Revised Geysers PPAThe PPA rate is revised (it was $98 at one point, then Western tried to re-negotiate to $117, who knows what it is now), the term lengthened from 20 to 25 years. The importance of this news is that it indicates that project finance loans are nearing completion. Project finance loans usually run as long as the PPA agreement, perhaps it's easier to spread the loans over 25 years, making payback easier.
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Also, the original PPA agreement was set to run from 2010 to 2030, leaving only 16 years of payments with a projected start date in late 2013. They had to revise the agreement for that reason alone, impossible to finance with only an effective 16 year PPA. I expect announcement of the project finance loan and EPC contract next month.
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I saw a $200 million number for the Geysers project cost a while ago. This has to include previous sunk costs! If they're asking for a $200 million project loan then the whole thing makes no sense.
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A $114 million dollar project finance loan should be more than enough to build Geysers, especially because drilling for a lot of the resource is completed and infrastructure from the previous plant on the site still exists (wellpads, roads, etc). Build the plant for $114 million by 2013, get a $34 million grant from the US government and the economics of the project is beautiful.
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$114 million financed at 7% over 25 years requires a yearly payback of around $9.6 million. Yearly revenues should be around $21.4 million (26 MW x $98 per MWhr x 8500 hours), leaving an EBITDA of 16 million. After loan payback a free cash flow of a little over 6 million per year.