# Equations and Variables in the ATB

## Calculated Variables Equations

## Input Variables

### Input Variable Equations

### Other Input Variables

Input Variable | Value | Definition/Description |
---|---|---|

Construction Duration (C) | Varies by technology | Number of years in construction period |

Capacity Factor (CF) | Varies by technology | Generally, the ratio of actual annual output to output at rated capacity for an entire year |

Nominal Discount Rate (d) | Varies by technology | The discount rate is a function of the WACC and inflation. |

Debt Fraction (DF) | Varies by technology | Fraction of capital financed with debt; 1-DF is assumed financed with equity. |

Expected Market Return on Premium (EMRF) | Varies by technology | The difference between the expected return on a market portfolio and the risk-free rate |

Capital Fraction (FC) | Varies by technology | Fraction of capital spent in each year of construction, 1 to C |

Depreciation Fraction (FD) | Varies by technology | Fraction of capital depreciated in each year, 1 to M |

Fixed Operation and Maintenance Expenses (FOM) | ATB input ($/MW-year) | Annual expenditures to operate and maintain equipment that are not incurred on a per-unit-energy basis |

Fuel | Heat rate (MMBtu/MWh) *Fuel Costs($/MMBtu) | Fuel costs, converted to $/MWh, using heat rates |

Grid Connection Costs (GCC) | Varies by technology ($/kW) | Overnight capital cost includes a nominal-distance spur line (<1 mi) for all technologies, and for offshore wind it includes export cable and construction-period transit costs for a 30-km distance from shore. Project-specific costs lines that are based on distance to existing transmission are not included. |

Inflation Rate (i) | 2.5% | Assumed inflation rate based on historical data |

Depreciation Period (M) | Varies by technology (years) | Number of years in MACRS depreciation schedule |

Overnight Capital Costs (OCC) | Varies by technology ($/kW) | Capital expenditures if plant could be constructed overnight (i.e., excludes construction period financing); includes onsite electrical equipment (e.g., switchyard), a nominal-distance spur line (<1 mi), and necessary upgrades at a transmission substation |

Capital Regional Multiplier (CapRegMult) | 1 | Multiplier to account for regional variation in capital costs; not used in the ATB |

Rate of Return on Equity (RROE) | Varies by technology | Assumed rate of return on the share of assets financed with equity |

Economic Lifetime (t) or cost recovery period | 30 years (default); 20 years and technical life also available | Length of time for paying off assets |

Tax Rate (TR) | 40% | Combined assumed marginal state and federal tax rate before application of available federal tax credits for renewable generators |

Variable Operation and Maintenance (VOM) | Varies by technology ($/MWh) | Operation and maintenance costs incurred on a per-unit-energy basis |

Year index (y) | — | — |

Assumptions common to all technologies include the following:

- Variables are defined in the Financial Definitions worksheet in the ATB data spreadsheet, where two sets of financial assumptions are available in (1) the R&D Only Financial Assumptions Case (R&D Only Case) and (2) the Market + Policies Financial Assumptions Case (Market + Policies Case).
- Though the tax rate has been updated to include the changes in corporate taxes in the Market + Policies Case, the federal/state blended tax rate is not assumed to vary by technology in our calculations; in practice, depreciation schedules vary by technology based on the tax code.