Impact of writeoff / writedown on economics
Applying the economic analysis model of ATCF to evaluate the impact of writeoff/writedown on project economics. A simplified economic analysis of ATCF with and without writeoff is recommended. A half-page write up is needed.
One may choose any of the following cases to investigate:
a.Writedown of assets by BP in 2020.
b.New 2020 policy allowing immediate writeoff of investments in offshore wind development. One may choose to analyze the 20-year Vineyard Wind Project using, but not limited to, the following information(J. Lesser, 2020):
➢Capital cost of the turbines themselves (which constitute 30%–45% of total capital costs) will decline to about $1,000/kW by 2030
➢Revenues starts in 2022 with 1st-year price of $74/MWh and an escalation rate of 2.5% per year
➢Support 80 jobs per year➢Electricity generations starts at 40% capacity and decreases 4.5% per year➢Decommission cost is $102,000 to $384,000 per MWh