Assessment of the Viability of a 500 MW Concentrated Solar Power Plant in Gombe, Nigeria

Abstract

The work assesses the viability of a 500 MW concentrated solar power plant project in Gombe, Nigeria. This is conducted by evaluating the impact of (i) electricity price, (ii) exchange rate, (iii) discount rate, and (iv) interest rate on the Net Present Value (NPV), Internal Rate of Return (IRR) and shareholders’ dividends, in assessing the power plant for possible viability. We found that the plant has a strong, positive correlation between price and profitability, with significant foreign exchange risk, where a weakening of the Naira will increase import costs more than it increases revenue. A higher discount rate will make the project appear less attractive today because of its negative NPV, yet it is financially viable and bankable, with clear sensitivity to interest rate changes.