Electricity power plants
Does anyone here work in utilities? I'm looking for some specific info (average WACC for power plants, etc)
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Get a list of comparable listed companies that specialise in the type of power generation you are interested in (because renewables are somewhat differently exposed to various risks than fossil fuel power generation)... then unlever their betas, take the average, and then re-lever them for your specific power generation project...
Take this number and feed it in to your CAPM and then use the return on equity that that generated for your WACC.
I did stuff in power investment for a while. Are you talking about existing power plants or new ones? WACC for power plants is largely dependent on the underlying technology (thermal [coal, gas {combined cycle vs standard gas turbine}, nuke, oil, etc] vs renewable). That's what drives the risk profile and debt capacity of the project.
Also the contract on the assets will also determind its risk profile thus WACC, Ie - PPA Power plants should have a lower WACC than fully merchant Power plant.
This also affects the Cap Structure b/c with a credit worthy PPA you can get higher leverage on the deal.
I.e think WACC's on Fully PPA Combine Cycles are 8-10%, Merchant 10 - 15% depending on Market (ERCOT is a beast).
I'm talking about new ones...not exactly greenfields though...more like there's an existing complex that they're just building another plant into.
Coal fired, PPA. 8-10% seems reasonable given some of the risks Raison mentioned. Probably add a little for emerging market geopolitical risks...
Thanks for the input, everyone.
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