CAP_NEW discounting?

Tom on the VEDA Forum Wrote:Is it correct that CAP_NEW discounts from the middle of a period to it's start year if no NCAP_ILED is defined for a technology? In the global model, where periods have 10 years duration, this discounting factor increases the reported lump sum investment (LUMPINV) costs significantly compared to the calculation based on pure investment costs and new capacity (NCAP_COST x VAR_NCAP), in particular when NCAP_DRATE is high (e.g. as I assume for residential solar PV).

No, there is no discounting from the middle of a period to its start year. To get the lump-sum investment cost, all the annual investment payments are just discounted to the beginning of the commissioning year k associated to each payment stream. When neither NCAP_ILED nor NCAP_DRATE is defined, the LUMPINV value should thus be equal to NCAP_COST × VAR_NCAP.  But if either of them is defined, the lump sum cost will be higher, because with interest during construction or a higher required rate of return, the present value of the investment payments at the commissioning year will be higher than  NCAP_COST × VAR_NCAP.


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CAP_NEW discounting? - by Antti-L - 19-12-2014, 06:47 AM

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