has calculated that at the 90-meter hub height the wind speed is actually 7.6 meters. See,
we’ve gone a little bit higher than the 80 meters, so the wind speed’s going up a little
bit. But that’s the average. It doesn’t always
blow at 7.6 meters per second. Sometimes it’s calm, sometimes it’s light winds and sometimes
there’s really strong winds. So that distribution of winds is specified through the selection
of this parameter, standard or custom, with the shape factor. And then that actually gets to be a little
bit more complicated, so I don’t want to get into it, but for most calculations if you
don’t know what the distribution should just saying standard is going to be a reasonable
estimate. Here’s our power curve data and our energy
curve, so I can click on this blue hyperlink over here, “Show figure,” and I see that here’s
the wind speed, the instantaneous wind speed, and here’s the power output. And that’s the
green line. So at very low winds puts out no power; at about three meters per second
it starts generating power. Power ramps up quickly until about 15 meters per second.
And then you achieve the full three megawatt output of the turbine, and then it holds that
steady until 30 meters per second. Of course there are always sources of losses
associated with any piece of equipment and we have to specify what some of those losses
are going to be. So the first one here is the array losses. What are array losses? Well, we go to the
Help. This is our standard approach. And it tells us this is the losses because we have
ten turbines and when the wind blows past one turbine it interrupts the wind flow to
the wind turbines that are downstream of it, and therefore they generate less power. It tells us there that for a cluster of less
than 8 to 10 turbines should keep array losses below 5 percent. Well, let’s put in 4 percent
here because we’ve got 10 turbines. So that should be okay. So I put in 4 percent. And
I could similarly go through the Help and pick air foil losses, miscellaneous losses
and availability but I’m just going to speed this up by saying 2 percent air foil losses,
5 percent miscellaneous losses and 97 percent availability, which are reasonable parameters. Based on that RETScreen has calculated the
capacity factor. So the capacity factor is the average output of the turbines, of the
wind farm, expressed as a fraction of the name play capacity. So we’ve
got a 30 megawatt wind farm; on average it’s putting out 28 percent of 30 megawatts, or
I guess – yeah, about 8-1/2 megawatts. And that’s because there are calm periods and
there are low wind periods, so it’s not always blowing at 15 meters per second or higher. So on average, over the course of an average
year it’s putting out about 28.2 percent of 30 megawatts, or 8-1/2 megawatts. And if you
multiply that by the number of hours in the year you end up with the electricity being
exported to the grid. I can see that in more detail by clicking
on that Show Data. I see there’s the unadjusted energy production and then there’s adjustments
for the air pressure, the temperature, the losses that we specified, and that ends up
getting this figure which works out to this amount of energy per square meter of swept
area of the turbine. So if we’re interested in the technical details they’re there; if
we’re not interested we just ignore them. Finally there’s the electricity export range,
which is the amount we’re being paid per megawatt hour of electricity that we’re generating.
And we said that’s going to be $60 per megawatt hour, or six cents per kilowatt hour. So $60
per megawatt hour, and if you’re not too familiar with megawatt hours versus kilowatt hours
if we go to the top here and click “Show Alternative Units” you’ll see that it provides some unit
conversions there, including this one. It’s six cents per kilowatt hour. That’s the energy model. It’s told us that
we’re going to provide about 75 gigawatt hours of electricity per year. Now we have to go
through and provide some information on costs and then we’re going to have to look at the
greenhouse gas emissions reductions. For costs if I had done, on the start page,
a method two analysis here I’d have a whole in-depth cost analysis page that I could fill
out. And if I wanted a lot of detail I could click method two there and have even more
detail. However, I want to keep things really, really simple, and I’ve made the assumption
that turbines cost $1,700 per kilowatt. So I’m going to go back to the method one where
everything is on a single page and it gives me one box here, the incremental initial costs
for specifying the initial costs. So at $1,700 per kilowatt I’m going to enter
=1700 and I’m going to use a formula to multiply those, and I come up with $51 million as being
the initial cost for my project. I’m going to have to enter my operation and maintenance
cost, my annual operation and maintenance costs a bit later on because they come further
down the page. Let’s look at the greenhouse gas emissions.
Here’s the emissions analysis. If I’m not interested in – if I’m not
at all interested in it I can unclick that and it goes away, but I am interested. So
I’m going to do a very simple emissions analysis. If I wanted to do a more flexible emissions
analysis based on the actual types of grid generation that my wind turbines would offset
then I could use a method two analysis to do that, but I’m just going to assume that
the emissions, the electricity produced by wind turbines reduce emissions associated
with the average for generation in Brazil. So I click on Brazil here and you can see
that the GHG emissions reduction emissions factor for Brazil in terms of tons of CO2
per megawatt hour of electricity produced in Brazil are very low. They have a lot of
hydro generation in Brazil. So the base line is very low, so it means that our wind turbines
do not result in a huge GHG emissions reduction: 6,500 tons of CO2 per year. If we picked another
county, let’s say if we go down to Alberta in Canada, which is a lot of coal generation
you see there’s a very high emissions factor and you’ll see that we have ten times more
emissions reductions. But in Brazil, where they’re using hydro, the average emissions
are very low and we have a low emissions reduction. I could adjust those based on losses in the
transmission and distribution but that’s detail that I don’t want to get into right now. In the base case I’m not going to assume that
any value is being placed on the emissions. We’re not selling our emissions reductions
to anyone. We can go back and revisit that in a bit.
So let’s not look at the financial analysis. We said that inflation, because this is in
U.S. dollars, is going to be around three percent, so I’ll enter inflation of three
percent. And that’s being applied in a simplified analysis to all future costs. So the ongoing
operation and maintenance costs but also the electricity, and amount we’re being paid for
electricity production. If we wanted to use separate values for those two different inflation
rates, so one for the electricity, another one for the ongoing operations and maintenance
costs, we could do that in a method two analysis. I’m going to assume that my turbines last
20 years, and as I said, we’re going to pay 30 percent out of our own pocket and 70 percent
out of debt. So I’m going to pick a debt ratio of 70 percent here. The debt interest rate
I think we said was 8-1/2 percent. Let’s go back – 8-1/2 percent interest rate over
15 years. So I’m going to enter 8.5 percent. And it’s over 15 years. So let’s just go back
and look at these. Pretty much entered all of that except for
the $15 per megawatt hour O&M costs. So I’ll go down to here, the O&M savings or costs,
and I’m going to use a formula. So $15 per megawatt hour times our annual production,
which is here, the 74,000 megawatt hours. And I see that my annual operation and maintenance
costs are about $1.5 million. So the initial costs are $51 million, and then every year
I have to pay about $1.1 million to keep these turbines running. With that I have some results about the financial
viability of this project. Here’s the cumulative cash flow graph. So here’s the 20 years of
the project. These are positive cash flows above zero and this is negative cash flow.
So initially I have 30 percent of the project being my equity portions. So what I take out
of my pocket to put the payment for the turbines and the wind farm. So 30 percent of $51 million
is about $15 million. And there we go: there’s our $15 million outlay of equity. Now every year I get some money from my electricity
sales but it looks like it’s actually less than what I have to pay each year to service
the debt, to pay the banks for the debt, and for the O&M costs. So you see that over time
this goes downwards. Eventually, though, the payments for the electricity, they’re going
up over time because they’re inflating at three percent, whereas my debt payments are
fixed. So this gradually goes up until 15 years, when I’ve paid off the debt. At that point in time debt payments disappear
and I quickly achieve positive cash flow once the debt is paid off. However, it’s really
not that attractive, right? We don’t achieve positive cash flow until nearly 18 years into
the project. And it’s only a 20-year project. That’s reflected in the pre-tax IRR and equity.
So on the 30 percent portion that we put in out of our own pockets we’re only getting
a three percent return on equity. That’s not very good. Where our ultimate goal was to answer this
question: will this attract investment? And the answer is no, this isn’t going to attract
investment because you can see that we’re earning three percent on money that we’ve
having to borrow at 8.5 percent, and who knows what our overall cost of capital is but it
might be 10 percent. So it’s going to be hard to find an investor who wants to earn 3 percent
on money that they’re having to borrow at 8-1/2 percent. So the next following question is: What would
we have to do to turn this project from being one that’s not going to attract investment
into one that does attract investment? So there’s a couple of suggestions here. Let’s
go through those. Well, we can move this to a windier site.
The wind resource is really important. If we find a windier location in this province
how is that going to change things? We can also change the equipment we’re using. If
we use a slightly more expensive turbine but one that’s going to generate more power per
unit capacity by using the same size rotor but on a smaller generator, so the capacity
factor goes up, or the average output goes up. And putting it on a higher tower, 105
meters instead of 90 meters, we should increase the amount of power this is producing per
unit of capacity. And of course we’re going to have to pay a bit more for these turbines,
but maybe overall that leads to a more profitable project. Also, we could seek better financing. We could
try and get an interest rate of six percent instead of this 8.5 percent here, and maybe
we can put a monetary value on the greenhouse gas emissions reductions. Even though it’s
small, maybe if we get $30 per ton of CO2 equivalent that’ll have an impact on the project.
So let’s see what impacts those have. So we go back, and the first thing I said
is move to windier site. So just so we can remember what our project looks like now it’s
a three percent pretax IRR and equity, and that’s the cash flow graph. That’s at 7.5
meters per second wind speed. If I go to 8.5 meters per second, yeah, it looks significantly
different. We’ve gone up to 7.8 percent. So it made a huge difference, from 3 percent
to nearly 8 percent. But it’s still not enough to make this a viable project. What else can we do? Well, we said we could
change the turbines to a model that might be more appropriate for this wind resource.
So let’s go to a Vim 92 megawatt at 105 meters. Now that’s a two megawatt turbine, so I’m
going to need 15 of these turbines to generate 30 megawatts power. And the price has changed
as well. So it’s now $2,000 per kilowatt. So at 105 meters the wind speed’s gone up
from – we were looking at 7.6 meters per second at the hub height before; now we’re
at 8.8 meters because we’re at a higher height at a better wind resource. This should have an improvement in our capacity
factor. Yes it does. Before, we were at a 28 percent capacity factor, so on average
we put out 28 percent of 30 megawatts; now with the change in the equipment that’s more
appropriate for this wind resource we have a 42 percent capacity factor. So that’s more
in line with what you would expect from a good wind farm.>>Dinesh S. Parakh: Michael, if I could interrupt
for one moment. You have about ten minutes left for this part of the presentation>>Michael Ross: Yep. Good. Thanks.>>Dinesh S. Parakh: Thank you.>>Michael Ross: So that improved the pretax
IRR and equity a bit. It went from just under 8 percent to almost 9 percent. We’ve still
got a long period before we achieve positive cash flow but it is looking more promising. The next thing that we talked about doing
was changing the debt interest rate. Convincing investors, or rather banks, that this was
a safer investment, and seeking better terms for the debt, and changing that to six percent
you’ll see that in fact this improves this quite a bit and we’re now up to 11.6 percent.
So we’re kind of approaching the neighborhood where you might start seeing some private
sector investment interest because you’ll see that we’re borrowing at 6 percent and
earning 11.6 percent on our equity portions. So that’s starting to be a relatively good
return given the riskiness of the project. The last thing we wanted to look at was trying
to monetize some of these greenhouse gas emissions reductions. So you’ll see we have more production
so we have more greenhouse gas emissions reductions now. And if we said, “Well maybe we can get
$30 per ton for this,” and maybe we can do that over a 20-year project lifetime, and
let’s assume that this will inflate also at the same rate as general inflation. So this
may or may not be a reasonable set of assumptions. It’s going to depend on project proponent
being able to find someone willing to pay $30 per ton. What impact would that have? Well, we went
up slightly from 11-something to 13.1 percent. So it didn’t have a miraculous impact, but
it did kind of take us over the top to the point where we have a project that might start
attracting equity investment. It’s still a bit risky because the equity payback period
is very long, but the return on equity is reasonably attractive. So given that it’s
exceeding, say, a 12 or 13 percent threshold we might get private sector investment. The point of this exercise was first to demonstrate
the software, but it was not to suggest that you can take any underperforming wind farm
and miraculously turn it into a good investment opportunity simply by changing some numbers.
What it showed was how we could start out with a set of assumptions and then determine
what would have to change in order to take this project from being a lemon to something
that people might want to invest in. And we identified that the wind speed was a really
important consideration. The type of equipment that we were using was a really important
consideration. The debt financing was an important consideration. And even the greenhouse gas
emissions reduction’s credits were a consideration. And if we were able to change those for our
project we might end up with something that made sense. The next step would be to say, “Ah, maybe
this is a reasonable project. Can I find the site which has the wind resource that I need?
Can I find debt financing at these terms? Are the costs of my turbines reasonable? You
would do on and you would refine your assumptions. But you’ll see that within the course of about
a half hour we did a really quick but somewhat in-depth analysis of a wind farm using this
RETScreen 4 software. I think that’s all that I had to say about
the software itself.>>Dinesh S. Parakh: Okay, well we do have
a lot of questions so if you’re finished with that particular part of it I think the questions
will definitely clarify – you’ll probably have to show a little bit more of the software
in the question and answer, so we can move on to that. We had a bunch of questions come in while
Michael was speaking and I just tried to respond to some of them quickly. I’m just going to
summarize a few of those. Some of them are just quick and easy responses. Somebody asked does it work on Macs, and it
does work on Macs. I did send the response to everybody. It doesn’t work on Macs but
it can be made to work with Macs, and there is a section on Help on our website which
describes how to do that and I sent that link to All. Somebody asked if a cloud-based version will
be developed. It will not – we’re not looking at it right now but it is on the horizon for
the future. But for now RETScreen is going to remain a desktop tool. Somebody asked in the climate database can
you select a specific year to get historical weather data. This can be done through RETScreen
Plus, which is included in the download of RETScreen Suite and that is – you can get
historical weather data through NASA satellite data. Another question was are all of the Help files
and built-in databases incorporated into the downloaded software so they can be used without
access to the internet. That is correct: if you download RETScreen 4 it’s a standalone
tool; you don’t need access to the internet then to use all of the features of RETScreen
4. For RETScreen Plus you do need internet access for live NASA satellite data but I
believe you’re able to sort of disable that and work without that if necessary. And we had a question as well about – yes,
about how often the databases are updated. They’re typically updated about once per year.
And if you want to look at the – usually the databases have some sort of year identifier
on them. So yeah, they are updated fairly regularly. Now some of the other questions I saved for
Michael here to be able to answer during the Q&A session. And I’ll start off with this
one, Michael: how do the accuracies of the output data vary between the three methods
and the energy model? So I think a bit more detail on perhaps method one, two and three.>>Michael Ross: I’m assuming this is specifically
related to the wind analysis.>>Dinesh S. Parakh: I’m assuming so, yes.>>Michael Ross: The accuracy is probably
not going to be so closely related to the method as to the input data. So firstly between
method one and method two: method one, there is no calculation of the capacity factor.
You’re assuming a capacity factor. So if you had another very sophisticated piece of engineering
software that gave you the capacity factor for this 30-megawatt wind farm you could still
use the RETScreen software, which would probably have an easier-to-use interface and an easier-to-use
GHG and cost and financial analysis. By saying, “Okay, it’s a 30-megawatt wind farm and my
sophisticated piece of engineering software has said that it’s got a capacity factor of,
say, 39 percent, so there is no calculation being done within RETScreen itself, essentially.
The capacity factor is assumed there. In method two we’re using annual data here.
So here essentially the accuracy of the calculation is going to be related to the accuracy of
the estimate of the hub height wind speed as well as the accuracy of the modeling of
the distribution of wind speeds. And in the standard, if you’re familiar with wind energy
technology the standard involves a relay distribution which is typically found. But if you actually
knew what the distribution was you could specify what it is using a custom selection here,
which then allows you to specify any Weibull distribution. So if you know what the distribution
is you can enter it that way. If you don’t know what the distribution is
that’s going to be your source of air here. Or if the distribution isn’t real modeled
by Weibull distribution that would be the source of inaccuracy. The third method, it’s a monthly calculation,
so then if you know what the distribution is for the wind speeds and it’s well modeled
each month then in theory you could get a better accuracy here, but I actually think
that the part that’s more useful is the ability to enter a different export rate every month.
So that would actually be for me more of a selling point of methods for even the accuracy. In short I would say that between method two
and method three in general the accuracy is going to be very similar. It’s going to be
more limited by what you know about your wind resource than by the actual calculation itself.>>Dinesh S. Parakh: Great. Thanks Michael.
The next question is – and I think this is specific to the wind example: Shouldn’t
array losses increase if you go from 10 to 15 turbines?>>Michael Ross: That’s a good point, yeah.
Yeah, perhaps I should have increased my losses here to like 5 or 6 percent. To determine
that accurately you might have to use a sophisticated modeling tool but yeah, we’re still in the
ballpark, but that’s a really good point. If we’ve gone to 15 turbines, yeah, all our
losses should have gone up. Thank you for that astute observation.>>Dinesh S. Parakh: The next question is:
How do you arrive at factors which increase the project’s financial viability?>>Michael Ross: I’m assuming that –>>Dinesh S. Parakh: Sounds like a big question.>>Michael Ross: Yeah. How I arrived at these
factors was through personal experience doing projects. But if you don’t have those personal
experiences during projects the great way to figure that out is to actually do the analysis
and then start changing values here. And you can test different values, you can see which
ones are having a big impact on this. For instance, I just changed my array losses
from 4 to 6 percent, and it had a small change in this. It had a small impact on this, but
it didn’t radically change the profitability of my project. So I would suggest – and
that’s not something that’s a huge concern. Whereas in comparison when I changed the wind
speed that did have a huge impact. So you can learn about that by changing the values.
And it’s actually not that hard an exercise. Take half an hour, go through, check what’s
changing here and you’ll be able to identify the parameters that are really important. If you want to try and automate that, if you
look at the start page and you select method two here you get this risk analysis, and that
involves sensitivity analysis and a risk analysis – [Off mic conversation] Yeah, so
I opened on the Start page method two, and
that permitted me to do a risk analysis. And on the risk analysis page there’s a sensitivity
analysis and a risk analysis and then this allows me to look at changes in different
sets of parameters and see which ones are important. I’m not going to show this in depth, but if
I change one of my initial costs here – doesn’t work because I’m in method two. And I haven’t
entered the cost data for method two. But if I quickly do that it doesn’t look like
it should because I’ve jumped between method one and method two without entering the data
associated with method two. But you see this would be a way to automate that process of
determining what are the key parameters by doing a sensitivity analysis using these dropdown
lists to identify the parameters you would want to investigate. So you can either do
it manually or you can do it automatically.>>Dinesh S. Parakh: Will the software scale
for small projects, for example single family homes or smaller multifamily homes?>>Michael Ross: Absolutely. It scales really
well, particularly on the energy efficiency side it works really, really well for small
projects. For renewable energy projects as well it’s great. You can do a 5 kilowatt PV
system for a home, or a solar hot water system for a home; software works great for that.
So yes, very good for small projects. If you were interested, for instance, in policy
and you wanted to see what type of incentives would make a difference for encouraging homeowners
to install solar domestic hot water systems you could definitely investigate that with
RETScreen, yeah.>>Dinesh S. Parakh: We have a question: How
can I specify the wind velocity over 90 meters? What tool can I use for that? How would you
do that in RETScreen 4?>>Michael Ross: Well, you specify the measurement
height. So if you had a tool that said – if you had access to data that told you that
the wind speed at 120 meters was – see, I entered 120 meters there – was, say, 9.5
meters per second you could specify it like that. And now you see that the conversion
has been from a 120 meter measurement height down to the 105 meter hub height. And if you
knew exactly what it was at the hub height you could specify your wind speed at the hub
height. I’m not sure if that answered the question
but that’s how you specify within RETScreen the measurement height for the wind resource.
And if you have it at a value other than 80 meters you can enter that here. If you want to determine what the wind speed
is at a height other than 80 meters you can use the wind shear exponent in RETScreen to
scale this up or down, or you can try and find that data from other tools.>>Dinesh S. Parakh: We have two questions
coming in asking if there’s going to be a RETScreen Plus seminar, and somebody’s asking
if there’s going to be a CHP seminar. I can answer that by saying that I’ll definitely
speak with the organizers at CESC, Sean and Stephanie, and see if we can organize something.
It seems like there is some good interest in RETScreen Plus, at least we’ll – stay
tuned, we’ll work on that. Another question for you. Actually I can answer
this one too: Will there be another webinar that goes deeper into the financial part,
risk and sensitivity? So one, yes, there will be. And if you look at CESC’s schedule we
have a webinar in April that is focusing on RETScreen 4 financial analysis. And that’s
actually going to be using the new RETScreen Expert software which I’ll speak about just
in a few moments. So yes, that is going to be covered. But Michael, I know it’s a large topic but
you might want to take a few minutes maybe and explain some more on the financial measures
that RETScreen uses, for example the different measures, IRR assets and equity payback period,
maybe a couple minutes on that.>>Michael Ross: Okay. So in the method one
analysis these are the financial viability parameters that are provided by RETScreen.
But if you go to the method two analysis you actually get even wider range of parameters.
Obviously they won’t be defined here because I haven’t entered the input data but you have
the pretax IRR and equity analysis, the after-tax IRR and equity analysis, simple payback, equity
payback, net present value, annual life cycle savings, benefit to cost ratio, energy production
costs and GHG reduction costs. So a wide range of parameters. The IRR, the internal rate of return, is akin
to the interest yield on the investment. So if you put in, way, 30 percent, so that’s
your equity portion in the last project you deal with, what does that earn you on an annual
basis over the lifetime of the project? That’s the internal rate of return. You can measure that based on your equity
portion, so that 30 percent you put in, or on the entire value of the project, which
is the assets. So the total initial costs, that would be of interest, for instance, to
lending institutions because if you default on your loan they’ll want to look at – they’ll
essentially take ownership of our portion and then the overall return on the total investment
would be of interest to them. So that’s for pretax. Of course if you have taxation RETScreen can
deal with that. It has a very simple tax analysis component that is surprisingly powerful. And
it will help you determine how the profitability of this project is affected by the taxes on
the earnings from the wind farm. And that’s also on the equity and the assets portion. Now those are measures of profitability, so
does this project learn you money over time. But there are also measures of quickness of
return. And those are, for example, the simple payback and the equity payback. A simple payback is the number of years required
for the initial costs of the project to be paid back out of the savings or earnings from
this project. If you had a project that cost you say $10 million to d and it earns you
$5 million a year in savings or in earnings then it would have a simple payback of two
years. So it’s a measure of how quickly the project pays for itself. Note that it doesn’t say anything about what
happens after that two years. So you could have a project that has a simple payback of,
say, three or four years, so it seems a little bit long for many investors. But it could
be very profitable following the payback for a long period of time. The equity payback is essentially when the
cumulative cash flow graph returns to positive territory. After you’re put in your initial
equity investment it takes a while for it to become positive again. That’s when your
equity portion has paid itself back out of earnings, net earnings from this project.
And it’s another measure of quickness of payback. So ultimately everyone should look at the
profitability, I think, of a project. But for certain organizations quickness of return
is also very important because they may not have the luxury of a long-term outlook. They
may have to earn quick cash flow in order for their organization to stay solvent over
the next few years. For them a quick payback may be really essential because if you don’t
get a quick payback you may go bankrupt. There’s also net present value which then
requires a specification of this thing called the discount rate. It’s very similar to the
IRR in what it tells us. It essentially says that if the value of the project, considering
the time value of money, over the entire life of the project is positive then it’s a profitable
project. If it’s zero it’s a breakeven project, and if it’s negative then it’s not a profitable
project. Those are the main indicators. The annual life cycle savings is another way
of essentially expressing the net present value but on an annual basis. The benefit
to cost ratio is another way of kind of couching that same information. And then the energy
production and reduction costs, GHG reduction costs, are ways that couch the costs or the
profitability in terms of megawatt hours of production or the tons of CO2 emissions reductions.>>Dinesh S. Parakh: It’s a large topic. Thank
you for summarizing it very well. We have a lot more questions here. We’re not
going to be able to get to all of them in the time that we have; we only have about
seven minutes left. But I’m going to summarize one or two of the questions which sort of
touch on several different things. We had a question early on about RETScreen
Expert, when that’s going to be made available. Some of you, I’m sure a number of you probably
have a similar question. RETScreen Expert is the new generation of the RETScreen software.
Quickly, it’s going to be made available, our anticipated launch is the second quarter
of 2016. We don’t have an official launch date yet. If you’re on our mailing list, if
you’ve downloaded the software you will get the most recent information. The most recent
Clean Energy bulletin, which is just going out now – some of you may have received
it, some may not have yet received it, has a link to a sneak preview webinar on RETScreen
Expert which you can have a look at. The April and May webinars that are scheduled
with CESC on financial analysis with RETScreen, one of them is in English in April; one is
in French in May. Those are actually going to be using RETScreen Expert so you will get
to see the new software there as well, okay? We’ve had some questions here about whether
RETScreen includes a reporting tool. The new RETScreen Expert is going to have a reporting
tool integrated, a very nice functionality. The new RETScreen Expert is also going to
include in the professional version of it – so I can’t get into too much detail but
you can find information on our website. But the professional version of RETScreen Expert
is going to include training as well, web-based training, web-based customer support, etc.
So look for that to come. However, let me stress please that you can
do a tremendous amount with RETScreen right now. You don’t have to wait for the new software.
RETScreen has led to well over $8 billion in euro savings until now, so there’s a tremendous
amount you can do. So I encourage you to download the software, learn how to use the basics
of RETScreen 4 because that’s going to be very helpful even if you do then move to the
new software later on. Michael, all right, for decentralized systems
which grade should be selected, for example home-based systems?>>Michael Ross: Well if it’s a home that’s
tied to the grid then it should be central grid. So even though it’s a decentralized
or distributed energy generation this is still tied into the central grid typically, so you
would use central grid. Of course if it’s an off-grid home, so there
is no grid connection, there’s no power line coming to the home, then you would use off-grid.
But most homes, say with a PV system on the roof, also have a grid connection. So they
would be tied to the central grid.>>Dinesh S. Parakh: Let me just – we have
logged all of these questions and we can respond to them later on by email. You can always
contact us as well, too. So there is always a way to get in touch with us; no need to
worry. Maybe we’ll try and squeeze one more question in. Let me just also mention there
were a couple questions about RETScreen in French. So the entire software is in French,
everything: the user manual, etc., and there’s going to be a French webinar with CESC on
using RETScreen for policy analysis in March and there’s going to be a webinar in RETScreen
for financial analysis using RETScreen Expert in French in May. So all of that is on CESC’s
website. You’ll be able to find that information there. Let’s try one more quick question here. Michael,
are there case studies available with real site data?>>Michael Ross: Yes there are. If you go
to the project database from the Start page here and you look at case studies here you’ll
see that these actually are from real projects, so they are based on real site data. If you
actually click on one and you click on the Help you can see there’s a real project there.>>Dinesh S. Parakh: And I’ll quickly answer
two more questions here: How often are the base assumptions updated, for example solar
costs dropping annually? On average we’re updating once a year. If there are significant
changes that can be done more frequently, but on average to do update all the databases
and review all the assumptions quite regularly. So you can use this software with confidence. We’ve also had a couple questions about getting
assistance to use RETScreen. Look, there are – I’ll just very briefly answer this by
saying that there are a number of companies that provide RETScreen consulting services.
You can find a listing of those on our RETScreen marketplace. Just google that. RETScreen Expert,
as I mentioned, is going to have a premium version of the software which will include
access to customer support and training. But there are many different ways. So if you have
specific questions, again, you can always contact us through the website and we get
back to people within a couple of business days maximum. We’re not going to get to all these questions;
there’s still a whole bunch more. But I’ll assure you we’ll have a look at those and
try to respond to those as soon as possible. I believe Sean and Stephanie have to – there’s
a brief survey we have to do.>>Sean Esterly: Yeah, thank you, Dinesh and
thank you Michael for the presentations. And as Dinesh said, we do have all the questions
saved so we can respond to those following the webinar through email directly to the
attendees. We do have a couple quick questions for you
to just help us evaluate how we did and improve for our next webinar. So I will show the first
question and you can respond right through the Go To Webinar platform there. The question
is: “The webinar content provided me with useful information and insight.” And the second question is: “The webinar’s
presenters were effective.” And: “Overall the webinar met my expectations.” And yes or no question: “Do you anticipate
using the information presented in this webinar directly in your work and/or organization?” And one final question: “Do you anticipate
applying the information presented to develop or revise policies or programs in your country
of focus?” Thank you very much for answering our survey.
And on behalf of the Clean Energy Solutions Center I would just like to once again thank
our panelists for their presentations and also our attendees for participating in today’s
webinar. We very much appreciate everyone’s time and do invite you to check the Solutions
Center website if you’d like to download and view the slides that we used today. Or also
we’ll be posting a recording of today’s presentation within the next day or two. Additionally on the Solutions Center website
you’ll find information on upcoming webinars and other training events. And just a reminder:
we also post our webinar recordings to the Clean Energy Solutions Center YouTube channel,
along with other clean energy-related videos. So with that I would just like to wish everyone
the great rest of your day and hope to see you again at future Clean Energy Solutions
Center events. And this concludes our webinar.

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