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Analyst briefing includes Meridian windpower value model

posted Apr 2, 2012, 5:00 AM by ema-1 ema-1   [ updated Apr 2, 2012, 2:16 PM ]
"In his first formal briefing to investment market analysts, Binns also gave the most explicit view yet published of Meridian’s approach to valuing prospective wind projects, with good projects commercially attractive at under $85 per Megawatt hour. “Meridian’s existing pipeline showing four projects at less than $85/MWh, four projects between $85 and $95/MWh,” say Binns’s presentation notes, well below the widely quoted belief in the electricity industry that wind requires prices of around $100MW/h to be viable"

"Binns also explained how Meridian reaches project value using a discounted cashflow rather than using the forecast long-run marginal cost of electricity as its benchmark for investment decisions. The DCF must exceed a hurdle rate, defined as a return greater than the weighted average cost of capital after sunk cost. “Terminal value (second life or sustainable cashflows) are excluded from this calculation.”"

"“Forward expectations of high quality wind unit costs are better than other generation options: true greenfield geothermal, and thermal (gas / coal).”"

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