An integrated, combined cycle power plant produces 285 MW of electricity by gasifying coal. The capital investment for the plant is $570 million, spread evenly over two years. The operating life of the plant is expected to be o20 year. Additionally the plant will operate at full capacity 75% of the time (downtime is 25% of any given year.
a. if this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low risk venture?
b. what is the IRR for the plant? Is it profitable?