Complete(rigorous(investmentevaluaon(and( …greenways2go.com › wp-content › uploads › 2015...
Transcript of Complete(rigorous(investmentevaluaon(and( …greenways2go.com › wp-content › uploads › 2015...
!$4,000,000&
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Cumula4ve&Discounted&Cash&Flow,&$US&
Years&AGer&Ini4al&Opera4on&
Cumula4ve&Discounted&Cash&Flow&Including&Infrastructure&&&Vehicle&Investments&&First&20&Year&Periodd&&&&&&
&Fleet&w/&Infra&1&&
&Fleet&Third&Party&1&&
&Fleet&w/&Infra&2&&
&Fleet&Third&Part&2&&
Ø Complete rigorous investment evalua1on and make informed decisions – Vehicle / fuel / infrastructure choices – Schedule of investment decision events – Educate organiza1on on choices and facilitate decision process
Ø Reduce risk Ø Lay out business strategies
• Model executes a Simple Cash Flow and a Net Present Value (NPV) Cash Flow analyses related to use of Alterna1ve Fuel Vehicles (AFVs)
– Fleets that invest in AFVs and/or AFV infrastructure fueled by CNG, LNG, Propane, E85, B20 and Electricity
– Retail fuelers that invest in AFV infrastructure – Evalua1ons consider lifecycle costs over 20 years. – NPV cash flow analysis provides ability to fairly compare alterna1ve investments, by
discoun1ng future values into today’s dollars – Simple cash flow does not consider the impact of 1me value of money
• Comparisons between alterna1ve fuel types, including vehicles and infrastructure – Baseline: tradi1onal fuels à gasoline and/or diesel trucks, cars, buses and other transports – Comparisons: alt fuels à CNG vs. LNG vs. Propane Autogas vs. E85 vs. B20 – Vehicle choices: dedicated Alt Fuel vs. Bi-‐fuel (Gasoline-‐Alt Fuel) vs. Dual fuel (Diesel-‐Alt Fuel)
• Compare impact of miles driven and/or fuel economy (mpg) on investment • Compare investment alterna1ves, such as self-‐funded vs. borrowing funds
1. Fleets: own vehicles, but fueled by a Third Party: – NPV is based on the differen>al between tradi9onal and alternate fuel costs from Third Party Retail Fueling
2. Fleets: own vehicles and invest in their own fueling infrastructure: – NPV: based on the differen>al between tradi9onal fuel costs and all of the costs associated with self-‐fueling with Alt Fuel
3. Retail opera9ons – NPV is based on margin on chosen alterna>ve fuel
Tradi/onal Fuel Types Gasoline Diesel
Mixed Use
Alterna/ve Fuel Types Compressed Natural Gas (CNG) Liquefied Natural Gas (LNG)
Propane Autogas (PA) Ethanol/Gasoline Blends (e.g. E85) Biodiesel/Diesel Blends (e.g. B20)
Electric Vehicles (EV) Business Case Types
Fleet, self-‐fueled Fleet, 3rd party fueled
Retail fueling
Vehicle Types (Examples) Passenger Car Passenger Truck
Light Commercial Truck Intercity Bus Transit Bus School Bus Refuse Truck
Single Unit Short-‐Haul Truck Single Unit Long-‐ Haul Truck
Motor Home Combina1on Short-‐ Haul Truck Combina1on Long-‐ Haul Truck
Motorcycle
Funding Types Self-‐funded infrastructure Financed infrastructure Self-‐funded vehicles Leased vehicles
Fleet Types Group (e.g. bus, refuse, delivery) Individual vehicle (e.g. municipal) Retail (e.g. customer vehicles)
• Case Name • Costs
– Vehicles – Infrastructure – U1li1es – Fuel – Marke1ng
• Opera1onal Profile – Route logis1cs – Labor – Fueling plan – Maintenance labor & parts – Insurance
• Current Fuel Type • Alterna1ve Fuel Type • Business Opera1on Type • Vehicle Usage Profile
– Miles & Gallons/day – Miles& Gallons/year
• Fuel Supply Rates – Current – Future
• Funding Sources • Incen1ves • Deprecia1on • Time Value of Money
– Interest rates – Escala1on/Infla1on – Discount rates
• Taxes
DESCRIPTION CNG, No Incentive CNG, Infra 30% Incentive
CNG, Infra 30% Incentive, AFV
Incentive
CNG, Infra 50% Incentive, AFV
Incenitve
CASE CASE 1 CASE 2 CASE 3 CASE 4
A. PROJECT CAPITAL COSTS
Compressor/Pump, Dryer, Storage and Dispensing Equipment $ 450,000 $ 450,000 $ 450,000 $ 450,000 Commissioning by Manufacturer $ 6,500 $ 6,500 $ 6,500 $ 6,500 Site Design $ - $ - $ - $ - Equipment Installation $ 970,510 $ 970,510 $ 970,510 $ 970,510 Electric Utility Infrastructure Costs $ - $ - $ - $ -
Gas Utility Infrastructure Costs $ - $ - $ - $ -
Infrastructure Incentive Amounts $ - $ (428,103) $ (428,103) $ (713,505)Total Fueling Infrastructure Investment $ 1,427,010 $ 998,907 $ 998,907 $ 713,505 Facility Infrastructure Modifications (e.g. Maintenance Building) $ 100,000 $ 100,000 $ 100,000 $ 100,000 Alternative Vehicle Marginal Costs (Incl. Incentive Credits) $ 1,250,000 $ 1,250,000 $ 1,250,000 $ 1,250,000 Total Fueling Infrastructure & Vehicle Investment $ 2,777,010 $ 2,348,907 $ 2,348,907 $ 2,063,505 B. OPERATING HOURS PROFILEAverage hours per day fueling occurs (annual average) 12.0 12.0 12.0 12.0 Days per week operation 6.0 6.0 6.0 6.0 Other Days per Year Closed 2.0 2.0 2.0 2.0
Fueling System Equipment and Installation Costs
SELECT BUSINESS OPERATION TYPE F (FLEET-self feuling), or T (Fleet Third Party), OR R (RETAIL)
F F F F
SELECT VEHICLE USAGE BASIS, INVIDUAL VEHICLE BASIS (I), VEHICLE GROUP BASIS (G) OR RETAIL PROFILE (R)
G G G G
VEHICLE COUNT CHECK (Compares usage source with Vehicle Investment inputs) OK OK OK OK
SELECT ALTERNATIVE FUEL CNG, LNG, PA, E85 or B20 CNG CNG CNG CNG
Suggested Demand Basis Flow Rate Minimum (SCFM for CNG, Gallons for other Fuels) 377.82 377.82 377.82 377.82 For Gaseous Alt Fuel Evaluations (CNG)
Design Max. Fueling Rate - Standard Cubic per MINUTE- from all hoses 500 500 700 700
C. FUEL AND BUSINESS MODEL SELECTION FACTORS
D. FUELING RATE- BASED ON EQUIPMENT SELECTION (AVAILABLE SUPPLY)
For Liquid Alt Fuel Evaluations (LNG, PA, E85, B20)Design Max. Fueling Rate - Gallons Alt Fuel per MINUTE- from all hoses 8.00 5.00 3.00 6.00
• Simple Cash Flow (CF) based model – Accounts for all investments, revenues, O&M costs – Amor1za1on of investments – Deprecia1on where applicable – Annualized results – net cash flow = cash in – cash out
• Cumula1ve Cash Flow Analysis – Looks at each year’s cash in and out – Cumula1vely adds each year to the first year – Accounts for infla1on and escala1on – When investment crosses into posi1ve territory, at 1me t, this = simple payback
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0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
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ve%Cash%Flow
,%US%$%
Years%AAer%Ini3al%Opera3on%
Cumula3ve%Cash%Flow%(Simple%Payback),%including%Vehicles%&%Infrastructure%First%Ten%Years%
%75%CNG%MDT%%
Payback
NPV @ 10 years
• Cumula1ve Net Present Value Analysis = Discounted Cash Flow: – Used to realis1cally evaluate the viability of capital projects over the life of a project – Posi1ve NPV means amount of cash that would be added to a business in today’s dollars – Model can be based on actual cash flows or compara1ve cash flows – Looks at each year’s cash flows, in and out – Discounts the net cash flow back for each year to the present to have all ac1vi1es in current year dollars. – Discounted value for NPV = Cash Flow d = discount rate, n = 1me period (e.g. year)
(1+d)n – Inverse of Future Value = Cash Flow (1+i)n
Ø e.g. how much is money worth at some point in the future? – Cumula1vely adds each year to the first year – Time horizon shows value of investment and/or compara1ve values between choices, in current dollars
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Cumula4ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Ten&Years&
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Payback
NPV @ 10 years
ITEM VALUE
Scenario Name NPV vs. Cash Flow
Variable(s) Vehicle Quan1ty, Infra Investment
Fixed Parameters Vehicle daily usage, qty
Alt Fuel(s) CNG
Vehicle Qtys: Years Purchased
25: 1, 50: 1 to 2, 75: 1to 3, 100: 1 to 4
Vehicle Type Heavy Duty Truck
Diesel $/Gal $3.80
Alt Fuel, $/GGE or DGE : COST
$0.80
Funding Self-‐funded
Maintenance Facility Upgrades
Yes
!$4,000,000&
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$0&
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ve&Discoun
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Years&AGer&Ini4al&Opera4on&
Cumula4ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Ten&Years&
&25&CNG&AFV&& &50&CNG&AFV&&
&75&CNG&AFV&& &100&CNG&AFV&&
Payback NPV @ 10 years
Impact of Usage
Δy Δx
Slope
Beler investments = earlier payback, higher slope, greater returns over 1me. Usage: more vehicles and/or more gallons of fuel = beler Return On Investment
NPV is more conserva1ve and realis1c analysis than Simple Payback at 10 or 20 years NPV is truer reflec1on of cash flow in real business
ITEM VALUE
Scenario Name Fuel Usage
Variable(s) Vehicle Quan11es
Fixed Parameters Vehicle daily usage
Alt Fuel(s) CNG
Vehicle Qtys: Years Purchased
50:1-‐2, 50:1-‐2, 100: 1-‐2, 100: 1-‐2
Vehicle Type Refuse Truck
Diesel $/Gal $3.80
Alt Fuel, $/GGE or DGE : COST
$0.80
Funding Self funded
Maintenance Facility Upgrades
Yes !$5,000,000&
$0&
$5,000,000&
$10,000,000&
$15,000,000&
$20,000,000&
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Cumula4
ve&Discoun
ted&&Cash&Flow
,&US&$&
Years&AGer&Ini4al&Opera4on&
Cumula4ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Ten&Years&
&CNG&Self&Fund:&50&Refuse&Trucks&&
&CNG&3rd&Party:&50&Refuse&Trucks&&
&CNG&Self&Fund:&100&Refuse&Trucks&&
&CNG&3rdParty:&100&Refuse&Trucks&&
More vehicles = faster payback, beler ROI (slope) and long term NPV
ITEM VALUE
Scenario Name Fuel Usage
Variable(s) Vehicle Quan11es
Fixed Parameters Vehicle daily usage
Alt Fuel(s) CNG
Vehicle Qtys: Years Purchased Over
20:1 to 2, 30:1 to 3, 60: 1 to 4, 100: 1 to 5
Business Opera1on Type
Fleet, self owned
Vehicle Types Medium Duty Trucks
Diesel $/Gal $3.80
Gal/year/Vehicle
Alt Fuel, $/GGE or DGE : COST
$0.80
Funding Self funded
Maintenance Upgrades
Yes
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Years&AGer&Ini4al&Opera4on&
Cumula4ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Ten&Years&
&CNG:&20&Refuse&Trucks&&
&CNG:&30&Refuse&Trucks&&
&CNG:&60&Refuse&Trucks&&
&CNG:&100&Refuse&Trucks&&
21%$
21%$
!"!!!!
!500!!
!1,000!!
!1,500!!
!2,000!!
!2,500!!
!CNG:!20!Refuse!Trucks!!
!CNG:!30!Refuse!Trucks!!
!CNG:!60!Refuse!Trucks!!
!CNG:!100!Refuse!Trucks!!
%!Im
provem
ent!
Tons!Per!Year!R
educCo
n!CO
2!
GHG!Change!!
Beler payback with more vehicles and improvement in Greenhouse Gases (GHG)
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Years&AGer&Ini4al&Opera4on&
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&CNG&Self&Fund:&50&Refuse&Trucks&&
&CNG&3rd&Party:&50&Refuse&Trucks&&
&CNG&Self&Fund:&100&Refuse&Trucks&&
&CNG&3rdParty:&100&Refuse&Trucks&&
Vehicle purchase intervals
• Top: all purchasing in 1st year
• Bolom: spread out over
mul1ple years
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low,&U
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Cumula4ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Ten&Years&
&CNG:&20&Refuse&Trucks&&
&CNG:&30&Refuse&Trucks&&
&CNG:&60&Refuse&Trucks&&
&CNG:&100&Refuse&Trucks&&
ITEM VALUE
Scenario Name Incen1ves
Variable(s) Infra and AVF incen1ves
Fixed Parameters Vehicle daily usage, and Quan11es
Alt Fuel(s) CNG
Vehicle Qtys: Years Purchased
50: 1 to 2, all cases
Vehicle Type Heavy Duty Trucks
Diesel $/Gal $3.80
Alt Fuel, $/GGE or DGE : COST
$0.80
Funding Self funded
Maintenance Upgrades
Yes
!$2,000,000&
!$1,000,000&
$0&
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$2,000,000&
$3,000,000&
$4,000,000&
$5,000,000&
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Cumula0
ve&Discoun
ted&&Cash&Flow
,&US&$&
Years&ACer&Ini0al&Opera0on&
Cumula0ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Five&Years&
&CNG,&No&Incen0ve&&
&CNG,&Infra&30%&Incen0ve&&
&CNG,&Infra&30%&Incen0ve,&AFV&Incen0ve&&
&CNG,&Infra&50%&Incen0ve,&AFV&Incenitve&&
Same number of vehicles & fuel: incen1ve influence varies based on vehicle and/or infra
incen1ve and the % of incen1ves
ITEM VALUE
Scenario Name AFV Types
Variable(s) AF
Fixed Parameters Vehicle daily usage, Quan11es
Alt Fuel(s) CNG, LNG, PA, E85
Vehicle Qtys: Years Purchased
100: all
Vehicle Type Heavy Duty Trucks
Diesel $/Gal $3.80
Alt Fuel, $/GGE or DGE : COST
Varies by Fuel Type
Funding Self funded
Maintenance Upgrades
Yes
!$20,000,000&
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ted&Ca
sh&Flow,&$US&
Years&AGer&Ini4al&Opera4on&
Cumula4ve&Discounted&Cash&Flow&Including&Infrastructure&&&Vehicle&Investments:&&First&20&Year&Periodd&&&&&&
&100&CNG&AFV&&
&100&LNG&AFV&&
&100&PA&AFV&&
&100&E85&AFV&&
0%#
5%#
10%#
15%#
20%#
25%#
!"!!!!
!500!!
!1,000!!
!1,500!!
!2,000!!
!2,500!!
!3,000!!
!100!CNG!AFV!! !100!LNG!AFV!! !100!PA!AFV!! !100!E85!AFV!!
%!Im
provem
ent!
Tons!Per!Year!R
educEo
n!CO
2!
GHG!Change!!
Impact of GHG depends on Alt Fuel Type
Economics vary widely depending on inputs for alt fuel costs
ITEM VALUE
Scenario Name Incen1ves
Variable(s) Discount Rate (DR): 0% to 10%
Fixed Parameters Vehicle daily usage, Quan11es
Alt Fuel(s) CNG
Vehicle Qtys: Years Purchased
50:1 to 2, all
Vehicle Type HDT
Diesel $/Gal $3.80
Gasoline $/Gal
Alt Fuel, $/GGE or DGE : COST
$0.80
Funding Self funded
Maintenance Upgrades
Yes !$4,000,000&
!$2,000,000&
$0&
$2,000,000&
$4,000,000&
$6,000,000&
$8,000,000&
$10,000,000&
$12,000,000&
$14,000,000&
0& &1&& &2&& &3&& &4&& &5&& &6&& &7&& &8&& &9&& &10&&
Cumula4
ve&Discoun
ted&&Cash&Flow
,&US&$&
Years&AGer&Ini4al&Opera4on&
Cumula4ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Ten&Years&
&DR&=&0&& &DR&=&4%&&
&DR&=&6%&& &DR&=&10%&&
Time Value of Money (Discount Rate) plays significant role over 1me, all other things being equal Discount Rate @ 0% = Simple Payback
ITEM VALUE
Scenario Name Retail Revenue
Variable(s) Fuel Usage, Daily Vehicle Fueling Quan11es
Fixed Parameters Investment costs
Alt Fuel(s) CNG
Vehicle Qtys/Day: Retail 1=25, Retail 2 = 50, Retail 3 = 100, Retail 4 = 200
Vehicle Type Heavy Duty Trucks
Margins: 30-‐35%
Alt Fuel, $/GGE or DGE : COST
$0.80
Funding Self funded
!$2,000,000&
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$0&
$1,000,000&
$2,000,000&
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$4,000,000&
$5,000,000&
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Cumula4
ve&Discoun
ted&&Cash&Flow
,&US&$&
Years&AGer&Ini4al&Opera4on&
Cumula4ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Ten&Years&
&Retail&1&& &Retail&2&&
&Retail&3&& &Retail&4&&
More vehicles (same daily consump1on) = faster payback, beler ROI (slope) and long term NPV
ITEM VALUE
Scenario Name Financing
Variable(s) Fuel Usage, Model Type
Fixed Parameters Vehicle daily usage, qty.
Alt Fuel(s) CNG
Vehicle Qtys: 50: all case
Vehicle Type HDT
Margins: 30-‐35%
Alt Fuel, $/GGE or DGE : COST
$0.80
Funding Self funded
Maintenance Upgrades Yes
Financing Terms 3 yr, 6% APR
Lease Terms 3 yr, 5.6% APR !$2,000,000&
!$1,500,000&
!$1,000,000&
!$500,000&
$0&
$500,000&
$1,000,000&
$1,500,000&
$2,000,000&
$2,500,000&
0& &1&& &2&& &3&& &4&& &5&&Cu
mula0
ve&Discoun
ted&&Cash&Flow
,&US&$&
Years&ACer&Ini0al&Opera0on&
Cumula0ve&Discounted&Cash&Flow,&including&Vehicles&&&Infrastructure&First&Five&Years&
&100%&self&fund&&
&50:50&Self/Financed&&
&100%&Self&Financed&&
&Infra&Self&funded,&Vehicles&Leased&&
The degree of borrowing influences ROI
• Green Ways 2Go will be pleased to complete an investment model for your fleet or retail facility.
• First evalua/on is free – up to four variables – Alt fuel types – Roll-‐out schedules – number and types of vehicles – how many, which ones and when
– Vehicles only, using 3rd party alt fueling vs. purchasing own infrastructure
– Retail business ROI with variable margins – Self-‐funded vs. financed – Impact of incen1ves – Etc.
• Contact Green Ways 2Go to start the process