# Energy Transition on Sifnos: An Approach to Economic and Social Transition and Development
## 6 Uncertainties
### The Electricity Selling Price  
A major parameter regarding the economic viability of the proposed project is the selling price of the electricity produced by the hybrid power plant. The impact of selling the electricity on the investment's economic efficiency, expressed via typical economic indices, is shown in Table 5. It is clarified that the total set-up cost has been estimated at EUR 37,255,000, while the funding scheme is configured, given the gathered letters of intent, at 13% private contributions and 87% banking loans, with a payback period of 15 years and a rate of 1.5%. The economic indices presented in Table 5 were calculated versus private capital. The strong influence of the electricity selling price on the investment's economic efficiency is obvious, as expected. Following a legislation revision in Greece, performed in 2020, the selling price for the electricity produced by hybrid power plants will be defined by a relevant Ministerial Decision [80], without giving any references to the adopted algorithm, the parameters and the criteria. It is therefore conceivable that the implementation of this highly promising project on Sifnos, with all these developmental perspectives mentioned and justified in this article, remains unsure as long as the electricity selling price has not been defined. According to the data presented in Table 5, the investment's economic viability is ensured with a selling price for the produced electricity in the range of EUR 0.26/kWh. This price is 30% higher than the electricity production-specific cost of EUR 200/MWh, which refers to the operation of the interconnected grid of Sifnos in the future, assuming electricity production cost in the mainland system in the range configured until summer 2021. This scenario also imposes the maintenance of the existing thermal generators in stand-by operation mode. However, given the abrupt and significant electricity production cost increase recorded during the last months of 2021, the average electricity procurement price for the final consumers in Greece was configured at 0.25 EUR/kWh in December 2021 [81]. This justifies the configuration of the electricity selling price at the aforementioned value, which ensures the project's viability. \begin{table}
\begin{tabular}{c c c c c c c} \hline \hline \multirow{2}{*}{**Electricity Selling Price (EUR/kWh)**} & \multicolumn{5}{c}{**Economic Indices**} \\ \cline{2-7}  & **Payback Period** & **Discounted Payback Period (Years)** & **IRR (\%)** & **NPV (EUR)** & **ROI (\%)** & **ROE (\%)** \\ \hline
0.18 & \(>\)20 & \(>\)20 & \(-1.3\) & \(-4\),161,682 & 1.6 & 12.4 \\
0.20 & 19.0 & \(>\)20 & 1.6 & \(-1\),373,986 & 9.1 & 71.1 \\
0.22 & 17.0 & 18.2 & 5.6 & 2,414,699 & 19.2 & 150.8 \\
0.24 & 15.3 & 15.9 & 9.9 & 6,203,385 & 29.4 & 230.6 \\
0.26 & 8.2 & 9.7 & 14.5 & 9,992,071 & 39.6 & 310.4 \\ \hline \hline \end{tabular}
\end{table} 
Table 5: Impact of the electricity selling price on the investment’s economic efficiency. It must be also noted that it is adequate to maintain the aforementioned selling price for as long as the payback period of the banking loans will last, namely for 15 years. Once the banking monetary obligations have been fulfilled, the electricity selling price can be reduced to the level of EUR 0.15/kWh. It is thus proved that with the proposed hybrid power plant, the minimum possible electricity production cost and selling price for the final consumer can be achieved, with concurrent establishment of a guaranteed power production process on the island based on RES and the total independence of imported energy sources. At the same time, a cluster of developmental perspectives is offered for the local insular community. Finally, according to the estimated set-up cost of the storage plant (EUR 25,800,000) and the achieved energy storage capacity in the upper reservoir (860 MWh), the set-up levelized cost of the PHS system is calculated at EUR 0.30/kWh of storage capacity.