The Weighted Average Cost of Capital (WACC) is influenced by many uncertain factors and is highly project specific, making it challenging to estimate. However, this assumption has a material impact on our market modelling outcomes, which inform our system planning functions presented in the IIO Report.
Over 20 market stakeholders were engaged to better understand the risks currently faced by renewable energy projects across various technologies and with various revenue strategies. The report considers the outcomes of this survey, alongside other sources of evidence, and presents a stylised set of WACC assumptions suitable for electricity market modelling. To accurately forecast costs to NSW consumers, it is important to consider variations in the WACC. This deviates from AEMO’s ISP, which serves a different purpose and uses a single technology agnostic WACC assumption.