Simple Solar Finance Model - Mass.Gov

					Solar Photovoltaic Project Simple Financial Model
RPS Solar Carve-Out Program v1.0
DATA ENTRY AND FINANCIAL SUMMARY
Key                                                                                                                                            Scenario Definitions
      Entry Cells                                                                                                                                  Scenario A: Non-Taxable Rebate - Assumes that the state rebate is non-taxable, but is subtracted from the cost basis for purposes of determining tax credits and accelerated depreciation.
      Calculation Cells (Not for Entry)                                                                                                            Scenario B: Taxable Rebate - Assumes that the state rebate is taxable, but is not subtracted from the cost basis for purposes of determining tax credits and accelerated depreciation.
                                                                                                                                                   Both Scenarios assume that the project owner can use both federal and state tax benefits
Select Taxable or Non-Taxable Entity                            Taxable                  Taxable                                                                                                                                      1                    2                   3                   4          5                 6               7        8
                                                                                         Non-Taxable                                           Tax Assumptions
Project and Customer Cost Assumptions                                                                                                              Federal Tax Rate                                                                35%
      Solar Photovoltaic System Size                                           200000 Watts (DC STC)                                               State Tax Rate                                                                  10%
      Total System Cost/Watt                                    $               5.500 $/Watt (DC STC)                                              Effective Tax Rate                                                              42%
      Total System Cost                                         $         1,100,000.00                                                             Federal Tax Credit                                                              30%
                                                                                                                                                   State Tax Deduction                                                            100%
CEC Rebate Assumptions                                                                                                                             5 Year Accelerated Depreciation Schedule (MACRS)                             20.00%              32.00%              19.20%                11.52%    11.52%             5.76%
      Rebate$ per/Watt                                          $                  -     $/Watt (DC STC)                                           Depreciation                                                                 20.00%              32.00%              19.20%                11.52%    11.52%             5.76%            0.00%   0.00%
      Total Rebate                                                                                                                                     Asset Basis
                                                                                                                                                            Gross Cost                                                 $     1,100,000
                                                                                                                                                            Rebate                                                     $           -
                                                                                                                                                            Less 50% of Federal Tax Credit                             $      (165,000)
Project Performance and Savings/ Cost Assumptions
      Annual Net Capacity Factor                                                13.0% kW (DC STC) to kWh AC                                            Asset Basis                                                     $       935,000
      Annual Production Degradation                                             0.50% %                                                        Financing Assumptions
      Project Life                                                                  25   Years                                                     % Financed w/ Cash                                                             100%               Cash
      Depreciation Life                                                             20   Years                                                     % Financed w/ Loan                                                                0%
      Electricity Revenue (Avoided Costs)                       $                0.16    $/kWh                                                     Loan Interest Rate                                                            9.00%               Loan
      Electricity Revenue (Avoided Costs) Annual Adjustor                        3.0%    %                                                         Loan Period                                                                        20 Years (must be equal to or less than project life)
      Solar Renewable Energy Certificate (SREC) Auction Price   $               0.285    $/kWh                                                     Net Cost                                                            $     1,100,000
      SREC Auction Opt-In Term                                                      10   Years (must be equal to or less than project life)        Customer Discount Rate                                                        8.00%
      SREC Revenue Annual Adjustor                                               0.0%    %                                                         Loan                                                                $           -
      SREC Contract Price                                                                $/kWh
      SREC Contract Term                                                                 Years (must be equal to or less than project life)
      Annual Operations and Maintenance Cost Factor             $               17.59    $/kW/Year
      Annual Operations and Maintenance Cost                    $               3,518    $/Year
      Annual Operations and Maintenance Adjustor                                 3.0%    %                                                     Solar Project Financial Analysis Summary
      Future Inverter Replacement Cost                          $                0.30    $/Watt (DC STC)                                           Net Present Value                                                   $        52,425
      Inverter Life, Replace Every X Years                                          10   Year (must be equal to or less than project life)         Simple Payback (100% Cash only)                                               Year 7
                                                                                                                                                   Estimated Return on Equity                                                     9.4%
                                                                                                                                                       Scenario A: Guess Return on Equity                                          10%

Disclaimer: This Unofficial Cash Flow Model is intended to provide non-residential entities that are considering the purchase and installation of solar energy equipment with a general understanding of possible financial implications
of such purchase and installation. Those entities interested in learning more about the financial implications of the purchase and installation of solar energy equipment are urged to consult their own tax and financial experts. The
information contained in the Unofficial Cash Flow Model may not be relied on by anyone for any purposes. Furthermore, the information contained in this model does not necessarily reflect the views of the Department of Energy
Resources or the Commonwealth of Massachusetts, and reference to any specific method does not constitute an implied or expressed recommendation or endorsement of it. Neither the Department of Energy Resources nor the
Commonwealth of Massachusetts make any warranties or representations, expressed or implied, as to the usefulness, completeness, or accuracy of any processes, methods or other information contained, described, disclosed, or
referred to in this model. Finally, neither the Department of Energy Resources nor the Commonwealth of Massachusetts makes any representation that the use of any product, apparatus, process, method, or other information will not
infringe privately owned property rights and assumes no liability of any kind or nature for any loss, injury, or damage directly or indirectly resulting from, or occurring in connection with, the use of information contained, described,
disclosed, or referred to in this Unofficial Cash Flow Model.




                                                                                                                                                       f0dc6cab-ffd6-4731-b3ee-e8495a57981c.xls                                                                                                                                                      1
Solar Photovoltaic Project Simple Financial Model
PRO FORMA AND PRODUCTION
                                                                                                       Start-Up           Year               Year               Year               Year               Year                Year                 Year               Year               Year               Year                Year                Year                Year                Year                Year
Project Output                                                                                            0                1                  2                  3                  4                  5                   6                    7                  8                  9                  10                  11                  12                  13                  14                  15
Annual Generation (kWh)                                                                                                    227,760            226,621            225,488            224,361             223,239             222,123             221,012            219,907            218,807            217,713             216,625             215,542             214,464             213,392             212,325


FINANCIAL SCHEDULES
INCOME STATEMENT
    Electricity Revenue (Avoided Cost)                                                                                $     36,442       $     37,347       $     38,275       $     39,226       $      40,201      $          41,200     $     42,224       $     43,273       $     44,349       $     45,451        $     46,580        $     47,738        $     48,924        $     50,140        $     51,386
    CEC Rebate                                                                                     $              -
    SREC Auction Revenue                                                                                              $     64,912       $     64,587       $     64,264       $     63,943       $      63,623      $       63,305        $     62,988       $     62,673       $     62,360       $      62,048       $         -         $         -         $         -         $         -         $         -
    SREC Contract Revenue                                                                                             $         -        $         -        $         -        $         -        $          -       $           -         $         -        $         -        $         -        $         -         $         -         $         -         $         -         $         -         $         -
                                    Total Revenue (Avoided Costs)                                  $              -   $    101,353       $    101,934       $    102,539       $    103,169       $     103,824      $      104,505        $    105,212       $    105,947       $    106,709       $    107,499        $     46,580        $     47,738        $     48,924        $     50,140        $     51,386
Replace Inverter?                                                                                        No               No                 No                 No                 No                  No                  No                  No                 No                 No                 Yes                 No                  No                  No                  No                  No
    Operations & Maintenance Costs                                                                                    $      (3,518)     $      (3,624)     $      (3,732)     $      (3,844)     $       (3,960)    $        (4,078)      $      (4,201)     $      (4,327)     $      (4,456)     $      (4,590)      $      (4,728)      $      (4,870)      $      (5,016)      $      (5,166)      $      (5,321)
    Inverter Replacement Cost                                                                                         $         -        $         -        $         -        $         -        $          -       $           -         $         -        $         -        $         -        $     (60,000)      $         -         $         -         $         -         $         -         $         -
                                         Total Operating Expenses                                  $              -   $      (3,518)     $      (3,624)     $      (3,732)     $      (3,844)     $       (3,960)    $        (4,078)      $      (4,201)     $      (4,327)     $      (4,456)     $     (64,590)      $      (4,728)      $      (4,870)      $      (5,016)      $      (5,166)      $      (5,321)
                                                           EBITDA                                  $              -   $     97,835       $     98,311       $     98,807       $     99,325       $      99,865      $      100,427        $    101,012       $    101,620       $    102,252       $      42,909       $     41,852        $     42,868        $     43,908        $     44,973        $     46,064
    Federal Depreciation Expense                                                                                      $   (187,000)      $   (299,200)      $   (179,520)      $   (107,712)      $    (107,712)     $      (53,856)       $         -        $         -        $         -        $         -         $         -         $         -         $         -         $         -         $         -
                                                               EBIT                                $              -   $    (89,165)      $   (200,889)      $    (80,713)      $      (8,387)     $       (7,847)    $       46,571        $    101,012       $    101,620       $    102,252       $      42,909       $     41,852        $     42,868        $     43,908        $     44,973        $     46,064
    Interest Expense                                                                                                  $         -        $         -        $         -        $         -        $          -       $           -         $         -        $         -        $         -        $         -         $         -         $         -         $         -         $         -         $         -
                                                                EBT                                $              -   $    (89,165)      $   (200,889)      $    (80,713)      $      (8,387)     $       (7,847)    $       46,571        $    101,012       $    101,620       $    102,252       $      42,909       $     41,852        $     42,868        $     43,908        $     44,973        $     46,064
    Federal taxes saved/(paid)                                                                     $              -   $     34,632       $     73,752       $     31,708       $       6,412      $        6,242     $      (12,785)       $    (31,819)      $    (32,010)      $    (32,209)      $     (13,516)      $    (13,183)       $    (13,503)       $    (13,831)       $    (14,167)       $    (14,510)
    State taxes saved/(paid) [can not deduct federal depreciation expense]                         $              -   $      (9,784)     $      (9,831)     $      (9,881)     $      (9,932)     $       (9,986)    $      (10,043)       $    (10,101)      $    (10,162)      $    (10,225)      $      (4,291)      $      (4,185)      $      (4,287)      $      (4,391)      $      (4,497)      $      (4,606)
                                                       Net Income                                  $              -   $    (64,316)      $   (136,968)      $    (58,886)      $    (11,908)      $     (11,592)     $       23,743        $     59,092       $     59,448       $     59,818       $      25,102       $     24,484        $     25,078        $     25,686        $     26,309        $     26,948

CASH FLOW STATEMENT
   Cash From Operations
         Net Income                                                                                $              -   $    (64,316) $         (136,968) $        (58,886) $         (11,908) $          (11,592) $              23,743     $     59,092       $     59,448       $     59,818       $     25,102        $     24,484        $     25,078        $     25,686        $     26,309        $     26,948
         Federal Depreciation Expense                                                              $              -   $    187,000 $           299,200 $         179,520 $          107,712 $           107,712 $               53,856     $        -         $        -         $        -         $        -          $        -          $        -          $        -          $        -          $        -
                                        Cash Flow From Operations                                  $              -   $    122,684 $           162,232 $         120,634 $           95,804 $            96,120 $               77,599     $     59,092       $     59,448       $     59,818       $     25,102        $     24,484        $     25,078        $     25,686        $     26,309        $     26,948

    Cash From Investing
         Installed PV Cost                                                                         $    (1,100,000)
         One Time State Solar Investment Tax Deduction (Actual Cash Value)                         $        77,000
         One Time Federal Solar Investment Tax Credit                                              $       330,000
                                       Cash Flow From Investing                                    $      (693,000) $            -       $          -       $          -       $          -       $          -       $             -       $          -       $          -       $          -       $          -        $          -        $          -        $          -        $          -        $          -

    Cash From Financing
         Loan Disbursement                                                                         $              -
         Loan Repayment (Principle)                                                                                   $          -       $          -       $          -       $          -       $          -       $             -       $          -       $          -       $          -       $          -        $          -        $          -        $          -        $          -        $          -
                                         Cash Flow From Financing                                  $              -   $          -       $          -       $          -       $          -       $          -       $             -       $          -       $          -       $          -       $          -        $          -        $          -        $          -        $          -        $          -

    Annual Cash Flow                                                                               $      (693,000) $       122,684 $          162,232 $          120,634 $           95,804 $            96,120 $               77,599 $        59,092       $     59,448       $     59,818       $     25,102        $     24,484        $     25,078        $     25,686        $     26,309        $     26,948
    Cumulative Cash Flow                                                                           $      (693,000) $      (570,316) $        (408,085) $        (287,451) $        (191,646) $          (95,526) $             (17,927) $       41,165       $    100,613       $    160,430       $    185,532        $    210,015        $    235,093        $    260,779        $    287,089        $    314,036

    Simple Payback                                                                                                    $              1   $              2   $              3   $              4   $              5   $                 6   $              7   $              8   $              9   $              10   $              11   $              12   $              13   $              14   $              15
    Net Investment                                                                                 $      (693,000) $      (570,316) $        (408,085) $        (287,451) $        (191,646) $          (95,526) $             (17,927) $       41,165       $    100,613       $    160,430       $    185,532        $    210,015        $    235,093        $    260,779        $    287,089        $    314,036
                                                                             Simple Payback Year                 7                                                                                                                                    7




                                                                                                                                                                                     f0dc6cab-ffd6-4731-b3ee-e8495a57981c.xls                                                                                                                                                                                      2
Solar Photovoltaic Project Simple Financial Model
DEBT SCHEDULES
                                                                                        Year           Year           Year           Year               Year                Year           Year           Year           Year           Year           Year           Year           Year           Year           Year
Scenario A Loan: Debt Schedule                                                           1              2              3              4                  5                   6              7              8              9              10             11             12             13             14             15
Beginning Balance                                                                   $          -   $          -   $          -   $          -    $             -     $             -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -
Debt Service                                                                        $          -   $          -   $          -   $          -    $             -     $             -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -
Principle                                                                           $          -   $          -   $          -   $          -    $             -     $             -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -
Interest                                                                            $          -   $          -   $          -   $          -    $             -     $             -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -
Ending Balance                                                                      $          -   $          -   $          -   $          -    $             -     $             -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -   $          -

                                                                                        Year           Year           Year           Year               Year                Year           Year           Year           Year           Year           Year           Year           Year           Year           Year
Disclaimer: This Unofficial Cash Flow Model is intended to provide non-residential entities that are considering the purchase and installation of solar energy equipment with a general understanding of possible financial implications of such purchase and installation. Those entities interested in learning
purchase and installation of solar energy equipment are urged to consult their own tax and financial experts. The information contained in the Unofficial Cash Flow Model may not be relied on by anyone for any purposes. Furthermore, the information contained in this model does not necessarily reflec
Resources or the Commonwealth of Massachusetts, and reference to any specific method does not constitute an implied or expressed recommendation or endorsement of it. Neither the Department of Energy Resources nor the Commonwealth of Massachusetts make any warranties or representations
completeness, or accuracy of any processes, methods or other information contained, described, disclosed, or referred to in this model.




Finally, neither the Department of Energy Resources nor the Commonwealth of Massachusetts makes any representation that the use of any product, apparatus, process, method, or other information will not infringe privately owned property rights and assumes no liability of any kind or nature for any
resulting from, or occurring in connection with, the use of information contained, described, disclosed, or referred to in this Unofficial Cash Flow Model.




                                                                                                                                       f0dc6cab-ffd6-4731-b3ee-e8495a57981c.xls                                                                                                                                           3
    9      10      11      12      13




0.00%   0.00%   0.00%   0.00%   0.00%




                                        f0dc6cab-ffd6-4731-b3ee-e8495a57981c.xls   4
    Year                Year                Year                Year                Year
     16                  17                  18                  19                  20
     211,263             210,207             209,156             208,110             207,069




$     52,663        $     53,971        $     55,312        $     56,687        $     58,096

$         -         $         -         $         -         $         -         $         -
$         -         $         -         $         -         $         -         $         -
$     52,663        $     53,971        $     55,312        $     56,687        $      58,096
    No                  No                  No                  No                  Yes
$      (5,481)      $      (5,645)      $      (5,815)      $      (5,989)      $      (6,169)
$         -         $         -         $         -         $         -         $     (60,000)
$      (5,481)      $      (5,645)      $      (5,815)      $      (5,989)      $     (66,169)
$     47,182        $     48,326        $     49,498        $     50,698        $      (8,073)
$         -         $         -         $         -         $         -         $         -
$     47,182        $     48,326        $     49,498        $     50,698        $      (8,073)
$         -         $         -         $         -         $         -         $         -
$     47,182        $     48,326        $     49,498        $     50,698        $      (8,073)
$    (14,862)       $    (15,223)       $    (15,592)       $    (15,970)       $       2,826
$      (4,718)      $      (4,833)      $      (4,950)      $      (5,070)      $         807
$     27,601        $     28,271        $     28,956        $     29,658        $      (4,440)




$     27,601        $     28,271        $     28,956        $     29,658        $      (4,440)
$        -          $        -          $        -          $        -          $         -
$     27,601        $     28,271        $     28,956        $     29,658        $      (4,440)




$          -        $          -        $          -        $          -        $          -




$          -        $          -        $          -        $          -        $          -
$          -        $          -        $          -        $          -        $          -

$     27,601        $     28,271        $     28,956        $     29,658        $     (4,440)
$    341,638        $    369,908        $    398,865        $    428,523        $    424,082

$              16   $              17   $              18   $              19   $              20
$    341,638        $    369,908        $    398,865        $    428,523        $    424,082




                                                                                                    f0dc6cab-ffd6-4731-b3ee-e8495a57981c.xls   5
                      Year           Year           Year           Year           Year
                       16             17             18             19             20
                 $           -   $          -   $          -   $          -   $          -
                 $           -   $          -   $          -   $          -   $          -
                 $           -   $          -   $          -   $          -   $          -
                 $           -   $          -   $          -   $          -   $          -
                 $           -   $          -   $          -   $          -   $          -

                      Year           Year           Year           Year           Year
hose entities interested in learning more about the financial implications of the
s model does not necessarily reflect the views of the Department of Energy
 any warranties or representations, expressed or implied, as to the usefulness,




bility of any kind or nature for any loss, injury, or damage directly or indirectly




                                                                                             f0dc6cab-ffd6-4731-b3ee-e8495a57981c.xls   6
Definitions
                                      Unit of energy. This is a measure of how much energy is consumed by a home o
Back   Kilowatt-hours (kWh)           much electricity is produced by a solar PV system. The amount of energy consu
                                      electric meter.

                                      The solar photovoltaic (PV) system. This includes your panels (modules), inverter
Back   Solar System                   utility.


       Estimated Optimal Annual       The best case scenario for how much electricity a solar PV system will produce.
       Generation (kWh)               electricity depending on several factors. For example, a system will produce less
                                      roof) than if they are on an axis that tracks the sun throughout the day. Another fa
Back
                                      is able to face due south, the more it should produce. Tilt angle also impacts prod
       optimal fixed south facing     latitude the more it will produce. An optimal system in Massachusetts that is fixed
       free from shading location     a tilt of 42 degrees.

       System Size                    Kilowatts are a measure of power. A kilowatt is 1,000 watts. In this case, it descr
Back                                  single solar PV panel might be rated at 180 watts. If a system uses 10 panels rat
       kilowatts (kW)                 be 1800 watts, or 1.8 kW.
                                      This is a ratio between the amount of energy produced by your solar PV system a
                                      production capability. A 12.8% net capacity factor is average for solar PV system
Back   Annual Net Capacity Factor     the angle of the system, its orientation, and the amount of shading. If a solar PV
                                      day, 24 hours per day at the optimal tilt and orientation with no shade then that sy
                                      in other words, it would produce its rated output.

       Annual Production              Over the course of the life of the PV system, its production capability will decrease
Back
       Degradation                    Our default assumption is that this degradation will be 0.5% per year.

                                      Depreciation is the reduction in the value of an asset due to usage, passage of ti
Back   Depreciation Life              obsolescence or other factors. Depreciation life is the "useful life" of the system,
                                      system will provide an economic benefit.
       Electricity Revenue (Avoided   This is the price per kWh that you will save on your electricity bill using this solar P
Back
       Costs)                         this is a state average price for electricity.

       Electricity Revenue (Avoided   This model assumes that the cost of electricity will increase at 5% per year, there
Back
       Costs) Annual Adjustor         costs will also increase at 5% a year.

                                      Solar Renewable Energy Certificates (SRECs), also known as green tags, Solar R
       Solar Renewable Energy         environmental commodities in Massachusetts which represent proof that 1 megaw
                                      generated from an eligible renewable energy resource. These certificates may ha
Back   Certificate (SREC) Auction     traded so that the owner of the SREC can claim to have purchased renewable en
       Price                          $.285/kWh, which is the price owners will receive for their SRECs if sold through
                                      Account.
                                      The model uses a default term of 10 years. This term is based upon the length o
                                      qualified in 2010 will receive. All projects with an Opt-In Term of 10 years will be
Back   SREC Auction Opt-In Term       their Opt-In Term by depositing them in the end of year Solar Credit Clearinghous
                                      expected to be a measure of last resort for projects that have not signed bilateral
                                      required to purchase SRECs by the end of the compliance year.
       SREC Revenue Annual
Back                                  This models allows the value of RECs to change by this percentage each year
       Adjustor
Back   SREC Contract Price            The price of SRECs as agreed upon in a bilateral contract with a compliance entit
Back   SREC Contract Term            The term of the bilateral contract with a compliance entity or other entity purchasin
                                     A solar inverter is a component of a PV system that changes the direct current (D
       Future Inverter Replacement   alternating current (AC) for use with home appliances or any AC load. The life of
Back
       Cost                          the life of the PV panels and will likely need to be replaced during the lifetime of th
                                     This model assumes the default cost to replace the inverter will be $0.75/watt.

Back   Annual Generation (kWh)       This is the estimated amount of energy that your solar PV system will produce in

                                     Total System Cost includes all elements of the installation including design, equip
Back   Total System Cost             etc. In the case of taxable commercial entities, the Total System Cost should incl
                                     equipment
y is consumed by a home or facility. It is also a measure of how
he amount of energy consumption or production is measured by an


r panels (modules), inverter, and meter which connects you to the


ar PV system will produce. PV systems will produce more or less
  a system will produce less energy if the panels are fixed (e.g. to a
oughout the day. Another factor is orientation. The more the system
 Tilt angle also impacts production. The closer a system's tilt is to its
 Massachusetts that is fixed, faces due south (180 degrees) and has


 watts. In this case, it describes the size of the solar PV system. A
 system uses 10 panels rated at 180 watts each, the system size will


d by your solar PV system and its optimimum nameplate (labeled)
 verage for solar PV systems in Massachusetts. This value varies by
nt of shading. If a solar PV system had the sun shining on it every
n with no shade then that system would have a 100% capacity factor,


ction capability will decrease as it deteriorates to a degree over time.
 0.5% per year.

due to usage, passage of time, wear and tear, technological
 "useful life" of the system, meaning the estimated length of time the

ectricity bill using this solar PV system. The default is $0.18/kWh as


rease at 5% per year, therefore your savings from avoided electricity


nown as green tags, Solar Renewable Energy Credits, are tradable
epresent proof that 1 megawatt-hour (MWh) of electricity was
 . These certificates may have a value and they can be sold and
ve purchased renewable energy. Their default value is set at
heir SRECs if sold through the Solar Credit Clearinghouse Auction

 is based upon the length of the Auction Opt-In Term that all projects
In Term of 10 years will be eligible to sell SRECs generated during
 r Solar Credit Clearinghouse Auction Account. The Auction is
at have not signed bilateral contracts with compliance entities that are
ance year.

is percentage each year

 ract with a compliance entity or other entity purchasing SRECs.
ntity or other entity purchasing SRECs.
hanges the direct current (DC) electricity from the PV array into
 or any AC load. The life of a solar PV system's inverter is less than
aced during the lifetime of the system which can be 25 years or more.
verter will be $0.75/watt.

 PV system will produce in kilowatt hours (kWh) each year.

tion including design, equipment, labor, permitting, interconnection,
tal System Cost should include Massachusetts sales tax on the

				
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