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Financial model

The financial model combines investment costs, operating costs, and revenues into a lifecycle assessment of the network. The output is shown in the Finance view (opened from the mode dropdown in the app bar) as a cash-flow forecast, LCOE, NPV, and payback period; aggregate KPIs are also surfaced on the Report page.

Investment (CAPEX)

CAPEX is calculated for each network component after the network is sized and simulated. The components considered are:

Component How cost is calculated
Pipe network Cost per metre from the network's DN-indexed cost table (see Cost table format), multiplied by each segment's length and split into material and installation (trench) parts. Defaults from a built-in preset (Nussbaumer Swiss or Nordics, by area type); override with the cost calculator, an uploaded table, or a project cost catalog.
Thermal sources Investment per kW × rated power useful, set per source in the energy center configuration.
Booster heat pumps Investment per kW × rated power, set per booster HP substation.
Pumps Investment per unit, set on each pump in the network.

If you have not supplied your own cost data, TESSA uses built-in defaults. Always verify these defaults are appropriate for your study area and procurement context before drawing financial conclusions.

A nominal_diameter_offset parameter lets you over- or undersize pipes by one DN step relative to the hydraulically optimal size, which affects the pipe cost.

Operating costs (OPEX)

OPEX has two components:

  • Fixed O&M — annual maintenance cost, usually expressed as a fraction of CAPEX or a fixed amount per component. Configured per component.
  • Variable OPEX — fuel or electricity cost, calculated from annual energy consumption (computed by the Simulate network operation tool) and the fuel price per kWh set on each heat source.
variable_opex [currency/year] = energy_final [kWh/year] × fuel_price [currency/kWh]

Revenues

Revenues are calculated from three elements:

  • Heat sale — annual revenue from heat delivered to customers: heat_price_per_kwh × annual_heat_delivered_kWh.
  • Power fee — annual charge per kW of subscribed capacity: power_price_per_kw × subscribed_capacity_kW + power_price_fixed.
  • Connection fee — a one-time fee paid when a building connects: connection_fee_per_kw × building_peak_kW + connection_fee_fixed.
  • Electricity sale (CHP) — for combined heat & power sources, revenue from exported electricity: net_electricity_kWh × electricity_export_fraction × electricity_sale_price.

Default tariff values are taken from Swiss district heating benchmarks (ERZ Fernwärme). Adjust these in the network tariff configuration before using the financial results for investment decisions.

A connection ramp-up curve can be applied to model phased customer uptake — not all buildings connect in year 1. If set, the revenue in each year is scaled by the fraction of buildings connected that year.

Lifecycle aggregation and key metrics

The cash flow is projected year-by-year over the network lifetime (default 40 years for pipes; shorter for sources and equipment based on their configured lifetimes).

CAPEX is spread over each component's lifetime as an annualised investment (straight-line amortisation):

annualised_investment = total_capex / component_lifetime_years

From the annual cash flows, TESSA computes:

Metric Description
NPV Net present value over the lifetime at the configured discount rate
IRR Internal rate of return
Payback period Years until cumulative cash flow turns positive
LCOE Levelised cost of energy (total lifetime cost / total lifetime energy delivered)

The discount rate is a scenario-level financial parameter (default 3%), set in the scenario's financial parameters rather than per network — so all networks in the scenario are discounted at the same rate. It affects only the NPV calculation, not the cash flow table itself.

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