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

Project and Customer Cost Assumptions
Solar Photovoltaic System Size
Total System Cost/Watt
Total System Cost
CEC Rebate Assumptions
Rebate$ per/Watt
Total Rebate

Project Performance and Savings/ Cost Assumptions

Annual Net Capacity Factor
Annual Production Degradation
Project Life
Depreciation Life
Electricity Revenue (Avoided Costs)
Electricity Revenue (Avoided Costs) Annual Adjustor
Solar Renewable Energy Certificate (SREC) Auction Price
SREC Auction Opt-In Term
SREC Revenue Annual Adjustor
SREC Contract Price
SREC Contract Term
Annual Operations and Maintenance Cost Factor
Annual Operations and Maintenance Cost
Annual Operations and Maintenance Adjustor
Future Inverter Replacement Cost
Inverter Life, Replace Every X Years

Taxable
Non-Taxable

Taxable

$
$

$
$

$
$
$

200000 Watts (DC STC)

5.500 $/Watt (DC STC)
1,100,000.00

13.0%
0.50%
25
20
0.16
3.0%
0.285
10
0.0%

17.59
3,518
3.0%
0.30
10

$/Watt (DC STC)

kW (DC STC) to kWh AC

%
Years
Years
$/kWh

%
$/kWh
Years (must be equal to or less than project life)
%
$/kWh
Years (must be equal to or less than project life)
$/kW/Year
$/Year
%
$/Watt (DC STC)
Year (must be equal to or less than project life)

Tax Assumptions
Federal Tax Rate
State Tax Rate
Effective Tax Rate
Federal Tax Credit
State Tax Deduction
5 Year Accelerated Depreciation Schedule (MACRS)
Depreciation
Asset Basis
Gross Cost
Rebate
Less 50% of Federal Tax Credit
Asset Basis
Financing Assumptions
% Financed w/ Cash
% Financed w/ Loan
Loan Interest Rate
Loan Period
Net Cost
Customer Discount Rate
Loan

Solar Project Financial Analysis Summary

Net Present Value
Simple Payback (100% Cash only)
Estimated Return on Equity
Scenario A: Guess Return on Equity

35%
10%
42%
30%
100%
20.00%
20.00%

32.00%
32.00%

19.20%
19.20%

11.52%
11.52%

11.52%
11.52%

5.76%
5.76%

0.00%

0.00%

$
$
$

1,100,000
(165,000)

935,000

$
$

100%
Cash
0%
9.00%
Loan
20 Years (must be equal to or less than project life)
1,100,000
8.00%
-

52,425
Year 7
9.4%
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.

267819732.xls

Solar Photovoltaic Project Simple Financial Model

PRO FORMA AND PRODUCTION
Start-Up
0

Project Output
Annual Generation (kWh)

Year
1
227,760

Year
2
226,621

Year
3
225,488

Year
4
224,361

Year
5
223,239

Year
6
222,123

Year
7
221,012

Year
8
219,907

Year
9
218,807

Year
10
217,713

Year
11
216,625

Year
12
215,542

Year
13
214,464

Year
14
213,392

Year
15
212,325

FINANCIAL SCHEDULES
INCOME STATEMENT
Electricity Revenue (Avoided Cost)
CEC Rebate
SREC Auction Revenue
SREC Contract Revenue

$
$

Total Revenue (Avoided Costs)

Replace Inverter?
Operations & Maintenance Costs
Inverter Replacement Cost

$
$
$

No

Total Operating Expenses

EBITDA

$
$

EBIT

EBT

$
$
$
$

$
$
$
$
$
$
$
$
$
$
$

$
$
$

$
$
$

Federal Depreciation Expense

Interest Expense
Federal taxes saved/(paid)
State taxes saved/(paid) [can not deduct federal depreciation expense]
Net Income
CASH FLOW STATEMENT
Cash From Operations
Net Income
Federal Depreciation Expense
Cash Flow From Operations
Cash From Investing
Installed PV Cost
One Time State Solar Investment Tax Deduction (Actual Cash Value)
One Time Federal Solar Investment Tax Credit
Cash Flow From Investing

$
$
$
$

Cash From Financing

Loan Disbursement
Loan Repayment (Principle)
Cash Flow From Financing
Annual Cash Flow
Cumulative Cash Flow
Simple Payback
Net Investment
Simple Payback Year

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

$
$
46,580 $

$
$
47,738 $

$
$
48,924 $

$
$
50,140 $

51,386

64,912
101,353
No
(3,518)
(3,518)
97,835
(187,000)
(89,165)
(89,165)
34,632
(9,784)
(64,316)

$
$
$
$
$
$
$
$
$
$
$

(64,316) $
187,000 $
122,684 $

(1,100,000)
77,000
330,000
(693,000) $

$
$
$

$
$

64,587
101,934
No
(3,624)
(3,624)
98,311
(299,200)
(200,889)
(200,889)
73,752
(9,831)
(136,968)

$
$
$
$
$
$
$
$
$
$
$
$
$
$

(136,968) $
299,200 $
162,232 $

64,264
102,539
No
(3,732)
(3,732)
98,807
(179,520)
(80,713)
(80,713)
31,708
(9,881)
(58,886)

$
$
$
$
$
$
$
$
$
$
$
$
$
$

(58,886) $
179,520 $
120,634 $

63,943
103,169
No
(3,844)
(3,844)
99,325
(107,712)
(8,387)
(8,387)
6,412
(9,932)
(11,908)

$
$
$
$
$
$
$
$
$
$
$
$
$
$

(11,908) $
107,712 $
95,804 $

63,623
103,824
No
(3,960)
(3,960)
99,865
(107,712)
(7,847)
(7,847)
6,242
(9,986)
(11,592)

$
$
$
$
$
$
$
$
$
$
$
$
$
$

(11,592) $
107,712 $
96,120 $

63,305
104,505
No
(4,078)
(4,078)
100,427
(53,856)
46,571
46,571
(12,785)
(10,043)
23,743

$
$
$
$
$
$
$
$
$
$
$
$
$
$

62,988
105,212
No
(4,201)
(4,201)
101,012
101,012
101,012
(31,819)
(10,101)
59,092

$
$
$
$
$
$
$
$
$
$
$
$
$
$

62,673
105,947
No
(4,327)
(4,327)
101,620
101,620
101,620
(32,010)
(10,162)
59,448

$
$
$
$
$
$
$
$
$
$
$
$
$
$

62,360
106,709
No
(4,456)
(4,456)
102,252
102,252
102,252
(32,209)
(10,225)
59,818

$
$
$
$
$
$
$
$
$
$
$
$
$
$

62,048
107,499
Yes
(4,590)
(60,000)
(64,590)
42,909
42,909
42,909
(13,516)
(4,291)
25,102

$
$
$
No
$
$
$
$
$
$
$
$
$
$
$

No

(4,728)
(4,728)
41,852
41,852
41,852
(13,183)
(4,185)
24,484

$
$
$
$
$
$
$
$
$
$
$

No

(4,870)
(4,870)
42,868
42,868
42,868
(13,503)
(4,287)
25,078

$
$
$
$
$
$
$
$
$
$
$

No

(5,016)
(5,016)
43,908
43,908
43,908
(13,831)
(4,391)
25,686

$
$
$
$
$
$
$
$
$
$
$

No

(5,166)
(5,166)
44,973
44,973
44,973
(14,167)
(4,497)
26,309

$
$
$
$
$
$
$
$
$
$
$

(5,321)
(5,321)
46,064
46,064
46,064
(14,510)
(4,606)
26,948

26,948
26,948

23,743 $
53,856 $
77,599 $

59,092 $
$
59,092 $

59,448 $
$
59,448 $

59,818 $
$
59,818 $

25,102 $
$
25,102 $

24,484 $
$
24,484 $

25,078 $
$
25,078 $

25,686 $
$
25,686 $

26,309 $
$
26,309 $

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

$
$

(693,000) $
(693,000) $

122,684 $
(570,316) $

162,232 $
(408,085) $

120,634 $
(287,451) $

95,804 $
(191,646) $

96,120 $
(95,526) $

77,599 $
(17,927) $

59,092 $
41,165 $

59,448 $
100,613 $

59,818 $
160,430 $

25,102 $
185,532 $

24,484 $
210,015 $

25,078 $
235,093 $

25,686 $
260,779 $

26,309 $
287,089 $

26,948
314,036

$
(693,000) $
7

1 $
(570,316) $

2 $
(408,085) $

3 $
(287,451) $

4 $
(191,646) $

5 $
(95,526) $

6 $
(17,927) $

7 $
41,165 $
7

8 $
100,613 $

9 $
160,430 $

10 $
185,532 $

11 $
210,015 $

12 $
235,093 $

13 $
260,779 $

14 $
287,089 $

15
314,036

DEBT SCHEDULES
Scenario A Loan: Debt Schedule
Beginning Balance
Debt Service
Principle
Interest
Ending Balance

Year
1
$
$
$
$
$

Year
2
-

Year

$
$
$
$
$

Year
3
-

Year

$
$
$
$
$

Year
4
-

Year

$
$
$
$
$

Year
5
-

Year

$
$
$
$
$

Year
6
-

Year

$
$
$
$
$

Year
7
-

Year

$
$
$
$
$

Year
8
-

Year

$
$
$
$
$

Year
9
-

Year

$
$
$
$
$

Year
10
-

Year

$
$
$
$
$

Year
11
-

Year

$
$
$
$
$

Year
12
-

Year

$
$
$
$
$

Year
13
-

Year

$
$
$
$
$

Year
14
-

Year

$
$
$
$
$

Year
15
-

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 refle
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.

267819732.xls

10

11

12

13

0.00%

0.00%

0.00%

0.00%

0.00%

267819732.xls

Year
16
211,263

Year
17
210,207

Year
18
209,156

Year
19
208,110

Year
20
207,069

52,663 $

53,971 $

55,312 $

56,687 $

58,096

$
$
$

$
$
52,663 $

$
$
53,971 $

$
$
55,312 $

$
$
56,687 $

No
$
$
$
$
$
$
$
$
$
$
$

No

(5,481)
(5,481)
47,182
47,182
47,182
(14,862)
(4,718)
27,601

$
$
$
$
$
$
$
$
$
$
$

$
$
$
$
$
$
$
$
$
$
$

(5,989)
(5,989)
50,698
50,698
50,698
(15,970)
(5,070)
29,658

$
$
$
$
$
$
$
$
$
$
$

58,096
Yes
(6,169)
(60,000)
(66,169)
(8,073)
(8,073)
(8,073)
2,826
807
(4,440)

29,658
29,658

$
$
$

(4,440)
(4,440)

No

(5,645)
(5,645)
48,326
48,326
48,326
(15,223)
(4,833)
28,271

$
$
$
$
$
$
$
$
$
$
$

No

(5,815)
(5,815)
49,498
49,498
49,498
(15,592)
(4,950)
28,956

$
$
$

27,601 $
$
27,601 $

28,271 $
$
28,271 $

28,956 $
$
28,956 $

$
$

$
$

$
$

$
$

$
$

$
$

27,601 $
341,638 $

28,271 $
369,908 $

28,956 $
398,865 $

29,658 $
428,523 $

(4,440)
424,082

$
$

16 $
341,638 $

17 $
369,908 $

18 $
398,865 $

19 $
428,523 $

20
424,082

Year
16
$
$
$
$
$

Year
17
-

Year

$
$
$
$
$

Year
18
-

Year

$
$
$
$
$

Year
19
-

Year

$
$
$
$
$

Year
20
-

Year

$
$
$
$
$

Year

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

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

267819732.xls

Definitions
Back

Kilowatt-hours
(kWh)

Unit of energy. This is a measure of how much energy is consumed by a ho

much electricity is produced by a solar PV system. The amount of energy c
electric meter.

Back

Solar System

The solar photovoltaic (PV) system. This includes your panels (modules), inv
utility.

Estimated Optimal
Annual Generation
(kWh)
Back

optimal fixed south

facing free from
shading location
System Size
Back

kilowatts (kW)

The best case scenario for how much electricity a solar PV system will produ
electricity depending on several factors. For example, a system will produce
roof) than if they are on an axis that tracks the sun throughout the day. Anot
system is able to face due south, the more it should produce. Tilt angle also
tilt is to its latitude the more it will produce. An optimal system in Massachus
degrees) and has a tilt of 42 degrees.

Kilowatts are a measure of power. A kilowatt is 1,000 watts. In this case, it d

single solar PV panel might be rated at 180 watts. If a system uses 10 pane
will be 1800 watts, or 1.8 kW.

Back

Annual Net Capacity

Factor

This is a ratio between the amount of energy produced by your solar PV syst
production capability. A 12.8% net capacity factor is average for solar PV sy
by the angle of the system, its orientation, and the amount of shading. If a s
every day, 24 hours per day at the optimal tilt and orientation with no shade t
capacity factor, in other words, it would produce its rated output.

Back

Annual Production
Degradation

Over the course of the life of the PV system, its production capability will dec
time. Our default assumption is that this degradation will be 0.5% per year.

Back

Depreciation Life

Depreciation is the reduction in the value of an asset due to usage, passage

obsolescence or other factors. Depreciation life is the "useful life" of the sys
the system will provide an economic benefit.

Back

Electricity Revenue
(Avoided Costs)

This is the price per kWh that you will save on your electricity bill using this s
this is a state average price for electricity.

Back

Electricity Revenue
(Avoided Costs)
Annual Adjustor

This model assumes that the cost of electricity will increase at 5% per year, t
electricity costs will also increase at 5% a year.

Solar Renewable
Energy Certificate
(SREC) Auction Price

Solar Renewable Energy Certificates (SRECs), also known as green tags, S

environmental commodities in Massachusetts which represent proof that 1 m
generated from an eligible renewable energy resource. These certificates m
traded so that the owner of the SREC can claim to have purchased renewab
$.285/kWh, which is the price owners will receive for their SRECs if sold thro
Account.

SREC Auction Opt-In

Term

The model uses a default term of 10 years. This term is based upon the len
projects qualified in 2010 will receive. All projects with an Opt-In Term of 10
during their Opt-In Term by depositing them in the end of year Solar Credit C
is expected to be a measure of last resort for projects that have not signed b
that are required to purchase SRECs by the end of the compliance year.

Back

Back

Back
Back
Back

SREC Revenue
Annual Adjustor
SREC Contract Price
SREC Contract Term

This models allows the value of RECs to change by this percentage each ye

The price of SRECs as agreed upon in a bilateral contract with a compliance

The term of the bilateral contract with a compliance entity or other entity purc

Back

Future Inverter
Replacement Cost

A solar inverter is a component of a PV system that changes the direct curre

alternating current (AC) for use with home appliances or any AC load. The li
the life of the PV panels and will likely need to be replaced during the lifetime
more. This model assumes the default cost to replace the inverter will be $0

Back

Annual Generation
(kWh)

This is the estimated amount of energy that your solar PV system will produc

Back

Total System Cost

Total System Cost includes all elements of the installation including design, e
etc. In the case of taxable commercial entities, the Total System Cost should
equipment

much energy is consumed by a home or facility. It is also a measure of how

V system. The amount of energy consumption or production is measured by an

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

ctricity a solar PV system will produce. PV systems will produce more or less
For example, a system will produce less energy if the panels are fixed (e.g. to a
s the sun throughout the day. Another factor is orientation. The more the
e it should produce. Tilt angle also impacts production. The closer a system's
. An optimal system in Massachusetts that is fixed, faces due south (180

watt is 1,000 watts. In this case, it describes the size of the solar PV system. A
80 watts. If a system uses 10 panels rated at 180 watts each, the system size

rgy produced by your solar PV system and its optimimum nameplate (labeled)
ty factor is average for solar PV systems in Massachusetts. This value varies
and the amount of shading. If a solar PV system had the sun shining on it
l tilt and orientation with no shade then that system would have a 100%
oduce its rated output.

m, its production capability will decrease as it deteriorates to a degree over

degradation will be 0.5% per year.

of an asset due to usage, passage of time, wear and tear, technological

on life is the "useful life" of the system, meaning the estimated length of time
fit.

e on your electricity bill using this solar PV system. The default is $0.18/kWh as

ricity will increase at 5% per year, therefore your savings from avoided
year.

ECs), also known as green tags, Solar Renewable Energy Credits, are tradable
setts which represent proof that 1 megawatt-hour (MWh) of electricity was
rgy resource. These certificates may have a value and they can be sold and
n claim to have purchased renewable energy. Their default value is set at
receive for their SRECs if sold through the Solar Credit Clearinghouse Auction

s. This term is based upon the length of the Auction Opt-In Term that all
projects with an Opt-In Term of 10 years will be eligible to sell SRECs generated
m in the end of year Solar Credit Clearinghouse Auction Account. The Auction
for projects that have not signed bilateral contracts with compliance entities
he end of the compliance year.

change by this percentage each year

bilateral contract with a compliance entity or other entity purchasing SRECs.

ompliance entity or other entity purchasing SRECs.

ystem that changes the direct current (DC) electricity from the PV array into
e appliances or any AC load. The life of a solar PV system's inverter is less than
ed to be replaced during the lifetime of the system which can be 25 years or
ost to replace the inverter will be $0.75/watt.

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

f the installation including design, equipment, labor, permitting, interconnection,

tities, the Total System Cost should include Massachusetts sales tax on the