Daily Archives: September 26, 2013

W4.1_SSD_Selection of Solar Photovoltaic System Based on IRR, WACC, and MARR


1. Problem Recognition, Definition and Evaluation

With increasing electricity rate, I am planning to install a photovoltaic solar panels system on my house. I want to investigate which PV arrangement will provide me with a good investment.
For that I use the tool mentioned in Engineering Economy Engineering Book, chapter 5, Introducing Concept of Minimum Attractive Rate of Return (MARR) and Internal Rate of Return (IRR), page
178-211,

The electricity price increases is shown at Table 1.

Year Increase Per

Year (%)

2010
2011
0.05
2012
0.035
2013
0.04

Table 1. Increase of electricity from 2010 until 2013

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W5_ASY_Project Evaluation Using ERR Method


Problem Statement

Continue to discuss further using topic from my W4 posting here I want to talk about using ERR for evaluating this project. The tools as discussed in in Engineering Economy Engineering Book, chapter 5, page 178-211. This is introducing external reinvestment rate (ɛ) per period. Just like IRR, ERR is used to evaluate the economic justification of project. But this time ERR that taken into account the interest rate external at which cash flow generated over the lifecycle of project. This method is also useful for solving similar problems as stated in in problem 5-46 at this book. But, instead of using MARR = 12%, in this posting I am using ɛ = MARR 20% because as I am using real life example as described in my blog posting W4 previously.
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W4_TOM_FPSO Time Charter Commercial Bid Evaluation using Discounted Time Value of Money (WACC) Technique


1 – Problem Recognition, Definition and Evaluation

According to American Petroleum Institute, there are 9 (nine) types of Production Facilities which are:

  1. Deepwater Development Systems
  2. Fixed Platform (FP)
  3. Compliant Tower (CT) 
  4. Tension Leg Platform (TLP)
  5. Mini-Tension Leg Platform (Mini-TLP)
  6. SPAR Platform (SPAR) 
  7. Floating Production System (FPS) 
  8. Subsea System (SS) 
  9. Floating Production, Storage & Offloading System (FPSO)

Source: http://www.api.org/oil-and-natural-gas-overview/exploration-and-production/offshore/offshore-production-facilities

In an oil field Facility Development Project that I am working for now, FPSO is the chosen option for the production facility.


Picture 1 – Picture of an FPSO

Source: http://www.rigzone.com/training/insight.asp?insight_id=299&c_id=12

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