Going Solar: Is it Right for You?

Going Solar: Is it Right for You?

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Description: Topics discussed include realizing economic returns by investing in power generation. Ownership of Equipment; direct supply of energy a District would otherwise be required to purchase. Realize economic gains by contracting for energy at lower prices than the current market price.

Why go Solar? Fixed energy cost for life of project / equipment. Insulation against utility rate increases. Zero energy costs after 6yr if Early Buy-Out is executed.

 
Author: Ruben Rojas (Fellow) | Visits: 2041 | Page Views: 2041
Domain:  Green Tech Category: Photovoltaics/Solar 
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Short URL: http://energy.wesrch.com/pdfTR1L02000AHJR

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Contents:
GOING SOLAR
Is it right for your district?

Ple Cash

Conference, February 2010

The Intent

� Realizing economic returns by investing in power generation. � Ownership of Equipment; direct supply of energy a District would otherwise be required to purchase. � Realize economic gains by contracting for energy at lower prices than the current market price.

Why Go Solar

� Fixed energy cost for life of project / equipment o Insulation against utility rate increases o Zero energy costs after 6yr if Early Buy-Out is executed � "True-up" guarantees performance of system � Life Cycle maintenance of assets

Analyzing Project Economics; Considerations
� Life Cycle Cost Analysis � Must encompass all cash flows during the life of a PV System: � Upfront capital investment � Structure of a Power Purchase Agreement (PPA) � Current energy costs and future escalation factor; baseline for savings � Consider EBO options � Maintenance costs � Life expectancy of PV Panels equipment � Externalities � often overlooked but crucial aspect of analysis � Payback Analysis � Length of time required to recover an initial investment through cash flows generated by the investment.

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Analyzing Project Economics; Considerations � Return on Investment � Net Present Value � Sum of the present values of the annual cash flows minus present value of investments. The discount rate accounts for time value of money and uncertainties. � Internal Rate of Return � Discount rate that makes the project have a zero Net Present Value. � Cost of Delay � Tiered incentive schedules � Non Monetary Returns � Political value � Social Responsibility

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Developing a Funding Strategy.

Developing a funding strategy.

1. Deciding which funding option fits the particular project
� Timing of the funding requirement may determine the best funding source. On-site renewables require upfront capital outlays as opposed to energy efficiency projects. Security required by Financiers; PPA commitments and detached assets vs. assets installed in buildings which are difficult to remove.





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Developing a funding strategy.

2. Institutional Self Assessment: The moment of truth. a) Size / status of operating and capital budgets b) Scale and covenants of existing borrowings c) Credit rating and balance sheets d) Size of project

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Developing a funding strategy.

3.

Positioning your District to capitalize on subsidies which otherwise not available. a) Tax-related subsidies which tax-exempt entities cannot use

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Means to an End; How to get this done:
Relevant Legislation �ARRA �Energy Independence and Security Act �University Sustainability Program Other Considerations �Performance Guarantees �Energy Performance Contracts �Cost of Procurement �Bulk Purchasing



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Internal Resources: General and Admin Funds 3rd Party Financing Bank Loan Federal Subsidies State Subsidies PVC and Corporate Sponsorship

What is available to educational institutions in the US? � Access to a consortium of global finance institutions � funding earmarked for educational institutions seeking to install renewable energy technologies �Access to a comprehensive package of pre-approved finance and legal transaction documents �Access to comprehensive procurement packages specific to solar integrators and finance partners.

Financial Consortium

Educational Institution

Gateway

Insurance Sector

Tier 1
Financial Institution Equity Appetite

Tier 1
Financial Institution Equity Appetite

Tier 1
Financial Institution Equity Appetite

How this model can be replicated at your District.
� Comprehensive Procurement Package Bifurcation of finance and construction � Strategic Partnerships � EPC contractors with solid balance sheet � Securing of tax equity investment � Competition is fierce due to fiscal climate � Bulk procurement

Thank you. Ruben Rojas ruben.rojas@aecom.com 213.550.7220

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