BUSP012 PROJECT MANAGEMENT ASSIGNMENT RESIT/DEFERRED

CYPRUS CONCENTRATED SOLAR POWER PROJECT

Date issued: 8th June 2023
Submission: Monday 26th June 2023

Figure 1. Arrays of parabolic solar mirrors

Introduction
Solar energy is a huge resource with the scope to power all of the world’s electricity generation. Pilot
schemes elsewhere (particularly the USA and Spain) have proven the technology of Concentrated Solar
Power (CSP) using arrays of parabolic mirrors to focus the sun’s rays, using heat to produce steam and
power electricity generators. A larger scale commercial power plant is planned for Cyprus and four
possible sites are being considered with a life of approximately 20 yearsi.

4
3 1

Figure 2. Possible locations

1|P a g e
Assignment tasks
Analyse the options for the Cyprus CSP project and prepare a Project Initiation Document (a report)
recommending the best course of action. Check the report writing guidelines for advice about the
format. It should include the following standard sections:
• Executive Summary (including key results and recommendations)
• Analysis (with sub-sections for each component of the analysis, e.g. schedule, finance)
• Conclusions and Recommendations (with clear interpretation for management)
• Appendices (NOTE: tables summarising results, e.g. milestone dates, should be included in the
main body of the report but full printouts of schedules should be placed in appendices; each
should have a distinct title and be numbered so that they can be cross referenced from the main
text)

Where there are any ambiguities or a lack of data, make sensible assumptions based on research that you
have carried out. Record your assumptions in full and if necessary use references to support your
assumptions. The PID should include:
• a project network plan and a schedule analysis estimating key dates for each option
• a financial appraisal of each option
• a sensitivity analysis exploring key uncertainties and their effects on the project

The PID should fully explain your analysis. In addition to the report which should be written in MS Word
you should also submit one MS Project and one MS Excel file providing details of the analysis of one of
your options. These additional files will be used to clarify your analysis if necessary. NOTE: you have been
allocated one of the four sites to analyse – see spreadsheet ‘CSP Locations for BUSP12_23’ you only should
analyse one site not all four.

Reports from key personnel

Senior Thermal Engineer
“The parabolic trough mirrors seem to offer the best solution at present with a much greater scope to
generate large quantities of electricity at a low price. Much of the technology has been proven both locally
in a small pilot plant and in the USA on a much larger scale. Figure 3 illustrates the basic technology
though a few variants are possible. At present we plan to build three arrays of mirrors, with each array
consisting of many mirrors.”

2|P a g e
 oil may be used to heat molten salt

oil is heated in oil heats the water to steam drives a turbine &
pipes produce steam electricity is generated

parabolic mirrors
track the sun
condenser
ensures the
thermal gradient
needed to provide
the pressure for
the turbine

the molten salt provides

a store of energy
Figure 3. Concentrated solar power generation with parabolic trough mirrors

“We need to consider the option of excluding the hot salt thermal energy storage. While this is attractive
in providing greater control of the electricity generated, the technology is expensive and can be
problematic. We would have to allow a significant time for installation and testing. From my perspective
I’d rather we avoided any commitment to this technology.”

Finance Director
“The project should not face too many technological risks. Our senior engineer insists that the basic
technology is well proven. However, there are financial risks. A major objective is to prove the financial
viability of Concentrated Solar Power. While we do not need to produce a large profit we do need to
provide an IRR (Internal Rate of Return) of at least 8%.”

“We are negotiating a subsidy for the project, provided by a combination of the Cypriot government and
the European Union. The original suggestion was that we would receive a guaranteed price of €110 per
MWh, with a capital subsidy in year 1 of €50 million. However, the government now wants to avoid
providing any capital subsidy and instead is offering a price of €120 per MWh. We need to get a better
understanding of what package of subsidy is needed in order to achieve our target IRR.”

“The government are willing to guarantee a higher price, an additional €20/ MWh for a more controllable
supply of electricity. This could be provided by investing in hot salt thermal storage. The Thermal Engineer
is not keen but it should improve the finances considerably.”

Project Engineer
“We have got the agreement of the key players: the company manufacturing the arrays and the Cypriot
government responsible for ensuring the site and the necessary access. Draft contracts have already been
signed. But there are some crucial decisions remaining, such as the options described below. Once a
final decision is made we can confirm the contracts and begin the real work. This final decision should be
made at the Board of Directors meeting on Monday 4th December 2023.”

3|P a g e
 “Three arrays of parabolic mirrors will be manufactured in Italy (total cost= €110 million; duration= 120
daysii). They will then be transported to Cyprus on board a single ship (cost= €10 million). The total time
for shipping and offloading the arrays in Cyprus is 20 days. Once in Cyprus the arrays are moved on a
convoy of specialist vehicles to the CSP site. This transport of the arrays in Cyprus can begin as soon as
the roads have been upgraded and the chosen site prepared. Each array requires a convoy of vehicles:
transport durations and costs will depend on the site chosen as noted in Table 1. It is anticipated that just
a single set of vehicles will be used but the transport could be speeded up if necessary by using two or
more sets of vehicles; this involves shipping more of the specialist vehicles from mainland Europe and a
cost of €3 million for each additional set.”iii

Thermal engineer
“My responsibility is to install the equipment required to convert the solar energy into electricity. Once
the site has been prepared and the general services available, we can begin installing the arrays as soon
as they arrive. Each array will take about 120 days to install, costing €10 million; this task requires a
dedicated installation team using specialised equipment, and skills. We assume that just one installation
team will be adequate: if we need a second or third team, this could be arranged but there would be an
extra cost of €5 million for each additional team. When all of the arrays are installed we can test the solar
heat collection (€3 million, 60 days), making sure that the control equipment works correctly, tracking the
sun and focussing the solar rays.”

“We also need to installiv the other crucial equipment: the steam boiler (60 days, €20 million), turbine (30
days, €30 million) and generator (60 days, €30 million) can all be installed when the site preparation and
general services are complete. These are relatively straightforward tasks and I don’t expect they will cause
any problems. If the location is inland, a conventional heat exchange condenser using well proven
technology will be installed (90 days and €20 million). However, the coastal locations will use sea-water
cooling, which can be more problematic to install (120 days and €40 million). Once the boiler, turbine,
generator and condenser are installed, the electricity generation system can be tested (30 days, €2
million).”

“Following the tests of the solar heat collection and the electricity generation the final whole system test
can be undertaken (50 days, €2 million). Hopefully there will be no major problems and this will be
sufficient time to fix the inevitable minor issues. If we include the salt storage option, this will also have
to be tested before the whole system test can begin. But I must admit I’m worried about this technology
as we have no experience in this area.”

Infrastructure engineer
“The key to any project is the basic infrastructure. As soon as the contracts have been confirmed, we can
start work on upgrading road access. The cost and duration of this will depend on the chosen location.
The site can then be prepared: we have to level the site and build foundations for the various building and
equipment. We then have to install the general services such as communication systems and water
supply. Work on the connection to the national grid can begin as soon as the site is prepared; again the
cost and duration is very much dependent on the location.”

1.Klirou 2.Episkopi 3.Khrysokhuo 4.Orgos

Duration Cost Duration Cost Duration Cost Duration Cost
transport to site 20 2 3 0.5 5 0.7 10 1
(per array)

4|P a g e
upgrading road 100 5 20 2 30 3 40 3
access
prepare site 60 5 60 5 60 5 60 5

install general 30 5 30 5 30 5 30 5
services
connection to grid 100 10 20 2 40 5 40 5

Table 1 Site dependent tasks

Cost engineer
“I have examined various solar energy schemes around the world and estimated the likely costs of
operation, and the electricity generation capacity for each of the possible sites, as summarised in Table 2.
Some of the proposed sites have more sunshine hours per annum and hence a higher notional capacity.
It is impossible to realise all of this capacity; the actual electricity generated is likely to be just 80% of the
notional capacity, though experience from other similar schemes suggests that that this could be anything
between 70-90%. All of the sites have an annual lease charge; some require the use of valuable land
implying a greater cost. We have arranged draft contracts for a 20 year lease for each of the possible sites;
the chosen site’s contract will be signed immediately after the Board of Directors meeting in order to
guarantee our access, even though we may not start work on the site for some months.”

Table 2. Site dependent costs and electricity generation potential

Options

Locations
Four possible locations are being considered with different characteristics. Some have better transport
connections. Some may have problems with water supply. A major difference is that the coastal options
can use sea-water as the basis for the heat exchange condenser. There are also significant differences in
the cost of the land required for each site. A further consideration is the sunshine at each site though all
have high levels of solar energy. From the spreadsheet ‘CSP Locations for BUSP12_23’ you have been
allocated one of the four sites to analyse.

Hot salt storage

Hot salt storage would be most useful helping match the supply of solar energy to demand. An electricity
supply that offers such control attracts a higher price. The problem is the cost of this technology (€ 30
million) and the time required: given the novelty of the technology considerable contingency is needed
and 180 days should be assumed for the installation of the salt storage equipment (which can begin as
soon as the general services are complete. The testing of the salt storage will require a further 60 days (€

5|P a g e
2 million) and can begin once the salt storage equipment is installed and the solar heat collection testing
has been completed.

Finance
As suggested by the Finance Director, the government wants to discuss a number of options, considering
different guaranteed electricity prices and an initial capital subsidy.

Notes
i
While this assignment is based on a real project, some issues have been simplified and the detailed data
are illustrative and not necessarily completely accurate.

ii All durations are quoted in working days. Assume 5 working days per week (though in practice this
would vary depending on the nature of the task).

iii In practice the manufacture, transport and installation of the mirror arrays would be more complex.
The description of these activities has been simplified for the sake of this exercise.

iv The durations refer to the installation; it can be assumed that as these are relatively standard items the
manufacture and transport are not a concern: the suppliers will be responsible for transport. The costs
quoted include manufacture, transport and installation.

(PF)

6|P a g e