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How to model Caps and Floors?

18/09/2019 | | based on greenmatch release
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In this article, you will learn how you can limit sales and operating expenditures to a specific amount by means of Caps and Floors.

This example is based on a limitation of Caps and Floors of an Opex item. The process is analogous for sales.

  1. To define caps and floors for an Opex, click on the desired item in the "Opex" section.

  1. In a next step, you can click on "Floor" in the input field Bounds to insert a floor (minimum value) and / or "Cap" to limit the operating costs with a cap (maximum value).

  1. A new input field appears where you can choose the driver: "Fix per Production Unit" per "Production" or an amount per "Power" installed.

Note: The comparison takes place on a monthly basis. For example, if a minimum value of "Fix per production unit" is set at EUR 100'000 per year, the minimum value is EUR 8'333.33 per month.

  1. The defined cap or floor can be indexed. Learn more on indexation here.

  2. Example: We model production-dependent lease costs (10 EUR / MWh) which are indexed (2%) and limited by a fixed cap of 100'000 EUR/a.

The profit and loss account shows that the costs are rising, by taking into account inflation, until a maximum of 100,000 EUR/a (cap) is reached and the lease costs do not rise above the cap until the end.

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