HomeMy WebLinkAboutPoint MacKenzie Solar Farm - Final Feasibility Study - February 2024 - REF Grant 7014003Executive Summary
Wert-Berater Feasibility Studies, LLC ●1968 South Coast Highway Suite 2382, Laguna Beach CA 92651 ●1.888.661.4449 ●https://www.wert-berater.com
Feasibility Study
5.88MW Ground Mounted Solar Electric (PV) System
Point MacKenzie, Alaska 99654
Matanuska-Susitna Borough
Prepared for
Fred Thoerner, President
Point MacKenzie Solar, LLC (hereinafter “Company”)
9033 Washburn St
Anchorage, AK 99502
February 28, 2024
Table of Contents
2
Item Page
Important Disclosures 3
Statement of Work 5
Definitions 15
Economic Feasibility 16
Alaska State Economic Overview 17
Electric Power Transmission in Alaska Overview 25
Subject Project Overview 28
Matanuska-Susitna Borough Data 29
Information Regarding Subject Project Site 33
Contractual Agreements and Environmental Considerations 37
Economic Feasibility Conclusion 41
Market Feasibility 42
Solar Farm Developers in the US 43
Barriers to Entry 52
Regulation & Policy 55
Competition 59
Type of project: service, product or commodity based 60
Project Impact and Objectives 61
Solar Power Generating Facilities 62
Structural Risk Analysis 64
Structural Risk Adjustment 66
Industry Life Cycle 71
Risk Scores Methodology 88
Market Feasibility Conclusion 90
Technical Feasibility 91
Commercial Availability 93
Photovoltaic (PV cell) Cell Overview 95
Sandia Model Analysis 100
Item Page
Technical Feasibility Conclusion 106
Financial Feasibility 107
Financial Feasibility Methodology 108
Subject Project Cost Estimate Table 109
50 Year Pro Forma ⅼ Years 1 through 10 111
50 Year Pro Forma ⅼ Years 11 through 20 112
50 Year Pro Forma ⅼ Years 21 through 30 113
50 Year Pro Forma ⅼ Years 31 through 40 114
50 Year Pro Forma ⅼ Years 41 through 50 115
5% Revenue Reduction Sensitivity Analysis 116
10% Revenue Reduction Sensitivity Analysis 121
Market demand forecast 126
Financial Feasibility Conclusion 127
Management Feasibility 128
Resume of the Analyst 130
The End 132
Important Disclosures
3
❖This document has been prepared by Wert-Berater Feasibility Studies,LLC based
on information and opinions provided by third parties named as “Source”and
the management of Infinite Point MacKenzie Solar,LLC and its associates
(herein after “Company”)and certain primary and secondary research
carried out by Wert-Berater Feasibility Studies,LLC on behalf of Company.
This document does not purport to be all-inclusive or necessarily to contain all
the information that a prospective investor or lender may desire investigating the
opportunity,and may be subject to updating,revision and amendment.
❖This document is not solely intended to form the sole basis of an investment
decision by any EB-5 Visa applicants,USCIS officials in determining job creation
or economic impact of the project or lenders acting as a construction loan or
permanent loan lender,guarantor and/or grant provider.Other interested parties
should carry out their own investigation and analysis of the subject Company
known as Point MacKenzie Solar,LLC concerning any investment,offer,loan or
guarantee or grant request.The information contained in the document will not
constitute or form part of any offer for sale of shares in the subject project or its
Company,its owners or managers of offer of equity,nor will any such
information from the basis of any contract in respect thereof.Any investor must
rely on the terms and conditions contained in such a contract subject to
limitations and restriction as may be specified therein.However,this document
may be used by third parties such as business plan authors and economic impact
or job creation economic studies as part of their investigation and analysis.
❖The projected financial information contained in the document is based on
our internal market research and judgmental estimates and assumptions
made by the management of Company,about circumstances and events that
have not yet taken place.Accordingly,there can be no assurance that the
projected results will be attained.In particular,but without prejudice to
generality of the foregoing,no representation of warranty whatsoever is
given to the relation of reasonableness or achievability of the projections
contained in the document or in relation to the bases and assumptions
underlying such projections not the reasonableness,achievability and accuracy.
❖No representation or warranty,express or implied is given by the
Promoters,the Company or Wert-Berater Feasibility Studies,LLC its principals,
managers,agents or employees,directors,partners,affiliates,or advisors (and
any warranty expressed or implied by statute is hereby excluded)as the accuracy
or completeness of the contents of this report or any such document or
information supplied at any time or opinions or projections expressed herein or
therein,nor is any such party under any obligation to update the document or
correct any inaccuracies or omissions in it which may exist or become apparent.
In particular,for reasons of commercial sensitivity,information on certain matters
may not have been included in this document.Such information may be
available at a later stage.
Important Disclosures
4
❖No responsibility or liability is accepted for any loss or damage arising as of a
result of this document and any and all responsibility and liability is expressly
disclaimed by the Promoters,Wert-Berater Feasibility Studies,LLC and the
Company or any of them or any of their respective directors,managers,principals,
partners,officers,affiliates,employees,advisors or agents.
❖Wert-Berater Feasibility Studies,LLC is acting as advisor to the Company,its
lender and the legal counsel only and to no other person.Neither receipt of the
document nor any information supplied in connection with any proposed
investment in the Company by any person is or is to be taken as consulting the
giving of investment advice or to constitute any person as a client of Wert-
Berater Feasibility Studies,LLC in connection with any proposed EB-5 Visa
Application,loan,investment or sale.
❖This document should not be considered as a recommendation by Wert-Berater,
LLC.or any of its subsidiaries or affiliates (including the Company)or their
respective directors,managers,principals,partners,officers,affiliates,
employees,advisors or agents to invest in the Company and each potential
investor must make its own independent assessment of the merits or otherwise
of acquiring the issued share capital of the Company and should take its own
professional advice.
❖In no circumstances will Wert-Berater Feasibility Studies,LLC or the promoters or
any or its subsidiaries or affiliates (including the Company)be responsible for any
costs or expense incurred in connection with any appraisal or investigation of the
Company or for any other costs or expenses incurred by prospective purchasers
in connection with the proposed investment in the Company.
❖THIS REPORT AND THE INFORMATION CONTAINED HEREIN DOES
NOT CONSTITUTE AN APPRAISAL UNDER THE UNIFORM STANDARDS
OF PROFESSIONAL APPRAISAL PRACTICE ("USPAP")AND SHOULD NOT BE USED
OR RELIED UPON AS SUCH.This material is not to be construed as providing
investment or appraisal services in any state,country or jurisdiction.This report is
not warranted by Wert-Berater Feasibility Studies,LLC or any other party for
accuracy,completeness or any other criteria.
❖General Note on Rounding:
Microsoft Excel was used in the calculation of the numbers presented in this
document.Results are presented in whole numbers or rounded to two decimal
places where appropriate,however,the analysis itself uses figures carried to their
ultimate decimal places;therefore,the sums and products generated in the
analysis may not equal the sum or product if the reader replicates the
calculations with the factors shown in the report.
Statement of Work
5
Appendix D to Subpart B of Part 4280 -Feasibility Study Components
Executive Summary
Provide an overview to describe the nature and scope of the proposed project,
including the purpose,project location,design features,capacity,and estimated
capital costs.Include a summary of the feasibility determinations made for each
applicable component.
Economic Feasibility
Cost Benefit Analysis
•Minimum amount of inputs (labor,infrastructure,utilities,renewable resources,
feedstocks)to operate successfully
•Contracts in place and contracts to be negotiated,including terms and renewals
•Environmental risks
•Cost of project relative to the increase in revenues or benefits provided
•Overall economic impact of project including new markets created and economic
development
Market Feasibility
Analysis of the current and future market potential,competition,sales or service
estimations including current and prospective buyers or users.
•Competition
•Type of project:service,product or commodity based
•Target market,new versus established
•End user analysis,captive versus competitive
•By-product revenue streams
•Industry risk
Technical Feasibility
Analyzing the reliability of the technology to be used and/or the analysis of the
delivery of goods or services,including transportation,business location,and the
need for technology,materials,and labor.
•Commercial availability
•Product and process success record and duplication of results
•Experience of the service providers
•Roads,rail,airport infrastructure
•Need for local transportation
•Labor market
•Availability of materials
•Use,age,and reliability of technology
•Construction risk
Financial Feasibility
Analysis of the operation to achieve sufficient income,credit,and cashflow to
financially sustain the project over the long term and meet all debt obligations.
•Commercial or project underwriting
•Management’s assumptions
Statement of Work
6
•Accounting policies
•Source of repayment
•Dependency on other entities
•Equity contribution
•Market demand forecast
•Peer industry comparison
•Cost-accounting system
•Availability of short-term credit
•Adequacy of raw materials and supplies
•Sensitivity analysis
Management Feasibility
Analysis of the legal structure of the business or operation;ownership,board and
management analysis.
•History of the business or organization
•Professional and educational background
•Experience
•Skills
•Qualifications necessary to implement the project
Recommendation
Conclude with an opinion and recommendation presented by the consultant
Qualifications
Provide a resume or statement of qualifications of the author of the feasibility study,
including prior experience.
Executive Summary
February 28,2024
Fred Thoerner,President
Point MacKenzie Solar,LLC (hereinafter “Company”)
9033 Washburn St
Anchorage,AK 99502
VIA EMAIL:fthoerner@gmail.com
Re:Feasibility Study for the planned 5.88MW ground mounted Solar Electric (PV)System in Matanuska-Susitna Borough hereinafter “subject
project”.
Dear Mr.Thoerner:
At your request and authorization,we are pleased to provide this Feasibility Study,in compliance with USDA Appendix D to Subpart B of Part 4280
-Feasibility Study Components related to the subject project which is a ground mounted Solar Electric (PV)System that is intended to produce
about 5,88kWDC/5,000kWAC.The subject project site is about 33-acres located at Point MacKenzie,Alaska 99654 in Matanuska-Susitna Borough
which is owned by the Company to be leased back at an annual rate of $40,000,no annual escalations.
Subject Project Cost
The estimated project cost is $9,420,288,allocated as follows:Solar Modules (31.2%),Inverters (4.4%),Pile Driving and Clearing (7.9%),Structural
Balance (8.1%),Electrical Balance (11.8%),Installation and Labor (9.4%),EPC Overhead (5.6%),Permit Costs (0.6%),Interconnection Fee (8.5%),
Transmission Line (1.2%),Developer Overhead/Financing (6.9%),Contingency (1.9%),EPC/Developer Profit (2.5%),along with planned expenses for
Interest Reserve Fund,Application Fees,Legal/Closing Fees,and Soft Costs.The land is owned directly and is to be leased to the subject project at
a rate of $40,000 annually for a period of 25-years,and the total cost will be partially offset by Investment Tax Credits,Bonus Depreciation,and
Accelerated Depreciation."
7
Source: Management of the Company
Executive Summary
Subject:Project Description
The subject project entails the installation of photovoltaic solar panels affixed to a stable racking system.Additionally,it encompasses the
construction of an array of inverters and associated electrical infrastructure,the implementation of a perimeter fencing system to secure the panels,
and the potential inclusion of vegetative buffers and screening as dictated by Best Management Practices (BMPs).
This solar PV energy generation system is designed to operate daily during daylight hours,with routine operational activities involving meticulous
monitoring for status,performance,and diagnostics.Further operational tasks include meter reading,production reporting,and the continuous
update of comprehensive Operations and Maintenance (O&M)manuals.Notably,the project site will be securely fenced to ensure public safety
and safeguard valuable equipment.Existing power poles and utility lines,in conjunction with the conveniently located Chugach Electric Transfer
Station merely a few hundred yards from the project site,offer an ideal interconnection point.The system is designed for 5.88MW of power
generation.
Loan,Grant and Tax Incentives
In pursuit of project funding,the Company has applied a Federal Tax Credit of 26 percent of the subject project cost total of $9,420,288 which is
estimated at about $2,449.275.
A 100 percent Bonus Depreciation is also applied estimated at about $2,164,838.The Alaska Energy Authority is to provide a $1,000,000 incentive.
Total incentives are estimated at about $5,614,112.Reducing the subject project cost estimate of $9,420,288 by $5,614,112 indicated an adjusted
subject project cost of about $3,806,176 which is applied to the Financial Feasibility analysis as presented in the body of this report.
8
Source: Management of the Company
Executive Summary
Interconnection Agreement
The subject property is planned to interconnect with the electrical grid at the Chugach Electric Transfer Station,conveniently located a mere few
hundred yards from the project site.This strategic interconnection point ensures efficient energy transmission and is integral to the successful
implementation of the solar energy project.
Price and Payment Schedule
The Proposal sets forth a Contract Price of $9,420,288 ($1.60/W).This fee includes all project hard costs and excludes the soft costs.The payment
terms for the Contract Price are discussed in the Agreement and it states that the owner’s responsibility for Milestone payments is subject to
acceptable inspection of work by the Owner,agent of the Owner,or the Owner’s lender.
Conclusions and Recommendations
Economic Feasibility
As presented herein,the subject project land area is 33±Acres (1,437,480±square feet).As indicated by the site plan provided,the site is the
shape and size required for the planned improvements.
Moreover,the site is in the appropriately zoned area making the site legally permissible.Utility requirements are minor for a solar farm project and
are at the capacities needed for the planned improvements.Based on this analysis,the subject project based on these features meets the
requirements as an Economically Feasible project.
9
Source: Partner Technical Report Direct Quotes taken from report dated September 02, 2022
Executive Summary
Conclusions and Recommendations
Market Feasibility Conclusion
In alignment with the findings presented in the Economic Feasibility section and in consideration of an agreement to be established between the
management of the Company and energy providers,the rate of $0.06 per KWh is well supported.Additional revenue is sources through SREC
(Solar Renewable Energy Certificates)at a rate of $2.00 SREC Decelerator revenue.
What's driving current industry performance?
High levels of government incentives drive growth
•The federal government has developed multiple laws and incentives to support the implementation of green energy across the country,
including the Federal Investment Tax Credit (ITC),Renewable Portfolio Standard (RPS),tax cuts and cash grants.
•The Federal Investment Tax Credit was set to contract in 2022,but the recent extension stemming from the Inflation Reduction Act will keep tax
credits at 30.0%until 2032.
•Government support enables new solar power companies to reduce entry costs and supports established companies in developing new
technologies.As a result,government incentives have enabled the industry to consistently expand.
•Some state governments continue to move forward with their efforts to grow green technology by requiring utility companies to diversify their
energy portfolio by including multiple sources of renewable energy,including solar power.
Innovative financing systems make solar power more accessible
•New financing systems,such as power purchase agreements (PPA),reduce the cost of implementing and maintaining renewable energy.Lower
costs help incentivize buyers to adopt solar power energy,supporting industry growth.
10
Source: IBISWorld –22111E . Solar Power in the US
Executive Summary
Conclusions and Recommendations
Market Feasibility Conclusion ׀ Conclusion
•These systems often benefit smaller solar power companies as they enable them to distribute power through wholesale rather than a retail
network,reaching a greater number of downstream buyers.
•Solar power companies that have joint ventures with utilities tend to reduce risk by owning a small project share.Similarly,utility companies
employ this strategy to lower the risk level of the project.
•However,supply chain disruptions and elevated demand for solar power have caused the PPA prices to jump,making it less affordable to
buyers and causing revenue growth to slow down.
Affordable solar panels drive demand for solar power
•An uptick in the need for semiconductors has led to a price jump,although it is still significantly lower than its historical levels.Lower
semiconductor prices reduce the production price of solar panels,bringing down the cost of installing and implementing solar power.
•Labor costs have continued to remain elevated,digging into profitability as solar power companies require skilled employees to help ensure
customers are getting their power without any issues.
•Solar power companies can purchase panels from domestic and international markets,resulting in an oversupply of solar panels and lowering
prices.Low-cost imports and a freeze on tariffs on solar panels from Southeast Asia have rapidly expanded solar power.
Solar power growth is unlikely to stop
•Solar power generators have established themselves and are popular in states with programs supporting renewable energy and favorable
geographic conditions,such as California.
11
Source: IBISWorld –22111E . Solar Power in the US
Executive Summary
Conclusions and Recommendations
Market Feasibility Conclusion ׀ Conclusion
•The industry is currently developing over 400 energy storage projects.These projects will allow utility companies to store and access power
produced by the panels,which,in turn,can be distributed to households and businesses.
•There are nearly 6,000 ongoing solar power projects across the country,representing about 153 W.This is a significant increase from 107 GW in
2018,a trend that will continue in the upcoming years.
•Solar power growth,spurred by government policy and augmented by strong public support,suggests that solar will secure its place in the
domestic energy market.
Based on this market analysis,the subject project is feasible from a Market Feasibility analysis as presented in the body of this report.
Technical Feasibility Conclusion
The comprehensive analysis of technical systems and installation data presented herein unequivocally affirms the performance potential of the
subject project in its envisioned form.The subject project has a low environmental risk and has production volumes to support the revenue
projections as presented in the financial pro forma as presented in the Financial Feasibility section of this report.The proposed ground mounted
PV system is diligently designed to harness its full electricity generation potential,effectively meeting the demands stipulated in the Power
Purchase Agreement (PPA).Notably,the subject project site boasts full accessibility through requisite road infrastructure and is well-equipped in
terms of essential utilities and services.This collective analysis underscores that the subject project,in its planned configuration,is technically
feasible and inherently of low risk.In light of these conclusive findings,it is recommended to proceed with the subject project,as its Market and
Technical Feasibility analyses both demonstrate a strong alignment with established criteria and exhibit a favorable risk profile.
12
Source: IBISWorld –22111E . Solar Power in the US
Executive Summary
Conclusions and Recommendations
Management Feasibility Conclusion
•Analysis of the legal structure of the business or operation;ownership,board and management analysis.
•History of the business or organization
•Professional and educational background
•Experience
•Skills
•Qualifications necessary to implement the project
The above items are presented in the Management Feasibility section of this report and accompanying resume as provided.
13
Source: USDA and Management of the Company
Definitions
14
Discounted Cash Flow Analysis (DCF)
Definition:Discounted Cash Flow (DCF)analysis is a rigorous financial valuation
method employed to assess the attractiveness of an investment opportunity.It
involves the utilization of future free cash flow projections,which are systematically
discounted,typically employing the Weighted Average Cost of Capital (WACC)as the
discount rate.The outcome of this analysis yields a present value,enabling a
comprehensive evaluation of the investment's potential.An investment opportunity
is considered favorable if the DCF-derived value surpasses the current cost of the
investment.
Key Points:
DCF analysis is a fundamental technique for evaluating the financial soundness of
investments.
It projects future cash flows and factors in the time value of money.
By comparing the DCF-derived value with the investment's current cost,it assists in
making investment decisions.
Net Present Value (NPV)
Definition:NPV is a financial metric used to assess investment or project profitability.
It calculates the difference between present value of expected cash inflows (Ct)and
initial investment costs (Co)over a specific time frame (t),using the discount rate (r).
Interpretation:A positive NPV means projected earnings exceed costs in today's
dollars,indicating potential profitability.A negative NPV suggests potential losses.
NPV guides investments toward those with positive values.
Use in M&A:In mergers and acquisitions,Discounted Cash Flow (DCF)is often part of
NPV analysis,assessing deal viability.
Entrepreneurial Profit
Definition:Rooted in economic theory by Joseph A.Schumpeter,it distinguishes
technical and commercial risks in entrepreneurship.Entrepreneurs seek a minimum
profit margin beyond risk compensation.
Key Points
Schumpeter's distinction:Technical vs.commercial risk.
Entrepreneurs require a margin beyond risk compensation.
Profit hinges on more than risk mitigation;it demands a surplus beyond risk
coverage.
Definitions
15
EBITDA -Earnings Before Interest,Taxes,Depreciation and Amortization
EBITDA stands for earnings before interest,taxes,depreciation and amortization.
EBITDA is one indicator of a company's financial performance and is used as a proxy
for the earning potential of a business,although doing so has its drawbacks.Further,
EBITDA strips out the cost of debt capital and its tax effects by adding back interest
and taxes to earnings.
Operating Profit
Operating profit is the profit earned from a firm's normal core business operations.
This value does not include any profit earned from the firm's investments,such as
earnings from firms in which the company has partial interest,and the before the
deductions of applicable interest and taxes owed.Operating profit is calculated using
the following formula:Operating Profit =Operating Revenue -COGS -Operating
Expenses -Depreciation and Amortization
Depreciation
Depreciation is an accounting method of allocating the cost of a tangible asset over
its useful life.Businesses depreciate long-term assets for both tax and accounting
purposes.For tax purposes,businesses can deduct the cost of the tangible assets
they purchase as business expenses;however,businesses must depreciate these
assets in accordance with IRS rules about how and when the deduction may be taken.
Amortization
Amortization is the paying off of debt with a fixed repayment schedule in regular
installments over a period of time for example with a mortgage or a car loan.It also
refers to the spreading out of capital expenses for intangible assets over a specific
period of time (usually over the asset's useful life)for accounting and tax purposes.
Interest
Interest is the charge for the privilege of borrowing money,typically expressed as
annual percentage rate.Interest can also refer to the amount of ownership a
stockholder has in a company,usually expressed as a percentage.
Residual Land Value
Land residual technique.in appraisal,a method of estimating the value of land when
given the Net Operating Income (NOI)and value of improvements.Used for
feasibility analysis and highest and best use.(C.Darlow.Valuation and Development
Appraisal (London:1982),pp.1–28.(Residual Method of Valuation).
A
Market Feasibility
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Economic Feasibility
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Economic Feasibility
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Alaska
State Economic Overview
Over the five years to 2023,Alaska has suffered stagnant population
growth.The shutdown of major parts of the economy amid the
COVID-19 reduced the rate of people moving in or out of the state.
In particular,Alaska’s distance from the other states accentuated the
limited movement of people.
Moreover,as a state that primarily imports most of its products
from the lower 48 states,the supply chain issues that arose from the
pandemic particularly affected the inventories of stores in Alaska.
Despite the problems to the average consumer of higher energy
prices,the increased price of oil in the latter part of the period
ultimately increased Alaska’s Gross State Product.
Factors Impacting Alaska's Economy
Housing Affordability
According to the Zillow Home Value Index,as of September 2023,
Source: IBISWorld US STATE ECONOMIC PROFILES REPORT AK Report by: Grace Wood | November 2023
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the typical value of homes in the United States is $348,538.In
comparison,Alaska’s typical home price in 2023 is $353,658.
Although Alaska’s typical home price is only slightly higher than the
nations typical home price,the state's high cost of living diminishes
the positive effects of its relative housing affordability.
Domestic Migration
Alaska has experienced a higher level of outbound migration than
inbound over the five years to 2023.In particular,the state’s
Department of Labor and Workforce announced that between July
2019 and July 2020,the population decreased by 0.5%.The location
of Alaska,far up in the north away from the lower 48,renders the
cost of living higher than most other states.Everything needs to be
imported,which increases the price of goods and services.
Business Climate Tax Index
Alaska ranks high on the Business Tax Climate Index.In particular,
there is neither state income nor sales tax in Alaska.
However,local governments in the state are allowed to issue local
sales tax.Specifically,one hundred and seven municipalities impose
a general sales tax.These sales tax rates range from 1.0%to 7.0%
percent.Overall,the state's low tax burden is conducive for
businesses.
Business Climate Tax Index
Alaska ranks high on the Business Tax Climate Index.In particular,
there is neither state income nor sales tax in Alaska.However,local
governments in the state are allowed to issue local sales tax.
Specifically,one hundred and seven municipalities impose a general
sales tax.These sales tax rates range from 1.0%to 7.0%percent.
Overall,the state's low tax burden is conducive for businesses.
Fiscal Stability
Alaska’s fiscal stability over the five years to 2023 is expected to
worsen.The state currently has a budget deficit which is expected to
persist over the next five years.
Source: IBISWorld US STATE ECONOMIC PROFILES REPORT AK Report by: Grace Wood | November 2023
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Additionally,Alaska has low taxes,on both individuals and
corporations,and the political culture of the state makes it unlikely
higher taxes will be politically viable.Furthermore,since oil revenues
consist a major part of the state’s budget,Alaska’s revenue endures
uncertainty.
New Job Growth
Alaska has nearly 336.0 thousand jobs,making it the 49th largest
employer in the US.Most of the jobs in the state are concentrated in
healthcare and social assistance,followed by professional,scientific
and technical services.During the past year,the number of jobs in
Alaska has increased by 2.0%,growing at a slower rate than the
United States,on average.
Educational Attainment
Across all states,Alaska ranks 32nd in the college completion rate
by adults aged 25 and older.Overall,30.0%of adults in Alaska have
a college degree,representing an increase from 24.7%two decades
ago.
Meanwhile,the high school completion rate in Alaska stays at an
estimated 80.0%,slightly below the US average.
Gross State Product in Alaska
Alaska,is the forty-sixth-largest economy in the nation,exhibiting a
gross domestic product of 50.7 billion,which has increased an
annualized 13735.8%over the two thousand and twenty-three years
to 2023.
GSP is a measurement of a state's output,or the sum of value added
from all industries in the state.It is a common indicator used to
track the health of an economy.
Population Growth in Alaska
Over the five years to 2023,Alaska has exhibited an annualized
population decline of -0.1%to reach a total population of 732.3
thousand.
Source: IBISWorld US STATE ECONOMIC PROFILES REPORT AK Report by: Grace Wood | November 2023
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Alaska Labor Market Summary Table
Source: the management of the Company
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Economic Feasibility
21
Alaska Largest Employers Summary Table
Source: the management of the Company
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Economic Feasibility
22
Alaska Building &Construction Trends Summary Table
Source: the management of the Company
A
Economic Feasibility
23
Alaska Housing Market Summary Table
Source: the management of the Company
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Economic Feasibility
24
Alaska State Demographics Summary Table
Source: the management of the Company
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Electric Power Transmission in Alaska Overview
Current Performance &Outlook
The Electric Power Transmission industry in Alaska is expected to
decline an annualized -6.6%to $619.5 million over the five years to
2023,while the national industry will likely grow at 0.6%during the
same period.
Industry establishments increased an annualized 1.4%to 45
locations.Industry employment has increased an annualized 4.4%to
878 workers,while industry wages have increased an annualized
2.8%to $101.0 million.
Over the five years to 2028,the industry is expected to grow an
annualized 12.7%to $1.1 billion,while the national industry is
expected to grow 0.7%.Industry establishments are forecast to grow
0.4%to 46 locations.Industry employment is expected to increase
an annualized 3.2%to 1,027 workers,while industry wages are
forecast to increase 2%to $111.6 million.
Key External Drivers
Every industry encounters external factors that impact industry
performance.
In addition to the three most influential national key external drivers
of an industry,we have identified key state level indicators that are
likely to impact the local industry's performance.
Source: IBISWorld | October 2023 US INDUSTRY STATE REPORT AK22112 / UTILITIES
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Electric Power Transmission in Alaska
Current Performance &Outlook Graph
Source: the management of the Company
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Economic Feasibility
27
Electric Power Transmission in Alaska
Key External Drivers Trends Graph
Source: the management of the Company
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28
Subject Project Overview
This subject project entails the development of a Solar Photovoltaic
(PV)Facility with a 5.88 MW installed capacity,renowned for its
reliability,especially during summer months,ensuring an average
monthly output of 500 MWh.The centerpiece of this venture is a 6
MW DC /5 MW AC utility-scale solar farm.It will seamlessly connect
to the CEA power grid via a medium-voltage line extension.This
extension will supply power to two Y-Y 2.5 MVA transformers,each
linked to one of the two 4,000 Amp service Main Distribution Panels
(MDP).
These MDPs are equipped with backfeed-rated circuit breakers
tailored for solar inverters.The 5.88 MW of AC-rated inverters will
efficiently interface with the MDPs through a 480V 3-phase
connection.These inverters will harness the potential of the 6 MW
of 480-Watt solar modules,mounted in a fixed position on a
ground-mounted racking system organized in rows to optimize land
usage and overall efficiency.
Additionally,the DC wiring will be operating at approximately 1,200
Volts DC per string,contributing to an annual energy generation of
about 6 million KWh.This project embodies sustainable energy
generation,promising benefits to the local power grid and
community.
Enough power to:
•Power about 800 homes.
•Prevent approximately 8 million pounds per year of carbon
dioxide emissions.
•Equivalent to taking 2,000 large cars off the road.
This subject project interconnection location is at Point MacKenzie
near the Chugach Electric Association Substation.PMS LLC will
provide 12,500 Q-Cells Q.PEAK DUO XL 480W modules with a 25-
year warranty.PMS objective is to develop and maintain the largest
Solar Farm in Alaska,5.88MW minimum,on 33 acres of unrestricted
bluff property adjacent to the Cook Inlet on Point MacKenzie.This
location is suitable to serve Anchorage as once construction is
Source: the management of the Company
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Economic Feasibility
29
Matanuska-Susitna Borough Data
Economic Overview
Population
Population in Matanuska-Susitna Borough increased 0.9%to 112.7k.
Matanuska-Susitna Borough accounts for 15.38%of the total
population in Alaska.Unemployment in Matanuska-Susitna Borough
has risen 4.8%to 5%in 2023,which is 33.9%above the national rate.
Employment
Total jobs in Matanuska-Susitna Borough have declined -3.05%in
2023.Per capita personal income in Matanuska-Susitna Borough has
risen 5.4%to $60,227.6 in 2023,which is 20.2%above the national
average.
Housing
The average home price in Matanuska-Susitna Borough has risen by
3%to $282.1 thousand in 2023,which is 0.2%above the national
average,and 4.68 times average household income in Matanuska-
Susitna Borough.
Source: IBISWorld US STATE ECONOMIC PROFILES REPORT AK Report by: Grace Wood | November 2023
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Economic Feasibility
30
Electric Power Transmission in Matanuska-Susitna Borough County Alaska data
Source: the management of the Company
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Economic Feasibility
31
complete,the system will be connected to the grid at the Chugach
Electric Transfer Station only a few hundred yards away.The point
of interconnection is the CEA Substation located at Point MacKenzie
and will cost approximately $800,000.
Land availability and site control
Fred Thoerner,President of PMS LLC is the sole owner in fee of Lot 1
David Bruce Ring Subdivision.This land consists of 33±acres
located adjacent to the CEA Substation at Point MacKenzie.
An additional 14 acres to the north are also available for future
expansion.Access in winter is done from the CEA High Voltage
Power line easement to and from Point MacKenzie Road.The land
will be leased to the Company for 25-years at $40,000 per annum.
Access is also available from the beach of Cook Inlet as the land is
waterfront.There are no zoning requirements for the land,as well as
no covenants or restrictions to hinder the project.
Previous Site Conditions and Preparations
Site Measurements
The available resource spans across 33±acres,and while permitting
has not been deemed necessary,potential permitting requirements
may be subject to the State of Alaska Energy Authority's jurisdiction.
Land Characteristics
The site is characterized by well-drained soil,primarily consisting of
sand,extending to a depth of approximately 4 feet.Importantly,the
land is wholly owned by Fred Thoerner.
Site Readiness:
The land has undergone partial clearing,having previously served as
an airstrip.To accommodate project operations,a cabin has been
thoughtfully constructed,providing lodging for both staff and
construction personnel.
These previous site conditions and preparations lay a solid
foundation for the successful implementation of the subject project.
Source: the management of the Company
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32
Point MacKenzie Solar Farm |Concept Plan
Source: the management of the Company
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Economic Feasibility
33
Information Regarding Subject Project Site
The proposed subject project is the new construction of a Point
MacKenzie Solar Farm located at Point MacKenzie,Alaska 99654 in
Matanuska-Susitna Borough.
Property ID 522997
Land Area 33±Acres (1,437,480±square feet)
Shape Rectangular /Irregular
Topography Mostly level
Zoning There are no zoning requirements for the
land,as well as no covenants or restrictions
to hinder the project.
Utilities Electricity,and telephone.
Flood Map FEMA has not completed a study to
determine flood map for the selected
location.
Flood Zone FEMA has not completed a study to
determine flood zone for the selected
location.
Access Access in winter is from the CEA High
Voltage Power line easement to and from
Point MacKenzie Road.Access is also
available from the beach of Cook Inlet as
the land is waterfront.
Source: Matanuska-Susitna Borough, Wert-Berater Feasibility Studies, LLC and FEMA
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Economic Feasibility
34
Economic Feasibility
Cost Benefit Analysis
•Minimum amount of inputs (labor,infrastructure,utilities,
renewable resources,feedstocks)to operate successfully.
•Contracts in place and contracts to be negotiated,including
terms and renewals.
•Environmental risks.
•Cost of project relative to the increase in revenues or benefits
provided.
•Overall economic impact of project including new markets
created and economic development.
In this Economic Feasibility section,the items above are addressed
in accordance with United States Department of Agriculture
Appendix D to Subpart B of Part 4280 -Feasibility Study
Components.The following data was provided by the management
of the Company and sources cited in the footnotes below.
Minimum amount of inputs (labor,infrastructure,utilities,
renewable resources,feedstocks)to operate successfully.
Labor Requirements
The design,development,construction and operations of a large-
scale solar farm have a variety of Labor Inputs as follows:
•Solar PV installers and technicians
•Sales representatives and estimators
•Solar designers and engineers
•Solar installation managers and project foremen
•HVAC technicians with specific skills in solar installation
•Energy auditors
•Site assessors and remote evaluators
•Electricians with specific skills in solar installation
The quantity of labor inputs per MW varies from project to project,
yet direct labor involved tends of average about 2 jobs per MW-ac
of solar installed and operated according to Economic Modeling
Specialists Inc.(EMSI).(2010).“EMSI Complete Employment,3rd
Quarter,2010.”Moscow,ID:Economic Modeling Specialists,Inc.
Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components and EMSI Complete Employment, 3rd Quarter, 2010.” Moscow, ID:
Economic Modeling Specialists, Inc
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35
Matanuska-Susitna Borough,Alaska |Civilian Labor Force
According to the Federal Reserve Bank of St.Louis,the civilian labor force in Matanuska-Susitna Borough,Alaska as of May 2023 was a total count
of 50,209 persons.
Source: Federal Reserve Bank of St. Louis
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Economic Feasibility
36
Matanuska-Susitna Borough,Alaska |Unemployment Rate
According to the Federal Reserve Bank of St.Louis,the unemployment rate in Matanuska-Susitna Borough,Alaska as of May 2023 was 4.2 percent
of the civilian labor force which amounts to a total count of 2,108 unemployed persons.
Source: Federal Reserve Bank of St. Louis
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Economic Feasibility
37
Contractual Agreements and Environmental Considerations
Contractual Agreements
The management of the Company is in process of obtaining a
Power Purchase Agreement (PPA).An agreement is to be secured
upon realization of ´the subject project as is customary.
Environmental Assessment
A meticulous environmental assessment has been conducted,
revealing a favorable outlook.
There are no anticipated impacts on threatened or endangered
species,habitat integrity,wetlands,archaeological resources,
aviation operations,or visual landscapes.
Furthermore,the project is free from land development constraints.
In line with the essence of solar energy,this endeavor poses minimal
environmental risk,aligning seamlessly with clean and renewable
energy practices.
Subject Site |Site Plat and Utilit Line to Grid
Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components and C., David. "Effects of Solar Power Farms on the
Environment" sciencing.com, https://sciencing.com/effects-solar-power-farms-environment
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38
Reduced Emissions
Almost 70 percent of electrical power in the U.S.came from fossil
fuels like coal,natural gas and petroleum as of 2010.Burning these
substances releases chemicals into the atmosphere,including
greenhouse gases that drive climate change,and toxic chemicals like
mercury and arsenic.In contrast,solar power produces little to no
emissions,because it does not use chemical fuels.As electricity from
solar farms supplants energy from coal plants,they reduce overall
chemical output into the environment.
Harm to Wildlife
In order to provide a significant amount of electrical energy,solar
farms require large tracts of land.Western states like California have
deserts with abundant space and sunshine,but these areas are also
natural habitats that support wildlife.For example,environmental
reports underestimated the number of desert tortoises that would
be displaced by the Ivanpah Solar Generating System in California’s
Mojave Desert.
The same solar farm also came under scrutiny when an increasing
number of bird deaths were reported on its premises.Many of their
wings had been melted or burned off by heat from the solar farm’s
mirrors.
Land Use and Ecological Impacts
In the point of generating electricity at a utility-scale,solar energy
facilities necessitate large areas for collection of energy.Due to this,
the facilities may interfere with existing land uses and can impact
the use of areas such as wilderness or recreational management
areas.
As energy systems may impact land through materials exploration,
extraction,manufacturing and disposal,energy footprints can
become incrementally high.Thus,some of the lands may be utilized
for energy in such a way that returning to a pre-disturbed state
necessitates significant energy input or time,or both,whereas other
uses are so dramatic that incurred changes are irreversible.
Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components and C., David. "Effects of Solar Power Farms on the
Environment" sciencing.com, https://sciencing.com/effects-solar-power-farms-environment
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Economic Feasibility
39
Impacts to Soil,Water and Air Resources
The construction of solar facilities on vast areas of land imposes
clearing and grading,resulting in soil compaction,alteration of
drainage channels and increased erosion.Central tower systems
require consuming water for cooling,which is a concern in arid
settings,as an increase in water demand may strain available water
resources as well as chemical spills from the facilities which may
result in the contamination of groundwater or the ground surface.
As with the development of any large-scale industrial facility,the
construction of solar energy power plants can pose hazards to air
quality.Such threats include the release of soil-carried pathogens
and results in an increase in air particulate matter which has the
effect of contaminating water reservoirs.
Heavy Metals
Some have argued that the latest technologies introduced on the
market,namely thin-film panels,are manufactured using dangerous
heavy metals,such as Cadmium Telluride.
While it is true that solar panel manufacturing uses these dangerous
material,coal and oil also contain the same substances,which are
released with combustion.Moreover,coal power plants emit much
more of these toxic substances,polluting up to 300 times more than
solar panel manufacturers.
Other Impacts
Besides the aforementioned environmental impacts,solar energy
facilities also may have other impacts,such as influencing the socio-
economic state of an area.Construction and operation of utility-
scale solar energy facilities in an area would produce direct and
indirect economic impacts.
The direct impacts would occur as a result of expenses on wages
and salaries as well as the attaining of goods and services which are
required for project construction and operation.Indirect impacts
would occur in the form of project wages and salaries procurement
expenditures,which create additional employment,income,and tax
revenues.
Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components and C., David. "Effects of Solar Power Farms on the
Environment" sciencing.com, https://sciencing.com/effects-solar-power-farms-environment
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40
Facility construction and operation would require in-migration of
workers,affecting housing,public services,and local government
employment.
Recycling Solar Panels
Currently the recycling of solar panels faces a big issue,specifically,
there aren't enough locations to recycle old solar panels,and there
aren't enough non-operational solar panels to make recycling them
economically attractive.Recycling of solar panels is particularly
important because the materials used to make the panels are rare or
precious metals,all of them being composed of silver,tellurium,or
indium.Due to the limitability of recycling the panels,those
recoverable metals may be going to waste which may result in
resource scarcity issues in the future.
Looking at silicon for example,one resource that is needed to make
the majority of present-day photovoltaic cells and which there is
currently an abundance of,however a silicon-based solar cell
requires a lot of energy input in its manufacturing process,the
source of that energy,which is often coal,determining how large
the cell's carbon footprint is.
The lack of awareness regarding the manufacturing process of solar
panels and to the issue of recycling these,as well as the absence of
much external pressure are the causes of the insufficiency in driving
significant change in the recycling of the materials used in solar
panel manufacturing,a business that,from a power-generation
standpoint,already has great environmental credibility.
Cost of project relative to the increase in revenues or benefits
provided
Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components
Point MacKenzie Solar Farm
Cost Benefit Analysis
System Cost Before Incentives 9,420,288$
NPV 14,876,943$
IRR 66.9%
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41
Overall economic impact of project including new markets
created and economic development
The subject project is a solar farm with a capacity of 5.88MW.
Employment for the maintenance is minor at 2 full time persons and
contractors.The economic impact is realized through the
expenditures related to the subject project at $9,420,288.Applying
a 2.0x multiplier the economic impact is estimated at about
$18,840,576 as the purchase of items requires for the subject project
create short-term construction jobs direct and indirect and induced
jobs.
Economic Feasibility Conclusion
As presented herein,the management of the Company is in process
of obtaining a PPA agreement in-place and direct labor is low and
well supported by the local availability of labor.The subject project
is of low environmental risks.The land is the size and shape and the
needed infrastructure for a solar farm is available for the subject
project thus based on these features meets the requirements as an
Economically Feasible project.
Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components
Market Feasibility
42
Market Feasibility
A
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43
Solar Farm Developers in the US
Industry Overview
Performance
Key Takeaways
•Investment tax credits for solar power have been a driving force
for farm development.The extension of credits until 2032 will
encourage developing new farms for the foreseeable future.
•The price of solar panels has fallen as input costs have declined
because of technological advancements in the manufacturing
process.Low-cost imports have also aided the price of panels.
•Operational efficiency has boosted profit.Lower material usage,
which includes silicon,has made purchasing solar modules and
panels more affordable for solar farm developers.
What's driving current industry performance?
Industry revenue has encountered sharp volatility over the past five
years
The Solar Farm Developers industry is centered around
developments that,according to the Solar Energy Industries
Association (SEIA),qualify as a solar farm if they ultimately sell their
power to a utility company,are ground-mounted and generate
energy larger than two megawatts (MW),which is capable of
powering roughly 300 typical American homes.This last caveat is
highly contested,as the threshold varies by party.
Demand for new solar farms has been backed primarily by
government incentives,such as the Solar Investment Tax Credit (ITC),
which has encouraged private investment into solar technologies by
offering tax credits.Since solar technology is not yet cost-
competitive with other types of energy used in electricity generation,
such as coal and natural gas,government incentives have been the
driving force behind industry growth.
With these incentives,solar farms and other solar-power
development projects had been built at accelerating rates.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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44
However,tariffs on imported solar equipment sharply increased the
costs of installing solar power infrastructure,resulting in an abrupt
fall-off in demand.This led to an uptick in domestic manufacturing
of solar cells in response.
Also,solar cell manufacturers have increasingly integrated newer
manufacturing techniques and technologies,such as production
processes that use significantly less silicon per solar module.This
has enabled industry revenue to rebound from the harsh impact of
solar cell import tariffs.
Government support fuels growth
The Energy Policy Act of 2005 established the solar investment tax
credit (ITC),which provided a 30.0%tax credit for eligible utility
projects.
The Inflation Reduction Act increased the ITC for utility-scale solar
projects from 2022 to 2032 to 30.0%.Before this extension,the
previous tax credit was set to drop to 26.0%in 2022.
The Department of Energy's Loan Programs Office issued
guaranteed loans for utility-scale solar projects,becoming the
backbone for early development.As the need for solar power grew,
private investors funded new projects.
This industry has also benefited from state-specific renewable
portfolio standards (RPSs),which mandate that renewable energy
must account for a certain percentage of all energy generated.
Over the past five years,many states implemented or raised RPSs,
which resulted in greater demand for solar energy,to the benefit of
solar farm developers.The growth of solar energy has subsequently
fueled demand for solar power project development,which
benefited industry revenue.
Solar panels are becoming increasingly affordable
The cost of solar panels has fallen over the past five years,despite
the impact of tariffs on imported solar cells,due to a drop in the
price of silicon in light of excess supply.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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45
•With lower silicon prices,solar manufacturers produced too
many panels for limited projects in the early recovery,when the
ability to finance solar projects became increasingly difficult.In
turn,prices for solar equipment dropped.
•Also,many foreign governments that were previously supporting
solar energy through subsidies and other benefits pulled back on
their government support of the industry during the economic
recovery.These cutbacks in support led to an oversupply of
panels and a flood of low-cost imports into the US market.
•While these trends reversed somewhat in the aftermath of tariffs
on imported solar cells,an uptick in domestic manufacturing of
solar cells and solar panels has since enabled the trend of falling
input prices to continue.
Profit rises amid lower input costs
•Manufacturers are increasingly using less silicon per solar module
and panel to help decrease costs and meet demand from
industry players.
•These trends made the capital costs associated with developing
and constructing a solar farm significantly less expensive for solar
farm developers.
•Still,a sharp rise in the price of semiconductors in the United
States,amid an ongoing shortage caused by supply chain issues
fueled by the COVID-19 pandemic,will increase production costs
for solar farm developers,tempering this rise in average industry
profit.
•Nonetheless,enhanced performance over the past five years,
along with consolidation efforts,have enabled profit to exhibit an
overall increase.
Volatility
What influences industry volatility?
•Tariffs on imported solar panels from low-cost labor countries
declined and were eventually waived,causing an uptick in
domestic solar panels.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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46
•More panels have increased supply,lowering utility installation
prices.
Government incentives and programs aid construction
•Tax credits that were set to contract in 2022 and 2023 were
extended to their original 30.0%.
•Loan programs make it easier for companies to start utility-scale
projects.
How do successful businesses overcome volatility?
Take advantage of government subsidies and other grants
Industry operators that can obtain government loan guarantees and
tax credits have a competitive advantage,as these firms will receive
more financing from investors and stable revenue.
Secure a highly skilled workforce
Solar farm development requires skilled construction workers and
engineers because the construction process is highly reliant on
technology.Firms that have skilled workers have a competitive
advantage.
Secure the latest and most efficient technologies and
techniques
Industry operators need to be able to develop or purchase new
solar power technology to receive contracts from downstream
customers.
Additionally,industry firms that have the most efficient construction
technology have a competitive advantage.
Use automated procedures and processes
Automated construction equipment,such as installation robots,can
significantly reduce labor costs.
Firms that successfully implement automation will experience higher
profit margin.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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Outlook
•The capital costs associated with developing and constructing a
new solar farm will continue falling over the next five years due
to an excess supply of solar panels as well as general
improvements and advancements in solar power technology,
which will reduce the per-kilowatt-hour (kilowatt of electricity
generated in one hour)cost of solar power.
•According to a report from the National Renewable Energy
Laboratory,the capital cost of solar photovoltaic technology,
which dominates the landscape of solar panel manufacturing,is
set to continue declining steadily over the next five years.
•Also,industry revenue will grow strongly as the period begins in
line with a broad macroeconomic recovery from the fallout of the
COVID-19 pandemic.
•Falling costs and the number of farms constructed amid the solar
boom of the previous five-year period will ultimately lead to
some market saturation within the solar energy sector,forcing solar-
generating capacity into somewhat of a standstill.This will drive
some unprofitable operators to exit the industry.To the industry's
benefit,the extended tax assistance is expected to prevent solar
farm developers from exiting the industry at a strong rate as in the
previous five-year period.
Technological advancements will help and hinder the industry
•Over the next five years,there are expected to be several
advancements and improvements in technology regarding the
construction of solar farms that will ultimately affect industry
performance.
•A strong flow of crystalline silicon solar energy panels into the
market will continue as manufacturers improve the technology's
efficiency in converting solar energy into electricity.
•Also,the continued slide in silicon prices will reduce the cost of
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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such panels.Low-cost panels will become more accessible for
consumers to buy individually,eliminating some demand for solar
generation from utilities.
•This trend may ultimately hurt solar farm developers,as the need
for new farms may diminish.
In the construction process,several technological advancements
will occur
•The increased use of automation technology and steady growth
in robotics will filter through the Solar Farm Developers industry.
•Automated machines will make installing solar panels in utility-
scale projects significantly quicker and more efficient.
•Automated machines can also improve solar panel efficiency,as
many are being developed with the ability to adjust solar panel
alignment to maximize sunlight exposure and maintain efficiency
throughout the day..
•While the inclusion of automated machines is set to decrease
labor costs in the long-run,industry employment will still grow
over the next five years.This comes as a result of companies
having to satisfy an increasing demand for solar farms,along
with having staff that is skilled enough to perform the work
necessary.
The growth of agrivoltaics will benefit solar farm developers in
the future
•As agrivoltaics is the use of land for energy and agriculture
purposes,some developers have started to add irrigation on
their solar farms.According to Electrek,after adding an irrigation
system to support 1,000 sheep,the Colorado-based Guzman
Energy has received approval from Delta County for its solar farm
construction plan.
•Similarly,in Wisconsin,dairy farms and energy companies form
strategic partnerships in which energy providers rent agricultural
land from farmers to build solar farms.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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49
•According to Electrek,a 2019 study by Oregon State University
stated that it only requires 1.0%of agricultural land to be
converted into solar farms to satisfy the global energy demand.
•Due to this,if more agricultural land is converted or rented out to
solar energy farm developers in the future,a higher share of the
population can switch from using conventional energy to
renewable energy.
Products and Services Graph
New technology developments
•Crystalline silicon cells are silicon atoms connected to form a
crystal lattice.The structure of the lattice converts light to
electricity more efficiently.
•Crystalline silicon panels (CSP)are the most popular panels,
making up two-thirds of revenue.
•While CSPs were expensive in the past,the falling price of silicon
has lowered material costs,increasing the number of CSP farms.
•Thin-film solar continues to spiral down
•Thin-film solar panels use less material and weigh less,lowering
prices.
•Originally,thin-film panels were an inexpensive substitute for
CSPs,but with the recent price drops,farms have been deterred
from using thin-film.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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Machines improve operational efficiencies
•Automated machines can quickly install solar panels for power
plants,reducing labor costs.
•Robots can improve solar panel efficiency by adjusting panels to
maximize sunlight exposure and installing panels during rough
weather conditions.
Improvements in power generation aid farms
•Because of its turbines,concentrating solar power technology
(CSP)can be combined with fossil fuel plants to create hybrid
plants.
•The two types of CSP solar farms are troughs (using mirrors to
heat a heat transfer fluid to generate steam)and towers (using
higher temperatures to allow the plant to store more heat and
generate electricity during suboptimal weather conditions).
Major Market Segmentation Graph
What’s influencing demand from the industry’s markets?
Solar power generators need farms
•The solar power industry (IBISWorld Report 22111e)represents
more than three-fourths of the customer base.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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•Solar power plants enter power purchasing agreements (PPAs)
with electricity transmission utilities,which fund solar farm
development.PPA agreements provide stable funding for solar
farm development.
•The urge to shift to renewable energy has greatly benefited this
market.
The federal government indirectly offers assistance
•Government loan programs and incentives have aided solar farm
development.
•Private investment in solar farm projects has outpaced federal
aid,causing this segment to contract.
•As the solar power industry expands,the need for government
aid becomes less apparent.
Competitive Forces
Key Takeaways
•Residential and commercial solar panel installation has
skyrocketed.Consumers and businesses call on contractors to
install panels,leading to less development of solar farms.
•Traditional energy sources remain the most significant
competitor.Despite the increased popularity of renewable
energy,many traditional power plants are still the primary power
source.
What impacts the industry’s market share concentration?
Low concentration by nature
•There is a low concentration because of various solar power
technologies.
•Concentration is higher in individual product segments.
•Expansion leads to more concentration
•Large companies have begun to expand to garner more market
share.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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Barriers to Entry
Legal
New entrants are required to follow federal,state and general
construction regulations.Companies must receive approval from
multiple federal agencies before beginning construction on public
lands.
Start-up Costs
New developers are subject to high capital costs from construction
equipment and components.
Differentiation
Companies differentiate themselves through research and
development.Developing or using efficient solar cells and panels
can give farms a competitive advantage.
Labor Intensity
Skilled labor and expertise are required for success.
Ensuring everything is set up correctly to ensure proper generation
is vital for farms.There is a significant variation in site-specific
expertise and developers must have the right employees for success.
How can potential entrants overcome barriers to entry?
Take advantage of government subsidies and other grants
Industry operators that can obtain government loan guarantees and
tax credits have a competitive advantage,as these firms will receive
more financing from investors and stable revenue.
Substitutes
What are substitutes for industry services?
•Coal and natural gas power in the US
•Traditional energy sources like coal and natural gas dominate the
domestic market.
•While there has been an uptick in utility-scale,many areas still
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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prefer traditional systems because they are familiar with them.
•Residential and commercial solar power generation
•Lower capital costs have led to an uptick in residential and
commercial solar power generation.
•Consumers and businesses have become more aware of solar
energy's benefits.They have switched with newly extended tax
credits,directly installing solar panels themselves,cutting out the
need for solar farms.
External Drivers
Tax credits for energy efficiency
Tax credits encourage private investment in solar technologies by
making the development of solar energy projects less expensive.
Solar farm development will rise while the tax credit is in effect.Tax
credits directed at solar technologies are set to remain through
2024,representing a potential opportunity for the industry.
Price of semiconductor and electronic components
Falling prices for semiconductor components,including silicon,
hinder revenue generated by developers of solar farms.When these
components fall in price,developers can generate solar energy for
less,but internalize these price drops and cannot charge higher
prices for their services.
Silicon prices have been on a downward trend because of an
oversupply in the market for solar panels following the recession.
The price of semiconductors and electronic components is expected
to increase slightly in 2024,posing a potential threat to the industry.
Electric power consumption
The need for solar power depends on the level of electric power
consumption throughout the United States.More need for
electricity translates into growth in renewable energy
implementation.Electric power consumption is expected to
decrease slightly in 2024.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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Solar Farm Developers in the US
Supply Chain |Graph
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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World price of steaming coal
The price of steaming coal reflects the need for coal to produce
electricity.Most electricity in the United States is generated by coal
and many electricity generators choose electricity-generation
technology based on the price required to purchase the input (i.e.,
steaming coal).
An increase in the price of steaming coal leads to using alternative
sources,including solar energy,to the benefit of solar farm
developers.The world price of steaming coal is expected to fall in
2024.
Regulation &Policy
Federal regulations
The Federal Land Policy and Management Act requires all
developers to gain approval from the Bureau of Land Management
(BLM)to construct utility-scale solar farms on public lands.
Developers must submit a plan and have it approved by multiple
agencies before starting construction.
State regulations
Most state governments also have regulations regarding power
plant construction.State agencies coordinate with federal
government agencies to ensure power plants comply with energy
and land regulations.
Construction regulations
General construction regulations (think building codes,pollution
control,occupational health and safety,noise and worker safety)
also apply to developers.
Assistance
Government
Department of Energy Loan Guarantee Program
The Department of Energy Loan Guarantee Program guarantees
clean energy projects by providing loans to investors.
Government policies
The business energy investment tax credit (ITC)is available to
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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utilities and solar farm developers.The newly signed Inflation
Reduction Act extended the Investment Tax Credit for solar projects
to 30.0%between 2022 and 2032.
State Standards
36 states have implemented renewable portfolio standards requiring
utility companies to supply some renewable energy.
Non-government
Solar Energy Industries Association (SEIA)
SEIA researches industry changes and offers multiple benefits to
members and non-members.
Member benefits include multiple resources,networking
opportunities and discount programs.
Non-members can access information regarding the state of the
solar power space.
Financial Benchmarks
Research and development are essential for the development of
solar farms and plants.
•Wages can reach high levels because skilled engineers command
high salaries.Average industry wage is about $76,874.
•While the cost of solar panels has fallen,purchase costs still
remain high.The largest cost are Purchases at about 34.4
percent.
•Other components for development are also costly.
•Profit Margin industry wide is about 6.3 percent.
Source: IBISWorld OD4493 -Solar Farm Developers in the US –January 2024
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Solar Farm Developers in the US
Cost Structure Benchmarks
Average operating costs by industry and sector as a share (%)of revenue 2023 |Graph
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Solar Farm Developers in the US
Industry Multiples |Table
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Market Feasibility
Analysis of the current and future market potential,competition,
sales or service estimations including current and prospective buyers
or users.
•Competition
•Type of project:service,product or commodity based
•Target market,new versus established
•End user analysis,captive versus competitive
•By-product revenue streams
•Industry risk
In this Market Feasibility section,the items above are addressed in
accordance with United States Department of Agriculture Appendix
D to Subpart B of Part 4280 -Feasibility Study Components.
The following data was provided by the management of the
Company and sources cited in the footnotes below.
Competition
•Willow Solar Farm:A 1.2 MW solar farm in Willow,Alaska,that
began operations in December 2019.It is the largest utility-scale
photovoltaic facility in the state and is expected to produce
enough power for 200 homes and offset 2 million pounds of
carbon dioxide each year .
•Golden Valley Electric Association Solar Farm:A 563 kW solar PV
system in Fairbanks,which came online in October 2018.The
project will produce enough energy to power 71 homes .
•Eagle and Kaltag Solar Projects:Two REF-funded solar PV
projects in the communities of Kaltag and Eagle .
•Houston Solar Farm:Alaska’s largest solar farm,an 8.5 MW
ground-mounted solar farm located in Houston,Alaska,began
operations in August 2023.It is expected to provide energy to
about 1,400 homes
Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components
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Source: The Management of the Company
Type of project:service,product or commodity based
The purpose of this project is to provide solar-generated energy to
the existing electrical grid at Point MacKenzie,Alaska 99654.
The system will be connected to the grid at the Chugach Electric
Transfer Station.
Target market,new versus established
The subject project is a target market facility based on selling its
output into an established energy grid.
By-product revenue streams
There is no by-product in Solar Industry.
Point MacKenzie Solar Overview
Point MacKenzie LLC was established in 2015 for the sole purpose of
this project with an end goal to be the home of the largest Solar
Farm in Alaska.
Fred Thoerner (President)is a lifelong Alaskan with 12 years’work
experience employed by the Department of Transportation,State of
Alaska,15 years in Real Estate Sales,and 22 years’experience
commercial fishing.
Project Description
This will be a Solar PV Facility,with installed capacity of 5.88 MW,
highly reliable and most available in the summer months,with 500
MWh average to be delivered each month.A 5.88-Megawatt DC/5-
Megawatt AC utility-scale solar farm is planned for the proposed
system.
The system will be interconnected to the CEA power grid via a
medium-voltage line extension to the site feeding the two Y-Y 2.5
MVA transformers.Each of the two transformers will feed one of the
two 4,000 Amp service MDP’s with backfeed rated circuit breakers
for collecting solar inverters.The 5 Megawatt of AC rated inverters
will be interconnected to the MDP’s by 480V 3 phase.
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The solar inverters will collect the 6 MegaWatt of 480-Watt solar
modules for conversion to AC power.The solar modules will be
mounted in a fixed position on a ground-mounted racking system
positioned in rows to maximize the use of the land available for the
greatest overall efficiency.
The DC wiring will be operating at approximately 1,200 Volts DC per
string providing 6 million KWh annually.
Project Impact and Objectives
Power Generation:
This project promises to generate substantial power,with the
capacity to provide electricity for approximately 800 households.
Beyond this,it stands as a significant environmental champion,
poised to prevent a remarkable 8 million pounds of carbon dioxide
emissions annually.This achievement is equivalent to removing
2,000 large automobiles from the road,reinforcing our commitment
to sustainability.
Interconnection Location:The strategic interconnection point is
situated at Point MacKenzie,proximate to the Chugach Electric
Association Substation.To realize this endeavor,Point MacKenzie
Solar LLC (PMS LLC)will deploy 12,500 Q-Cells Q.PEAK DUO XL
480W modules,each backed by a robust 25-year warranty.
Project Objective:The primary objective of Point MacKenzie Solar is
the development and stewardship of Alaska's most expansive Solar
Farm,boasting a minimum capacity of 5 MW.
This endeavor unfolds on 33 acres of unrestricted bluff property,
strategically positioned adjacent to the Cook Inlet on Point
MacKenzie.
This location is pivotal in serving the energy needs of Anchorage,as
the system will seamlessly integrate into the grid at the Chugach
Electric Transfer Station,located just a few hundred yards away.
Source: The Management of the Company
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Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
Solar Power Generating Facilities
Industry Risk
Industry Definition &Activities
Operators in this industry own and operate solar-power-generating
facilities in the form of either photovoltaic panels or solar thermal
power stations that make use of mirrors or lenses to concentrate the
sun's energy.
This industry covers utility-scale solar and does not include
distributed energy.
The primary activities of this industry are:
•Solar-fueled power generation
Risk Rating Analysis
Risk Score Trend Analysis
Overall risk in the Solar Power industry is forecast to be VERY LOW
over 2023.The primary positive factors affecting this industry are a
very low growth risk score and high industry assistance.
Overall risk will be slightly higher than the previous year,a result of
unfavorable movements in price of natural gas as well as world price
of steaming coal.However,their impact will be partially offset by a
projected fall in growth risk.
Risk Score Context
In 2023,the average risk score for all US industries is expected to be
in the MEDIUM band.Furthermore,the risk score for the Utilities
sector,which includes this industry,is at a MEDIUM-LOW level.
Therefore,the level of risk in the Solar Power industry will be lower
than that of the US economy and the Utilities sector.
Risk component Level Weight Score
Structural risk Low 25%3.46
Growth risk Very Low 25%1.00
Sensitivity risk Low 50%3.56
Overall risk Very Low 2.90
Industry Risk Score
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Solar Power Historical and Forecasted Risk Rating in the US |Graph
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Structural Risk Analysis
Structural risk will be LOW over the outlook period.Operators are
exposed to high revenue volatility.This requires prudent cash flow
management and planning in times of uncertain demand.
Businesses failing to account for these challenges risk sudden losses
or diminished margins.
A modest concern is the medium level of competition which
exacerbates risk by pressuring prices and profits downward.
Operators within the industry benefit from high barriers to entry
buffering against long-run competition by hindering entry of new
operators to the marketplace.
However,decreasing barriers to entry can attract new participants.
The industry benefits from high and increasing levels of assistance
as this helps mitigate operators'exposure to other kinds of risk.
Growth Risk Analysis
Growth risk is expected to be VERY LOW over the outlook period.
IBISWorld forecasts that annual industry revenue will grow 13.8%to
$19.3 billion.In comparison,revenue expanded 28.9%per year
between 2020 and 2022.
Sensitivity Risk Analysis
Sensitivity risk is forecast to be LOW over the outlook period,up
from VERY LOW in 2022.The two factors with the most significant
impacts on the industry are tax credits for energy efficiency and
electric power consumption.A rise in either of these factors will
lower industry risk.
Tax credits for energy efficiency:Tax credits for energy efficiency
incentivize solar energy generation by lowering Solar Power industry
operators'cost of production and,subsequently,increasing profit.
These tax credits also enable solar energy generators to compete on
the price of electricity with other,more-established energy sources,
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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such as coal and natural gas,thereby encouraging operators to
enter the growing industry.Tax credits for energy efficiency are
expected to remain stable in 2022,representing a potential
opportunity for the industry.This factor's contribution to risk is
expected to remain the same in the coming year.
Electric power consumption:Electric power consumption drives
overall demand for energy,including solar energy.An increase in
electric power consumption will typically lead to an increase in
demand for solar energy from industry operators.Conversely,a
decline in electric power consumption will lower demand for solar
energy,dampening industry revenue.Electric power consumption is
expected to increase in 2022.This factor's contribution to risk is
expected to increase in the coming year.
Price of natural gas:In addition to coal,solar competes with natural
gas in providing energy to US consumers.Thus,the price movement
of natural gas generally moves in line with demand for substitute
energy sources,such as solar power.
If the price of natural gas increases,there is typically greater
demand for substitute solar energy;if it decreases,demand for solar
energy will also likely decrease.This factor's contribution to risk is
expected to decrease in the coming year.
World price of steaming coal:Solar energy competes with other
energy sources,such as coal,which currently generates the largest
share of US electricity.Thus,an increase in the price of coal will
typically lead to an increase in demand for substitute energy sources
such as solar energy,which becomes relatively more affordable to
electricity generators,benefiting industry operators.
Conversely,a decline in the price of coal will typically lower demand
for solar energy from industry operators.The world price of
steaming coal is expected to increase in 2022.This factor's
contribution to risk is expected to decrease in the coming year.
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Price of semiconductor and electronic components:Semiconductor
and electronic components are essential inputs in the production of
solar panels,which are major purchase costs for industry operators.
Thus,price movements of semiconductor components generally
influence industry profit;when semiconductor input prices decrease,
solar panels become less expensive,increasing profit for solar
energy generators.The price of semiconductor and electronic
components is expected to increase in 2022.This factor's
contribution to risk is expected to increase in the coming year.
Structural Risk
Structural Risk Adjustment
Solar Power Risk Ratings are subject to structural adjustments in
2021 however the shock mechanism is not expected to carry
through into 2022.
Barriers to Entry
The Solar Power industry is capital-intensive:high capital costs are
incurred to set up the necessary solar infrastructure before power
generation can commence.As a result,new entrants need to secure
a significant amount of capital and investments to enter into the
industry.
The industry does benefit from growing concern over greenhouse
gas emissions associated with fossil fuel-fired power plants,and
strong public support has produced tax incentives to mitigate the
large initial costs.In addition,production costs for solar power are
approaching its fossil fuel counterparts,and are expected to
Year Adjustment Factor Score
2020 38% (Medium)5.95 (Moderate)
2021 25% (Low)5.88 (Moderate)
Structural Risk Adjustment Table
Structure component Level Trend Weight Score
Barriers to Entry High Decreasing 13%4.00
Competition Medium 20%5.00
Industry Exports Low Steady 7%1.00
Industry Imports Low Steady 7%2.00
Level of Assistance High Increasing 13%1.00
Life Cycle Stage Growth 20%1.00
Volatility of Industry High 20%7.00
Overall Structural Risk Score Low 3.46
Structural Risk Score Table
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eventually be less expensive than traditional energy generation.
Finding operators and experts that have extensive knowledge of the
industry is a barrier to entry.Most industry participants have
experience developing solar projects abroad,where favorable
government legislation has led to dramatic increases in solar output.
The relative remoteness of solar power facilities from major demand
centers also acts as a barrier to entry.Buying and leasing land in
remote areas is a high risk for operators that have not generated
solar power before.
Additionally,the land needs to have certain climate characteristics to
maximize the electricity generated from the sun as well as being
large enough to hold many panels.Transmission costs can also be
too high for an operator to undertake the initial capital spending
associated with the solar project.
Basis of Competition
Operators generating solar power not only compete for sales,but
also against traditional power plant generators,such as natural gas,
fossil fuels and nuclear power.Additionally,Solar Power industry
operators must also compete with other renewable technologies,
including hydroelectricity and wind power.
Consumer and business preferences are a major component of
demand,but so are costs,as traditional power generation is less
costly than solar power and other green technology.As a result,the
Solar Power industry must compete for government subsidies with
other green technologies designed to encourage the production of
more renewable energy.
Electric-power generators compete on price,but the different types
of capacity (base load,intermediate and peak load)have different
cost structures that dictate price levels.On average,a base-load
plant has the lowest cost structure.Competition between electricity
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producers using different fuel sources is blurred by the fact that
some producers generate electric power using a range of plant
types.
Such diversification provides a means of reducing reliance on a
particular type of plant,thereby reducing risk.Solar power typically
provides intermediate power,which can be switched on or off to
meet seasonal fluctuations in demand.
The energy source itself is also somewhat erratic,depending on the
climatic conditions and the seasons.As a result,the main
competitors in this sector of the electricity market are technologies
that are switched on and off to meet demand.
These technologies include wind farms and power stations fueled by
natural gas and oil that can be powered up or powered down fairly
readily.These types of electricity-generation technologies serve the
same purpose for electricity-generation companies:they provide
power when needed.Since they serve the same function,these
technologies compete on price as electricity generation companies
seek the most inexpensive technology to produce power.
Solar electricity producers also compete with other energy sources,
such as gas.This competition is particularly marked in applications
such as space heating and water heating.Factors such as the
availability of natural gas via a reticulated system and the relative
prices of electricity and gas tend to determine the type of energy
chosen.
Weather and climate are a basis of competition for solar producers.
If an area does not have as much sunlight,the amount of energy
created by the solar technology might not be enough to warrant the
project.
As a result,operators tend to locate in regions with significant
sunlight and favorable weather conditions.
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Domestic and International Markets
The Solar Power industry is not engaged in international trade,as
the generation of solar energy occurs within US borders.Upstream
suppliers of solar panels do import and export products,but this
activity is not accounted for in this industry.For more information
on solar panel production,refer to the Solar Panel Manufacturing
industry (IBISWorld report 33441c).
Industry Assistance
The Solar Power industry is not protected by either tariffs or
nontariff barriers.However,it does receive considerable industry
assistance.The American Recovery and Reinvestment Act of 2009
(ARRA)provided funding for energy efficiency and renewable
energy programs,including $8.5 billion to subsidize loans for
renewable energy projects,$2.0 billion for advanced battery systems
and $13.0 billion in tax credits for renewable energy production.
The Energy Policy Act of 2005 also provides some incentives for
electricity from renewable sources.Section 206 of the act
established a rebate program for renewable energy.The installation
of renewable energy systems in dwellings or small businesses
attracts a 25.0%rebate of spending on qualifying equipment,or
$3,000,whichever is less.
According to the legislation,renewable energy sources include
energy derived from solar,geothermal,biomass and wind for
nonbusiness residential purposes,as well as any other form of
renewable energy that the Secretary of Energy specifies by
regulation for the purpose of heating or cooling a dwelling or
providing hot water or electricity for use within a dwelling.Annual
funding for this program authorized in the Act started at $150.0
million for fiscal 2006 and ended with $250.0 million for fiscal 2010.
Thus far,in response to the COVID-19 (coronavirus)crisis,the
government has provided tax relief for renewable projects as well as
placed in service deadlines for tax credits that underpin part of the
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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industry's overall government assistance.The majority of
government aid during the crisis has focused on oil and gas
companies,but the potential for a changing administration could
boost assistance to the renewable sector in coming years.
Investment Tax Credits (ITC)
The federal government provides investment tax credits (ITC)for
renewable energy.Solar is included among the renewable energy
technologies covered in the tax credit and receives a 30.0%tax
credit until 2020,after which the value declines.The ARRA has
amended the ITC to enable industry operators to receive a grant
equal to the tax credit if the construction solar plant started in 2009
or 2010.Cash grants are more attractive because these would cut
down the cost of investment directly before the project has started.
As a result,the risk of the project is lessened.
Renewable energy production incentive
Designed to complement the production tax credit (PTC),which is
available for other technologies besides solar,this incentive provides
a production credit equal to a 10-year,1.5-cents per kilowatt-hour
inflation-adjusted production for solar projects.It also provides the
credit for other entities besides those that pay corporation tax,as
required by the PTC.However,the incentive is subject to the
availability of funds in the program.If the funds run out in a certain
year,then the production credit must be addressed the next year.
Several states provide incentives for renewable energy technologies.
For example,the California Public Utilities Commission and the
Wisconsin Public Service Commission have consistently developed
state energy plans that favor the use of renewables.
Coronavirus Aid,Relief and Economic Security Act
In light of the economic disaster stemming from the COVID-19
(coronavirus)outbreak,Congress implemented several programs
aimed to help cushion the blow many companies,and its related
workforce,have and are expected to continue enduring amid the
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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pandemic.In March 2020,the Trump administration passed the
Coronavirus Aid,Relief and Economic Security (CARES)Act.
Within the CARES act,the Small Business Administration (SBA)
implemented the Paycheck Protection Program (PPP),which
provided small businesses with up to eight weeks of funds
designated for payroll costs and benefits.
These funds may also be used to pay interest on mortgages,rent
and utilities.Loans may be forgiven under certain circumstances,
including if the funds are used to retain or rehire employees.Certain
provision of the CARES Act also enabled operators to defer certain
payroll taxes in 2020 and 2021.
According to size standards set by the SBA,industry operators that
employ fewer than 250 workers may qualify as a small business.The
SBA began a second round of the PPP loan program in January 2021
to give more companies access to forgivable loans.
The Family First Coronavirus Response Act (FFCRA)was also
implemented as part of the CARES Act and required certain
employers to provide workers with paid sick leave and extended
family and medical leave for reasons related to coronavirus.
Small businesses that employ fewer than 50 workers,which
comprise over 90.0%of all industry establishments according to
most recent County Business Patterns survey,may qualify for certain
exemptions.The FFCRA and PPP will provide support to many small
operators and related workforces amid the unfortunate global
situation.Further economic stimulus has the potential to help
companies remain operational and retain labor forces.
Industry Life Cycle
Life Cycle Reasons
•Industry output is growing much more rapidly than the economy
as a whole.
•Solar cell technology is continuing to advance¨.
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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•The industry is home to a substantial number of small,innovative
companies.
The Solar Power industry in the United States is growing rapidly,
underpinned by a combination of favorable government incentives
and consistent technological advancements.
Furthermore,solar power falls into the emergent green energy
sector and benefits from rising public and private support.Industry
value added (IVA),which measures the industry's contribution to the
overall economy,is anticipated to increase at an annualized rate of
15.5%over the 10 years to 2027,significantly outpacing domestic
GDP growth,which is expected to grow an annualized 2.0%during
the same period.
Solar power's high IVA growth can be attributed to the industry's
high depreciation costs,due to the significant capital costs
associated with solar installations,and profit,which remains high in
the industry.
Most states have enacted mandatory or voluntary targets relating to
energy production from renewable resources.These targets,which
force utilities companies to diversify their energy portfolio,have
contributed significantly to industry revenue growth over the past
decade.
Public pressure to improve US energy self-sufficiency and concerns
regarding climate change are also likely to spur continued growth in
solar power generation.Strong government and public support for
the emergent renewable energy market will encourage the private
sector to invest in solar technology.The new frontier will encourage
entrance,characteristic of a growing industry;over the 10 years to
2027,the number of solar power establishments is expected to
increase an annualized 20.2%to 1,310 establishments.
Rapid technological change is keeping the industry in a growth
phase of its life cycle.New technologies that more efficiently convert
sunlight to electricity are constantly being introduced.
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Although the industry does not actively take part in manufacturing
the technology,industry operators use this technology to transmit
energy to downstream customers.An example of such technology is
concentrating solar power (CSP),which uses mirrors to focus
sunlight on a surface to create electricity;large-scale deployment of
CSP is anticipated to continue into 2026.The industry's
technological shifts have focused on reducing initial costs,with the
hopes of mainstreaming solar energy.
Photovoltaic panels have consistently achieved greater efficiency in
converting sunlight into usable energy,and manufacturers
worldwide are competing to drive down the price of these panels.
These trends have lowered the operational costs of industry
operators.
However,due to the implementation of tariffs in 2018 in response to
the oversupplying of domestic solar panel markets the prices of
panels increased during the later stages of the period,dampening
industry profit.As the domestic market builds its own manufacturing
infrastructure and finds new locations to build its equipment,profit
is expected to remain healthy over the coming years.
Industry Volatility
The Solar Power industry has a high level of revenue volatility.
Although the market for electricity is relatively stable,the installation
of solar-generating capacity is expanding rapidly.Favorable
government incentives are pushing growth rates up significantly.
Since certain government incentives expire and only provide a
subsidy for a specified amount of time,revenue jumps will occur in
response.Also,a drop-in silicon prices has substantially aided the
increase in solar project completions,as many operators were able
to put their products out at lower costs.
Furthermore,the prices of other types of energy-generating
commodities influence industry revenue.The higher the volatility of
these commodities,the more likely electricity-generation companies
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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will use solar power.As a result,revenue volatility can occur from
fluctuations of other energy generating technologies.
Growth Risk
Growth Risk Analysis
The Solar Power industry has experienced significant growth over
the five years to 2022,propelled by favorable government incentives
in the form of renewable portfolio standard (RPS)targets and vast
improvements in the technologies used for electricity generation.
RPS legislation,currently implemented in 39 states and territories,
require local utilities to generate a percentage of their total energy
portfolio from renewable sources.Meanwhile,increased public
support for green energy has led to tax incentives and grants to
encourage investments in solar power.
In light of these trends,industry revenue is expected to grow an
annualized 21.7%to $16.9 billion over the five years to 2022,
including a 27.3%in 2022 alone.Despite robust revenue growth
during the current period,the COVID-19 (coronavirus)pandemic has
somewhat constrained the industry from reaching its full potential
due to temporary socioeconomic restrictions preventing further
additional solar capacity construction.
Federal and state government assistance for renewable energy has
led to exceptionally strong growth in solar power.The increase in
projects over the past five years exemplifies a triumph for energy
policy in solar power,which historically struggled to compete with
established energy sources,such as coal and natural gas.Credits,
grants and tax exemptions have helped mitigate the high
investment costs of solar power generation,encouraging industry
activity.Furthermore,a decline in the price of solar panels has
lowered the operational costs incurred by industry operators.Falling
input costs have accelerated the number of photovoltaic (PV)panel
projects and boosted industry profit.
Growth component Level Revenue Weight Score
2020-2022 Annualized growth Very Low 28.9%25%1.00
2022-2023 Forecast growth Very Low 13.8%75%1.00
Overall Growth Risk Score Very Low 1.00
Growth Risk Score
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Over the five years to 2027,industry revenue is expected to increase
an annualized 10.5%to $27.9 billion.Government support will
continue to help the industry compete with other energy sources
and will potentially accelerate further as pro-green policies
continues to gain popularity.State mandates for renewable energy
power and lower input costs will continue to translate into sustained
revenue growth.
PV solar power generation is also anticipated to achieve grid parity
in more states during the five-year period,whereby the cost of
solar-generated electricity is equal to or less than the retail rate of
grid power.In addition to further government stimulus following the
coronavirus crisis,these trends suggest that the industry will
continue to grow rapidly.
Sensitivity Risk
Tax credits for energy efficiency
Tax credits for energy efficiency incentivize solar energy generation
by lowering Solar Power industry operators'cost of production and,
subsequently,increasing profit.These tax credits also enable solar
energy generators to compete on the price of electricity with other,
more-established energy sources,such as coal and natural gas,
thereby encouraging operators to enter the growing industry.
Tax credits for energy efficiency are expected to remain stable in
2022,representing a potential opportunity for the industry.
Electric power consumption
•Estimated value in 2023:4,018.0 Billion kilowatt hours
•2018-2023 Compound Growth:0.07%
•Forecast value in 2028:4,206.1 Billion kilowatt hours
•2023-2028 Compound Growth:0.92%
Sensitivity component Level Weight Score
Tax credits for energy efficiency Very Low 40%2.00
Electric power consumption Medium - Low 25%4.21
Price of natural gas Medium 20%4.79
World price of steaming coal Medium 10%5.00
Price of semiconductor and electronic components Medium 5%5.00
Overall Sensitivity Risk Score Low 3.56
Sensitivity Risk Score
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Electricity demand is driven by households,manufacturers and
industrial producers,and any expansion in demand from these
entities drives up electricity consumption.Historically,electric power
consumption trended upward along with an increase in the number
of households,manufacturing capacity and industrial production.
Economic growth during the early part of the decade resulted in a
rise in consumption from 3,632 billion kWh in 2002 to 3,890 billion
kWh in 2007.
The recession,however,reversed these trends as many households
cut back on energy usage,businesses closed their doors and
manufacturers idled capacity in response to diminished demand.In
2008 and 2009,electric power consumption dropped 0.6%and 3.7%,
respectively.Consumption recovered 4.4%in 2010,as the economy
gained steam and industrial producers and manufacturers increased
their energy needs.However,the growth was short-lived,as slower
economic growth and advances in energy-efficient appliances
limited electric power consumption.
Electricity consumption is expected to continue to rise slowly over
the five years to 2028.As the economy regains steam,
manufacturers and industrial producers will use more energy to
undertake the production of products for domestic and export
markets.
However,over the next five years,domestic energy consumption
growth will be mitigated as more manufacturers move abroad to
save on labor costs and households increasingly use "smart"devices
and appliances.These devices will enable households to monitor
energy consumption and find ways to use less energy.Overall,
electric power consumption is forecast to increase an annualized
0.9%over the five years to 2028.
Current Performance
Electricity demand is driven by households,manufacturers and
industrial producers,and any expansion in demand from these
entities drives up electricity consumption.Historically,electric power
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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abroad to save on labor costs and households increasingly use
"smart"devices and appliances.These devices will enable
households to monitor energy consumption and find ways to use
less energy.
Price of natural gas
•Estimated value in 2023:$5.3 per thousand cubic feet
•2018-2023 Compound Growth:11.02%
•Forecast value in 2028:$4.7 per thousand cubic feet
•2023-2028 Compound Growth:-2.61%
The price of natural gas reflects the Henry Hub Natural Gas spot
price,which is a distribution hub of the natural gas pipeline system
in Louisiana.It is the pricing point for natural gas future contracts on
the New York Mercantile Exchange (NYMEX).
Driver data is measured in current dollars per million British Thermal
Unit (Btu)and sourced from the World Bank.
Current Performance
The recession caused energy prices to plummet across the board in
2009,and natural gas was no exception,dropping 55.4%to an
average of $3.95 per million Btu.The inability to reduce production
meant that during this year,gas producers accumulated large
stockpiles of gas as demand dropped.Furthermore,the increased
use of hydraulic fracturing (aka fracking)and other advanced drilling
techniques had jumpstarted the shale gas boom in the United States,
which kept supply very high even as economic growth picked up.
Consequently,prices further declined in 2011 and 2012,despite
economic growth,falling to $2.75 per million Btu in 2012.Prices did
bounce back,with significant increases of 35.3%in 2013 and 17.3%
in 2014.However,this trend exhibited an immediate reversal,with
prices declining 40.2%in 2015.In 2016,a warm winter combined
with high production levels of natural gas caused prices to drop a
further 4.6%to $2.49 per million Btu,the lowest price seen since
1999.A mini-recession in manufacturing also contributed to this
decline.
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Electric Historical and Forecasted Power Consumption |Graph
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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During the first half of the current period,prices neared historically
low levels and exhibited high volatility.
In 2020,amid the COVD-19 pandemic,gas prices dropped 21.5%,
driven by low demand and high supply.However,gas prices began
to grow strongly starting from November 2020 and reached a
record-high $5.48 MMbtu a year later,in November 2021.
Consequently,the average price of gas is expected to hit a seven-
year high in 2021,at $3.84 MMbtu.The massive spike in prices has
been driven by higher demand due to the reopening of the
economy and constrained supply.
Due to storage injections in fall 2021 that outpaced the prior five-
year average,gas prices are expected to decline during the first
quarter of 2022.Overall,however,gas prices are expected to rise at
an annualized rate of 5.3%to $3.84 MMbtu over the five years to
2022.
Outlook
Natural gas prices are expected to weaken over the five years to
2028.Natural gas production is expected to steadily increase,
particularly in 2023 and 2024 in response to higher global demand
and rising exports.Stabilizing demand and normalized supply chain
are expected to contribute to lower prices.Consequently,the price
of natural gas is expected to decline at an annualized rate of 2.6%
over the five years to 2028.
However,the effects of the ongoing war in Ukraine,including a
recent shutdown of gas flows through Nord Stream 1 pipeline to
Germany,present additional challenges in forecasting the future of
gas prices.
Volatility
The volatility of natural gas prices is very high.The difficulties of
predicting future trends in energy are widely recognized.Even the
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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most sophisticated of forecasting models cannot account fully for
the myriad of complex and generally uncontrollable variables that
affect prices.In any given year,natural gas demand observably
fluctuates on a seasonal basis,falling in summer months and rising
in winter months.The need for heat during the winter and lack
thereof during the summer are the primary factors responsible for
these fluctuations.Seasonal anomalies,like cooler summers or
warmer winters,can dampen this effect and change the amount of
gas demanded on a large scale,thereby affecting natural gas prices.
Utilities that purchase gas when prices are lower during the summer
months,to keep inventories ready for the winter,also have a muting
effect on natural gas seasonality.
World price of steaming coal
•Estimated value in 2023:247.10 US Dollars Per Tonne
•2018-2023 Compound Growth:16.89%
•Forecast value in 2028:131.65 US Dollars Per Tonne
•2023-2028 Compound Growth:-11.83%
Steaming coal,also known as thermal coal,is coal to be used for its
heating value,typically in electricity generation.The Australian
export price from Newcastle/Port Kembla represents the world price
as Australia accounts for about 60.0%of the world's coal exports.
Data and forecasts are sourced from the International Monetary
Fund and the World Bank.
Current Performance
Like the prices of other energy-producing commodities,the price of
steaming coal rose dramatically between 2004 and 2008.A booming
world economy driven by the rapid industrializations of Brazil,Russia,
India and China (BRIC)caused worldwide electricity demand to
skyrocket,driving up input prices.As a result,the world price of
steaming coal rose 493.7%from 2003 ($28.0 per metric ton)to 2008
($138.0 per metric ton).The price spiked over $190.00 per metric ton
in the third quarter of 2008 due to several adverse conditions;
namely unseasonably cold weather in China increasing electricity
demand,flooding in Queensland,
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Historical and Forecasted Price of Natural Gas |Graph
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Australia disrupting supply and high crude oil and natural gas prices
driving energy demand toward coal.Demand fell sharply following
the global financial crisis in late 2008,causing coal prices to drop
below $90.00 per metric ton from November 2008 through
December 2009.
As the world economy recovered in 2010,coal prices rebounded,
averaging $100.1 per metric ton for the year.Coal mines in
Queensland,Australia,saw widespread flooding again in early 2011.
Since Australian mines account for about 60.0%of the world's coal
exports,the flooding severely restricted worldwide supply,pushing
prices to about $141.0 per metric ton.The price fell back down over
the remainder of the year once the Australian mines recovered from
the flooding.However,continually increasing demand,matching the
continually recovering world economy,led to a 23.9%increase in
2011.Unfortunately for coal mining companies,the demand for
thermal coal in the United States has been held back by the
emergence of natural gas as a substitute.
Furthermore,a particularly mild 2011-2012 winter in the United
States reduced demand for steaming coal,which is typically used in
power generation for heating.Consequently,inventory stockpiles
remained high around the globe,depressing prices.As a result,the
price fell 21.7%in 2012 and 11.1%in 2013.In 2014 and 2015,the
strength of the US dollar also pushed down prices of coal produced
outside the United States,putting downward pressure on the entire
market.
It is difficult for coal producers to scale back production in an effort
to decrease supply and push up prices.Miners are tied to rail and
port contracts obliging them to pay shipping costs even if they do
not ship any product.Miners,therefore,typically continue to ship
coal at low prices,at a smaller loss than if they did not ship any at all.
This predicament kept miners putting more coal into the market,
pushing prices down.Nevertheless,in 2016 and 2017,strong
demand for coal generated electricity from Asian markets increased
demand,with prices increasing 11.8%and 34.3%respectively.
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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In 2018,the price of steaming coal rose another 20.3%driven by
import demand in China,India and the Association of Southeast
Asian Nations (ASEAN).Due to price declines in 2019 and 2020 due
to overall supply chain disruptions during the COVID-19
(coronavirus)pandemic,the price of steaming coal declined,but as
demand picked up in 2021 as demand from domestic and global
markets increased,price of steaming coal also increased.In 2022,
due to Ukraine -Russia crisis,energy prices soared which led to
increase in price of steaming coal.Over the five years to 2023,price
of steaming coal is estimated to increase at an annualized rate of
16.9%.
Outlook
Over the five years to 2028,the world price of steaming coal is
projected to decline on an annualized basis as the global economy
normalizes,thus resuming coal production.However,declines are
expected to be minimal,as demand for coal grows alongside a
recovering global economy.
A high base due to an estimated 132.3%surge in 2021 will leave
significant room to recover to a pre-pandemic equilibrium.Later in
the outlook period,price declines will continue,as long-term
demand for coal will continue to wane in favor of more
environmentally friendly alternatives.
On the supply side,global supply is expected to exceed demand,
resulting in downward pricing pressure.On the demand side,
demand for coal will remain weak in Europe.The area has made a
significant shift away from coal power generation in favor of gas
generation for environmental reasons.Both Canada and the United
States are going through similar transitions.
Price of semiconductor and electronic components
•Estimated value in 2023:57.6 index points
•2018-2023 Compound Growth:0.56%
•Forecast value in 2028:52.0 index points
•2023-2028 Compound Growth:-2.02%
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components
Historical and Forecasted World Price of Streaming Coal |Graph
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Source: United States Department of Agriculture Appendix D to Subpart B of Part 4280 -Feasibility Study Components
The Bureau of Labor Statistics uses an index to track changes in the
prices that semiconductor manufacturers receive for their products.
The index has a base of December 1984.
Current Performance
The price of semiconductors has fallen steadily over the past decade.
The steady price fall is caused indirectly by Moore's Law,an
observation that the number of transistors that can be inexpensively
placed on a circuit board doubles every two years.
As computing capacity grows exponentially each year,
manufacturers are able to create more powerful chips using less and
less expensive silicon.As chip production has become cheaper,it
has become more competitive.The highly competitive nature of the
semiconductor manufacturing industry has pressed the companies
to offer their products at cheaper and cheaper prices.
The price decline in the last decade was exaggerated during the
recession,as consumers tended to put off computer purchases until
the economy turned itself around.The demand drop worked its way
up the supply chain,causing semiconductor prices to drop more
quickly during the recession,before slowing once the economy and
computer demand recovered.As semiconductor manufacturers
continue to jockey for business,the collective price of their products
fell an additional 0.5%over 2013 and price decline continued from
2014 through 2016.After the chip industry attained a drastic
revenue expansion during the prior period,many semiconductor
suppliers overproduced in 2019 and raised the inventory levels
dramatically,leading the price of semiconductor and electronic
components to decrease.
Despite declining prices,a global semiconductor shortage began in
2021 causing a surge in the price of semiconductors and electric
components after a long-term decline.The COVID-19 (coronavirus)
pandemic caused a decline in vehicle sales at the start of 2020,
leading to vehicle manufacturers reducing orders of semiconductors
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for vehicle parts including displays and other safety systems.Later in
2020,demand for vehicles surged,as the global economy began to
recover,contributing to unexpected demand while the leading
global producer in Taiwan,Taiwan Semiconductor Manufacturing
Company has been rumored to increase chip prices.
Additionally,geopolitical tension between the United States and
Chinese semiconductor firms further contributed to low domestic
supply of semiconductors.
As a result of these varying factors,the price of semiconductor and
electric components is expected to increase 3.6%in 2022.
The chip shortage,which persisted throughout 2022,is expected
continue in 2023,contributing to an estimated 1.7%increase in the
chip PPI index.As a result,the price of semiconductor and electronic
components is expected to increase at an annualized rate of 0.6%
over the five years to 2023.
Outlook
The continual innovation and high competition in the
semiconductor industry will persist in the near future.As a result,the
price of semiconductors will continue to fall,particularly as prices
recover from the shortage brought on by the pandemic as
manufacturers increase production to meet demand.
Over the next five years to 2028,the price of semiconductor and
electronic components is expected to decrease at an accelerated
rate as it corrects,falling at an annualized rate of 2.0%.In addition,
demand for semiconductors will steadily increase as improvement in
the global economy supports consumer demand for computing
technology in more and more products,including cars and
household appliances.
However,price competition will remain a characteristic feature of
this industry and consequently,prices are expected to continue to
decline over the five years to 2028.
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Historical and Forecasted Price of Semiconductor and Electronic Components |Graph
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
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Risk Scores Methodology
What is Industry Risk
IBISWorld Industry Risk evaluates the inherent risks associated with
hundreds of different industries in the United States.Industry Risk is
assumed to be "the difficulty or otherwise of the operating
environment".This approach is new in that it analyzes non-financial
information surrounding each industry.
The Industry Risk score is forward looking,and the score looks at
expected Industry Risk over the next 12-18 months.The
methodology is based on industry classifications and is designed to
identify and quantify risks inherent in specific industries both now
and into the 12-month forecast.
Industry-based information would,for example,enable the
examination of a loan book (portfolio)with regards to risk,which
would enable a more sophisticated assessment of risk spread and
pricing to risk.Alternatively,individual exposures can be better
evaluated using an assessment of structure and key drivers of
change in the industry of the exposure.
Industry Risk Scoring Methodology
A numeric scoring system is used and is based on a scale of 1 to 9,
where a score of 1 represents the lowest risk and 9 is the highest
risk.For each of the three major risk categories (Structure,Growth
and External Sensitivities)a component score is derived from various
subcomponents.Finally,an overall score is derived by combining the
three major risk categories.
Overall Score:This is derived from a combination of the various
component scores,as explained below:
Growth Score:This figure is derived as a combination of recent and
forecast growth scores.Growth scores account for between 0 and
25%percent of the overall.The base case contribution is 25%,but
this is dampened at inflection points where extreme declines in
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Risk Rating Score Ranges |Graph
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recent years produce a misleading positive forecast growth.
Structure Score:This score is made up by analyzing internal industry
risk factors.These factors are an industry's;level of volatility,barriers
to entry,external assistance,trade exposure imports and exports (if
any),industry life cycle,and amount of competition.
When IBISWorld’s analysis identifies than an external factor creates a
transitory shift to industry structure,then the ratings are subjected
to a structural adjustment score.The structure score contributes
25%plus any contribution dampened from the growth score.
Sensitivity Score:This figure is derived by examining external and
exogenous factors which affect risk within the industry.Examples
include input costs,number of housing starts,commodity prices,etc.
This component contributes to 50%of the overall score.
Source: IBISWorld US Risk Rating Report 2211E Solar Power Generating Facilities
Market Feasibility Conclusion
The solar generation industry is of LOW RISK according to IBISWorld
US Risk Rating Report 2211E Solar Power Generating Facilities dated
October 2022,the most recent risk report available.
Because of the low risk and PPM in place,the subject projects meets
to the requirements of a Market Feasibility project because there is
no absorption time and competitive solar facilities do not hinder is
acceptance into the market.
Market Feasibility
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Technical Feasibility
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Technical Feasibility
Main equipment and system parameters
The following table shows the main equipment and system
parameters that the management of the Company has applied for
the calculation of the long-term energy estimation for the subject
project proposed improvements.
The indicated capacities and systems provide for a technically
feasible project concerning its physical attributes to produce solar
energy to meet the PPA as described in the Economic and Market
Feasibility sections of this feasibility study.
Technical feasibility analysis in accordance with the USDA guide is
presented in the following pages.
92
Technical Feasibility
Analyzing the reliability of the technology to be used and/or the
analysis of the delivery of goods or services,including transportation,
business location,and the need for technology,materials,and labor.
•Commercial availability
•Product and process success record and duplication of results
•Experience of the service providers
•Roads,rail,airport infrastructure
•Need for local transportation
•Labor market
•Availability of materials
•Use,age,and reliability of technology
•Construction risk
Source: Energy Information Administration (EIA), The Management of The Company
Parameter System
Site 5.88MW Solar Plant
Connection two 2.5 MVA transformers
Connection type 480V 3-phase
Power per module 480 W
PV modules 12,500
AC rating 5 MW DC
Main Equipment and System Design Parameters
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Commercial Availability
Operational Continuity
The subject project operates on a round-the-clock basis,ensuring
uninterrupted power supply 24 hours a day,7 days a week.This
commitment to constant availability is reinforced by a well-
structured Power Purchase Agreement (PPA),as elaborated in the
Economic and Market Feasibility sections of this report.The PPA
encompasses a substantial 30-year term,reflecting a steadfast
dedication to long-term sustainability.Infrastructure Accessibility
Strategic Location:
The project's strategic location at Point MacKenzie,Alaska 99654,
within the Matanuska-Susitna Borough,ensures convenient access
to vital transportation and infrastructure networks.
With direct access to roadways,this site is well-positioned to
facilitate logistical operations seamlessly.This strategic advantage
enhances efficiency and accessibility,reinforcing the project's
viability.
Source: ScribbleMaps, Wikipedia
Rail
The Alaska Railroad stretches 470 miles from Seward in the south to
Fairbanks in the north.The train operates two main daily routes in
the summer:a southern route between Seward and Anchorage and
a northern route between Anchorage,Talkeetna,Denali,and
Fairbanks.Anchorage is the closest big city to the subject project
site.The subject project is not directly served by rail;however,rail is
not required for its installation or operations.
Airports
The nearest airports to Point MacKenzie are Goose Bay Point
MacKenzie Airport and Big Lake Airport.Near Anchorage is located
Ted Stevens Anchorage International Airport.Other nearby airports
include Birchwood Airport,Merrill Field Airport,and Wasilla Airport.
Infrastructure
Solar farms require little infrastructure besides access and being
linked to the power grid.The subject project site has these attributes.
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Local Transportation
As presented in Market Feasibility part,The subject project is
located near the Alaska Railroad,is surrounded by several airports,
and has direct access to the road network.
Labor Market
According to the Department of Labor of Alaska,the civilian labor
force in Matanuska-Susitna Borough as of July 2023 was a total
count of 49,578 persons.
According to the Department of Labor of Alaska,the unemployment
rate in Matanuska-Susitna Borough as of July 2023 was 4.4 percent
of the civilian labor force which amounts to a total count of 2,180
unemployed persons.
Availability of Materials
In 2024,solar PV demand is expected to total 125.2 gigawatts
around the world.The United States has started a process to
implement taxes on solar products from China and Taiwan,which
has initiated trade disputes around the world.
Use,age,and reliability of technology
Reliability of Solar Panels
The reliability and lifespan of solar panels is excellent,according to a
recent study by NREL (The National Renewable Energy Laboratory).
The researchers looked at 54,500 panels installed between 2000 and
2015.They found that each year,a scant 5 out of 10,000 panels
failed (0.05%).
According to NREL (The National Renewable Energy Laboratory).
solar panels’high level or reliability allows solar panel manufacturers
to offer power output warranties of either 25 years or 30 years.The
subject project equipment age is New.The use is for energy
generation.
Construction Risk
Risk of property damage or liability stemming from errors during
the building of new projects.The management of the Company as
indicated in the Economic Feasibility section of this report has
engaged a professional installer thereby mitigating construction risk.
Source: The National Renewable Energy Laboratory
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Photovoltaic (PV cell)Cell Overview
Solar PV technology converts energy from solar radiation directly
into electricity.Solar PV cells are the electricity-generating
component of a solar energy system.When sunlight (photons)
strikes a PV cell,an electric current is produced by stimulated
electrons (negative charges)in a cell layer designed to give up
electrons easily.
The existing electric field in the solar cell pulls these electrons to
another layer.By connecting the cell to an external load,this current
(movement of charges)can then be used to power the load (e.g.,
light bulb).
Photovoltaic Effect
The photovoltaic effect is a process that generates voltage or
electric current in a photovoltaic cell when it is exposed to sunlight.
These solar cells are composed of two different types of
semiconductors—a p-type and an n-type—that are joined together
to create a p-n junction.
By joining these two types of semiconductors,an electric field is
formed in the region of the junction as electrons move to the
positive p-side and holes move to the negative n-side.This field
causes negatively charged particles to move in one direction and
positively charged particles in the other direction.
Source: Energy Information Administration (EIA)
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Photovoltaic (PV cell)Cell Cross Section View
Light is composed of photons,which are simply small bundles of
electromagnetic radiation or energy.When light of a suitable
wavelength is incident on these cells,energy from the photon is
transferred to an electron of the semiconducting material,causing it
to jump to a higher energy state known as the conduction band.
In their excited state in the conduction band,these electrons are
free to move through the material,and it is this motion of the
electron that creates an electric current in the cell.
Major System Components
A typical PV system is made up of several key components,
including:
•PV modules
•Inverter
•Balance-of-system components.
These,along with other PV system components,are discussed in
turn as follows:
PV Module
Module technologies are differentiated by the type of PV material
used,resulting in a range of conversion efficiencies from light
energy to electrical energy.The module efficiency is a measure of
the percentage of solar energy converted into electricity.
Source: Energy Information Administration (EIA)
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Two common PV technologies that have been widely used for
commercial-and utility scale projects are crystalline silicon and thin
film.
Crystalline Silicon
Traditional solar cells are made from silicon.Silicon is quite
abundant and nontoxic.It builds on a strong industry on both
supply (silicon industry)and product side.
This technology has demonstrated consistent and high efficiency for
over 30 years in the field.The performance degradation (reduction
in power generation due to long-term exposure)is under 1%per
year.Silicon modules have a lifespan of 25–30 years but can keep
producing energy beyond this range.
Typical overall efficiency of silicon solar panels is between 12%and
18%.However,some manufacturers of mono-crystalline panels
claim an overall efficiency nearing 20%.
This range of efficiencies represents significant variation among the
crystalline silicon technologies available.The technology is generally
divided into mono-and multi-crystalline technologies,which
indicates the presence of grain-boundaries (i.e.,multiple crystals)in
the cell materials and is controlled by raw material selection and
manufacturing technique.Crystalline silicon panels are widely used
based on deployments worldwide.
Source: Energy Information Administration (EIA)
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Thin Film
Thin-film PV cells are made from amorphous silicon (a-Si)or non-
silicon materials such as cadmium telluride (CdTe).Thin-film cells
use layers of semiconductor materials only a few micrometers thick.
Due to the unique nature of thin films,some thin-film cells are
constructed into flexible modules,enabling applications like solar
energy covers for landfills,such as a geomembrane system.Other
thin-film modules are assembled into rigid constructions that can be
used in fixed-tilt or,in some cases,tracking system configurations.
The efficiency of thin-film solar cells is generally lower than
crystalline cells.Current overall efficiency of a thin-film panel is
between 6%and 8%for a-Si and 11%and 12%for CdTe.
Industry standard warranties of both crystalline and thin-film PV
panels typically guarantee system performance of 80%of the rated
power output for 25 years.After 25 years,they will continue
producing electricity at a lower performance level.
Inverter
Inverters convert DC electricity from the PV array into AC and can
connect seamlessly to the electricity grid.Inverter efficiencies can be
as high as 98.5%.
Inverters also sense the utility power frequency and synchronize the
PV-produced power to that frequency.When utility power is not
present,the inverter will stop producing AC power to prevent
“islanding”or putting power into the grid while utility workers are
trying to fix what they assume is a de-energized distribution system.
This safety feature is built into all grid-connected inverters in the
market.Electricity produced from the system may be fed to a step-
up transformer to increase the voltage to match the grid.
There are two primary types of inverters for grid-connected systems:
string and microinverters.Each type has strengths and weaknesses
and may be recommended for different types of installations.
Source: Energy Information Administration (EIA)
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String inverters are most common and typically range in size from
1.5 kW to 1,000 kW.These inverters tend to be cheaper on a
capacity basis,as well as have high efficiency and lower operations
and maintenance (O&M)costs.
String inverters offer various sizes and capacities to handle a large
range of voltage output.For larger systems,string inverters are
combined in parallel to produce a single point of interconnection
with the grid.Warranties typically run 10 years,which is currently the
industry standard.
In larger units,extended warranties up to 20 years are possible.
Given that the expected life of the PV panels is 25–30 years,an
operator can expect to replace a string inverter at least one time
during the life of the PV system.
Micro-inverters are dedicated to the conversion of a single PV
module’s power output.
The AC output from each module is connected in parallel to create
the array.
This technology is relatively new to the market and is in limited use
in larger systems because of the potential increase in O&M
associated with significantly increasing the number of inverters in a
given array.
Current micro-inverters range in size between 175 W and 380 W.
These inverters are typically a more expensive option per watt of
capacity than string inverters.
Warranties range from 10–25 years.Projects with irregular modules
and shading issues usually benefit from micro-inverters.
With string inverters,small amounts of shading on a solar panel will
significantly affect the entire array production.Instead,it impacts
only that shaded panel if micro-inverters are used.
Source: Energy Information Administration (EIA)
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Sandia Model Analysis
Effective irradiance is total plane of array (POA)irradiance adjusted
for angle of incidence losses,soiling,and spectral mismatch.In a
general sense it can be thought of as the irradiance that is “available”
to the PV array for power conversion.
In the context of the Sandia PV Array Performance Model (SAPM),
effective irradiance is defined specifically as:
Where x the short circuit current.It can be calculated from Eq.1
described in the SAPM,from measured irradiance,air mass,angle of
incidence,and several empirically determined module coefficients.
Alternatively,effective irradiance can be measured directly by
obtaining IV curves from a matched reference module.
A simplified approach using a single irradiance sensor has also been
suggested,shown below.Caution should be used when applying
this method because irradiance sensors (pyranometers)require
careful calibration and frequent cleaning.These calibrations may
not account for all instrument responses (e.g.,angular),and
instruments can vary in their spectral response and acceptance
angles,etc.(thermopile vs.photodiode).
Performance Ratio
The daily AC performance ratio is defined in IEC 61724 as.
yield defined as the measured AC energy produced by the PV
system in the day (kilowatt hours per day)divided by the rated
Source: Energy Information Administration (EIA)
where:this formula is the AV system yield
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Technical Feasibility
101
power of the PV system.The definition of this rating is not specified
in IEC 61724 but is defined here as DC power rating at STC
conditions (1000 W/m2,cell temperature of 25 °C,and AM1.5
spectrum).
is the plane-of-array insolation divided by the reference
irradiance (1000 W m-2)in units of time.
They can also be evaluated at other time intervals (e.g.,hourly,
monthly,etc.).One of the shortcomings of this metric is that it is
sensitive to temperature variation and when plotted over a full year
typically exhibits lower values in the warm parts of the year and
higher values in the colder times of the year.
The AC output from each module is connected in parallel to create
the array.This technology is relatively new to the market and is in
limited use in larger systems because of the potential increase in
O&M associated with significantly increasing the number of
inverters in a given array.
Current micro-inverters range in size between 175 W and 380 W.
These inverters are typically a more expensive option per watt of
capacity than string inverters.Warranties range from 10–25 years.
Projects with irregular modules and shading issues usually benefit
from micro-inverters.
With string inverters,small amounts of shading on a solar panel will
significantly affect the entire array production.Instead,it impacts
only that shaded panel if micro-inverters are used.
Source: Energy Information Administration (EIA)
A
Technical Feasibility
102
DC Wiring Loses
DC wiring losses are mainly caused by the ohmic resistance of the
cabling that interconnects PV devices and strings,although losses
can also occur in connections and fuses.The power loss
varies as a function of the array current squared.Differences in cable
length or size among parallel strings can introduce differences in
voltage drop,,and therefore contribute to mismatch.Series
protection diodes are another source of voltage drop.
AC Loses
Energy losses on the AC side of the inverter can be significant when
the AC power is raised to distribution or transmission level voltages
and is transferred any distance before the utility meter.
The value of the energy produced by the plant needs to include all
losses before the utility meter.For a residential system,these losses
can likely be neglected,but for many utility-scale plants these losses
can be significant and should be included in a performance model.
DC to AC Conversion
Conversion from DC to AC power allows this power to be tied to the
AC grid.This conversion can be accomplished with high efficiencies
but there are energy losses that need to be estimated.There are a
number of model algorithms that are used to estimate this
conversion efficiency.They will be described and compared in this
section.
Inverter Saturation
Inverter saturation,commonly referred to as “clipping”,occurs when
the DC power from the PV array exceeds the maximum input level
for the inverter.In response to this condition,the inverter typically
adjusts DC voltage to reduce the DC power.
This is done by increasing voltage above the MPP voltage,thus
reducing DC current.Most,but not all inverters self-limit.In
addition,some inverters self-limit in response to high temperatures
inside the inverter cabinet.
Source: Energy Information Administration (EIA)
A
Technical Feasibility
103
Such behavior protects the internal components (e.g.,capacitors)
from accelerated damage.Elevated temperatures can arise when
active cooling fails (e.g.,fan malfunction,filter clogged),or as a
result of high ambient temperatures and installation problems (e.g.,
South-facing install).
While most inverters can handle overloading the power (DC Rating
of Array at STC/AC Capacity of Inverter >1),there are important
limits to how this can be done.For example,the DC voltage of the
array must not exceed the maximum input voltage of the inverter.
In addition,the maximum short circuit current of the array must not
exceed the maximum short circuit current of the inverter.
Loss of Grid
Grid connected inverters must be able to reliably detect a loss of
grid condition and rapidly disconnect from the grid system.This
behavior prevents the formation of an unintentional island (a stand-
alone power system with its own generation and loads operating in
balance).
Current standards (e.g.,IEEE 1547 and IEC 62116)specify that the
inverter must disconnect within 2 seconds and remain disconnected
for 5 minutes before attempting to reconnect.
Sun Position
The position of the sun relative to an observer on the surface of the
Earth is an important input needed to model PV system
performance.The convention used to describe solar position
includes:
Zenith angle:
Azimuth angle:
Solar elevation angle:is equal to:
The figure on the following page shows how these angles are
defined.
Source: Energy Information Administration (EIA)
A
Technical Feasibility
104
Sun Position
Irradiance &Insolation
Weather and irradiance data are used as input to PV performance
models.These data are directly measured,derived from measured
data,or simulated using a stochastic model.
Irradiance is to power as insolation is to energy.Or in other words:
Irradiance is an instantaneous measurement of solar power over
some area.
The units of irradiance are watts per square meter.For practical
purposes of measurement and interpretation,irradiance is
expressed and separated into different components.
Insolation is a measurement of the cumulative energy measured
over some area for a defined period of time (e.g.,annual,monthly,
daily,etc.).The common unit of insolation is kilowatt hours per
square meter.For these units to be interpreted correctly the time
interval must be clearly stated (e.g.,kW-hr per square meter annual
insolation).
For each measurement of irradiance,a collection plane must be
defined.For example,the collection plane may be oriented normal
to the sun,or the collection plane may be horizontal to the surface
of the Earth.
Source: Energy Information Administration (EIA)
A
Technical Feasibility
105
The collection plane may also change its position such as terrestrial
(inside the atmosphere)or extraterrestrial (outside the atmosphere).
Note that the lack of a specifier generally indicates a terrestrial
measurement.All extraterrestrial irradiance is direct due to lack of
an atmosphere to cause scattering.Irradiance measurements may
also be classified by the portion of sunlight which is being measured.
For example,some measurements may only measure direct
irradiance,others may measure only diffuse irradiance,and others
may measure both direct and diffuse (sometimes called “total”)
irradiance.
Finally,irradiance measurements may indicate the field of view of
the measurement instrument.In general,measurements of direct
irradiance use a 5°field of view.Irradiance measurements may also
be taken with an instrument which uses a 180°field of view
(sometimes called “global”).
Weather Data Sources for Performance Modeling
Obtaining high quality weather and irradiance data for performance
modeling studies is one of the most important steps in PV
performance modeling,since the uncertainty in the irradiance data
usually accounts a large amount of the total uncertainty.
The modeler usually starts with historical data that has been
compiled especially for solar applications (e.g.,NSRDB,TMY).
However,when the results of the model are being used for large
investment decisions,additional data is usually used (e.g.,satellite
data and site-specific ground measurements).
Solar Resource Map
Presented as follows,the Solar Resource Map provided by NREL
indicates the average daily total solar resource information on grid
cells.The State University of New York/Albany satellite radiation
model was developed by Richard Perez and collaborators at the
National Renewable Energy Laboratory and other universities for the
U.S.Department of Energy.Specific information about this model
can be found in A New Operational Satellite-to-Irradiance.
Source: Energy Information Administration (EIA)
A
Technical Feasibility
106
This model uses hourly radiance images from geostationary weather
satellites,daily snow cover data,and monthly averages of
atmospheric water vapor,trace gases,and the number of aerosols in
the atmosphere to calculate the hourly total insolation (sun and sky)
falling on a horizontal surface.
Atmospheric water vapor,trace gases,and aerosols are derived from
a variety of sources.The procedures for converting the collector at
latitude tilt are described in Solar Radiation Data Manual for Flat-
plate and Concentrating Collectors (1994).
Perez All-Weather Sky Model Analysis
Measured irradiance values are preferred,as many meteorological
stations calculate direct normal and diffuse horizontal illuminance
values based on the Perez All-Weather sky model rather than
measuring these values directly.The Perez All-Weather Sky model
requires irradiance values as inputs3 if the sky brightness and sky
clearness parameters are unknown.If instead gendaylit is provided
with measured or calculated illuminance values,it must iteratively
calculate the approximate irradiance values and Perez sky clearness
and brightness parameters.
Regulation and Governmental Action
There are no known regulations or governmental actions in the state
of Texas or the city of Liverpool that would negatively affect the
technical potential of the subject project.
Technical Feasibility Conclusion
The foregoing systems and installation data presented herein
indicates performance potential for the subject project as planned
whereas the PV system as proposed is designed to produce the
gross potential electricity to meet PPA demands.
The subject project site is served by all necessary roads and
infrastructure.Overall,based on the foregoing analysis,the subject
project as planned is technically feasible and of low risk.
Source: Energy Information Administration (EIA)
Market Feasibility
107
Financial Feasibility
Financial Feasibility
108
Analysis of the operation to achieve sufficient income,credit,
and cashflow to financially sustain the project over the long
term and meet all debt obligations.
•Commercial or project underwriting
•Management’s assumptions
•Accounting policies
•Source of repayment
•Dependency on other entities
•Equity contribution
•Market demand forecast
•Peer industry comparison
•Cost-accounting system
•Availability of short-term credit
•Adequacy of raw materials and supplies
•Sensitivity analysis
Financial Feasibility Methodology
This section of the report presented subject estimated project cost,
loan details,and expected subject project cost loan amount cover
ratio the use of the own sources.
A 50 years Pro Forma is presented.Debt Service Coverage (DSCR)is
presented.
Commercial or project underwriting
To present Commercial or project underwriting,a 50-year Pro Forma
with the contracted and uncontracted revenue is presented.
These revenue sources were provided by the Management of the
Company.Annual operating expenses are presented.
These expenses were estimated by the Management of the
Company.Sensitivity analysis of reduction of the revenue rates by 5
and 10 percent was applied.
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
Financial Feasibility
109
Commercial or project underwriting
Pro Forma Assumptions Table
Subject Project Cost Estimate Table
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
System Design
System Cost ($/watt DC)$1.60
System Size (DC) (MW)5.88
Initial debt service reserve funding $241,902
Total System Cost $9,662,190
Performance Inputs
DC Capacity Factor 13.5%
Annual Output for Year 1 (MWh)6,928
Degradation Factor 0.75%
System lifetime (in Years) = Lease Term 50
Other
O&M Costs ($/kW)$20.00
O&M Costs Escalator (%/yr)2.00%
Inverter replacement cost ($/W)$0.25
10yr inverter replacement cost $1,470,000
Annual inverter amount to reserve $147,000
Inverter replacement time (in Years)10.0
Insurance Expense ($/kW)$20.00
Insurance Escalator (%/yr)2.00%
SREC Value/MW $200
SREC Decelerator 2.00%
Land Lease/Year $40,000
Lease Escalator 0.0%
Wholesale Price of Electricity $0.06
Electricity Escalator 2.5%
Point MacKenzie Solar
Cost Description Cost/watt Actual Cost 5.88 MW
Item Cost %Per MW
Module 2,937,600$ 31.2%0.50$
Inverters 411,264$ 4.4%0.07$
Pile, Pile driving and Clearing 747,520$ 7.9%0.13$
Structural Balance of System 763,776$ 8.1%0.13$
Electrical Balance of System 1,116,288$ 11.8%0.19$
Installation labor and equipment 881,280$ 9.4%0.15$
EPC Overhead 528,768$ 5.6%0.09$
Permitting Cost 58,752$ 0.6%0.01$
Interconnection Fee 800,000$ 8.5%0.14$
Transmission Line 117,504$ 1.2%0.02$
Developer Overhead/financing 646,272$ 6.9%0.11$
Contingency 176,256$ 1.9%0.03$
EPC/Developer Profit 235,008$ 2.5%0.04$
Total Cost 9,420,288$ 100.0%1.60$
Less Incentives
Federal Tax Credit 2,449,274$ 26.0%0.42$
100% Bonus Depreciation 2,164,838$ 23.0%0.37$
Alaska Energy Authority 1,000,000$ 10.6%0.17$
USDA Grant - land clearing and construction 500,000$ 5.3%0.09$
Total Incentives 6,114,112$ 64.9%1.04$
Adjusted Subject Project Cost 3,306,176$ 35.1%0.56$
A
Financial Feasibility
110
Risks Related to
•The offering
The offering is a private company that is seeking solar plant
construction grant and loan financing.Because the subject project is
a start-up,it has risk associated with its potential performance
because there is no operational history.However,the management
of the Company has established good relations with a solid Alaskan
energy construction company and a very reliable power utility
company which mitigates this risk.
•Applicant financing plan
Point MacKenzie Solar (PMS)management (“the Company”)seeks
to borrow a loan of $4,095,775.The amount of $4,787,927,will be
amortized over 50 years at an interest rate of 5.50 percent.
•Tax issues
There are no known Tax Issues.
Ability of the business to achieve the projected income and cash
flow
As presented in the market analysis and financial pro forma
estimates herein,the subject project based on current market and
legal conditions is likely to achieve the projected income and cash
flows with little risk.
The management of the Company provided a pro forma which was
based on data from the energy company.Their assumptions appear
to be well-supported.
Assessment of the cost accounting system
There are no historical financial statements.This item is not
applicable.
Source: primary research by Wert-Berater Feasibility Studies, LLC
Financial Feasibility
111
50 Year Pro Forma ⅼYears 1 through 10
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 1 2 3 4 5 6 7 8 9 10
Energy Production (MWh)6,928 6,876 6,824 6,773 6,722 6,672 6,622 6,572 6,523 6,474
Wholesale Price of Electricity (MWh)$56.6800 $58.0970 $59.5494 $61.0382 $62.5641 $64.1282 $65.7314 $67.3747 $69.0591 $70.7856
SREC Income $1,385,587 $1,320,737 $1,284,615 $1,249,481 $1,215,307 $1,182,069 $1,149,739 $1,118,294 $1,087,708 $1,057,960
Operating Revenue $392,675 $399,473 $406,389 $413,425 $420,582 $427,864 $435,271 $442,807 $450,473 $458,272
Total Revenue $1,778,262 $1,720,211 $1,691,004 $1,662,906 $1,635,890 $1,609,932 $1,585,010 $1,561,101 $1,538,181 $1,516,231
O&M Costs ($119,952)($122,351)($124,798)($127,294)($129,840)($132,437)($135,085)($137,787)($140,543)($143,354)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($119,952)($122,351)($124,798)($127,294)($129,840)($132,437)($135,085)($137,787)($140,543)($143,354)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($426,904)($427,660)($428,511)($429,461)($430,510)($431,661)($432,916)($434,277)($435,746)($437,325)
Operating Profit $1,351,358 $1,292,551 $1,262,493 $1,233,445 $1,205,380 $1,178,272 $1,152,094 $1,126,824 $1,102,436 $1,078,906
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 5.61x 5.37x 5.24x 5.12x 5.01x 4.89x 4.79x 4.68x 4.58x 4.48x
Financial Feasibility
112
50 Year Pro Forma ⅼYears 11 through 20
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 11 12 13 14 15 16 17 18 19 20
Energy Production (MWh)6,426 6,377 6,330 6,282 6,235 6,188 6,142 6,096 6,050 6,005
Wholesale Price of Electricity (MWh)$72.5552 $74.3691 $76.2283 $78.1340 $80.0874 $82.0895 $84.1418 $86.2453 $88.4015 $90.6115
SREC Income $1,029,024 $1,000,881 $973,507 $946,881 $920,984 $895,795 $871,295 $847,465 $824,287 $801,743
Operating Revenue $466,205 $474,277 $482,488 $490,841 $499,338 $507,983 $516,778 $525,724 $534,826 $544,085
Total Revenue $1,495,230 $1,475,157 $1,455,994 $1,437,722 $1,420,322 $1,403,778 $1,388,073 $1,373,189 $1,359,113 $1,345,828
O&M Costs ($146,221)($149,145)($152,128)($155,171)($158,274)($161,440)($164,668)($167,962)($171,321)($174,747)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($146,221)($149,145)($152,128)($155,171)($158,274)($161,440)($164,668)($167,962)($171,321)($174,747)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($479,442)($481,248)($483,171)($485,214)($487,378)($489,667)($492,082)($494,626)($497,302)($500,112)
Operating Profit $1,015,788 $993,909 $972,823 $952,508 $932,944 $914,111 $895,991 $878,563 $861,811 $845,715
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 4.22x 4.13x 4.04x 3.96x 3.88x 3.80x 3.72x 3.65x 3.58x 3.51x
Financial Feasibility
113
50 Year Pro Forma ⅼYears 21 through 30
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 21 22 23 24 25 26 27 28 29 30
Energy Production (MWh)5,960 5,915 5,870 5,826 5,783 5,739 5,696 5,654 5,611 5,569
Wholesale Price of Electricity (MWh)$92.8768 $95.1987 $97.5787 $100.0181 $102.5186 $105.0816 $107.7086 $110.4013 $113.1613 $115.9904
SREC Income $779,815 $758,487 $737,742 $717,565 $697,940 $678,851 $660,285 $642,226 $624,661 $607,576
Operating Revenue $553,505 $563,087 $572,836 $582,753 $592,842 $603,105 $613,546 $624,168 $634,974 $645,967
Total Revenue $1,333,320 $1,321,574 $1,310,578 $1,300,318 $1,290,781 $1,281,956 $1,273,831 $1,266,394 $1,259,635 $1,253,544
O&M Costs ($178,242)($181,807)($185,443)($189,152)($192,935)($196,794)($200,730)($204,744)($208,839)($213,016)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($178,242)($181,807)($185,443)($189,152)($192,935)($196,794)($200,730)($204,744)($208,839)($213,016)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($543,485)($546,572)($549,802)($553,177)($556,701)($560,375)($564,205)($568,191)($572,339)($576,650)
Operating Profit $789,835 $775,002 $760,776 $747,141 $734,081 $721,581 $709,626 $698,203 $687,297 $676,894
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 3.28x 3.22x 3.16x 3.10x 3.05x 3.00x 2.95x 2.90x 2.85x 2.81x
Financial Feasibility
114
50 Year Pro Forma ⅼYears 31 through 40
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 31 32 33 34 35 36 37 38 39 40
Energy Production (MWh)5,527 5,486 5,445 5,404 5,363 5,323 5,283 5,244 5,204 5,165
Wholesale Price of Electricity (MWh)$118.8901 $121.8624 $124.9089 $128.0317 $131.2325 $134.5133 $137.8761 $141.3230 $144.8561 $148.4775
SREC Income $590,959 $574,796 $559,076 $543,785 $528,913 $514,447 $500,377 $486,691 $473,380 $460,433
Operating Revenue $657,151 $668,528 $680,102 $691,876 $703,854 $716,039 $728,436 $741,047 $753,876 $766,928
Total Revenue $1,248,110 $1,243,324 $1,239,177 $1,235,661 $1,232,766 $1,230,486 $1,228,812 $1,227,738 $1,227,257 $1,227,361
O&M Costs ($217,276)($221,622)($226,054)($230,576)($235,187)($239,891)($244,689)($249,582)($254,574)($259,665)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($217,276)($221,622)($226,054)($230,576)($235,187)($239,891)($244,689)($249,582)($254,574)($259,665)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($621,553)($626,201)($631,024)($636,024)($641,204)($646,569)($652,122)($657,867)($663,808)($669,948)
Operating Profit $626,557 $617,123 $608,154 $599,637 $591,562 $583,917 $576,690 $569,871 $563,449 $557,413
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 2.60x 2.56x 2.53x 2.49x 2.46x 2.43x 2.40x 2.37x 2.34x 2.32x
Financial Feasibility
115
50 Year Pro Forma ⅼYears 41 through 50
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 41 42 43 44 45 46 47 48 49 50 Levelized
Energy Production (MWh)5,127 5,088 5,050 5,012 4,974 4,937 4,900 4,863 4,827 4,791 Energy Production (MWh)
Wholesale Price of Electricity (MWh)$152.1894 $155.9942 $159.8940 $163.8914 $167.9886 $172.1884 $176.4931 $180.9054 $185.4280 $190.0637 Cost of Generation ($/kWh)
SREC Income $447,841 $435,592 $423,679 $412,091 $400,820 $389,858 $379,195 $368,824 $358,737 $348,926 SREC Income
Operating Revenue $780,205 $793,712 $807,454 $821,433 $835,654 $850,121 $864,839 $879,811 $895,043 $910,538 Operating Revenue
Total Revenue $1,228,046 $1,229,305 $1,231,132 $1,233,524 $1,236,474 $1,239,979 $1,244,034 $1,248,635 $1,253,780 $1,259,464 Total Revenue
O&M Costs ($264,859)($270,156)($275,559)($281,070)($286,692)($292,425)($298,274)($304,239)($310,324)($316,531)O&M Costs
Inverter Replacement Cost ($106,575)($102,533)($98,490)($94,448)($90,405)($86,363)($82,320)($78,278)($74,235)$2,869,808 Inverter Replacement Costs
Insurance Costs ($264,859)($270,156)($275,559)($281,070)($286,692)($292,425)($298,274)($304,239)($310,324)($316,531)Insurance Costs
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)Land Lease
Total Costs ($676,293)($682,844)($689,608)($696,588)($703,788)($711,213)($718,868)($726,756)($734,884)$2,196,746 Total Costs
Operating Profit $551,753 $546,460 $541,524 $536,936 $532,686 $528,765 $525,166 $521,879 $518,896 $3,456,210 Operating Profit
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 2.29x 2.27x 2.25x 2.23x 2.21x 2.20x 2.18x 2.17x 2.16x 14.36x
Financial Feasibility
116
5% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 1 through 10
Sensitivity Analysis - Rate Reduction 5.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 1 2 3 4 5 6 7 8 9 10
Energy Production (MWh)6,928 6,876 6,824 6,773 6,722 6,672 6,622 6,572 6,523 6,474
Wholesale Price of Electricity (MWh)$53.8460 $55.1922 $56.5720 $57.9863 $59.4359 $60.9218 $62.4449 $64.0060 $65.6061 $67.2463
SREC Income $1,316,307 $1,254,700 $1,220,384 $1,187,007 $1,154,542 $1,122,965 $1,092,252 $1,062,379 $1,033,323 $1,005,062
Operating Revenue $373,042 $379,500 $386,070 $392,754 $399,553 $406,471 $413,508 $420,666 $427,949 $435,358
Total Revenue $1,689,349 $1,634,200 $1,606,454 $1,579,760 $1,554,095 $1,529,436 $1,505,760 $1,483,046 $1,461,272 $1,440,420
O&M Costs ($119,952)($122,351)($124,798)($127,294)($129,840)($132,437)($135,085)($137,787)($140,543)($143,354)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($119,952)($122,351)($124,798)($127,294)($129,840)($132,437)($135,085)($137,787)($140,543)($143,354)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($426,904)($427,660)($428,511)($429,461)($430,510)($431,661)($432,916)($434,277)($435,746)($437,325)
Operating Profit $1,262,445 $1,206,540 $1,177,943 $1,150,300 $1,123,586 $1,097,775 $1,072,844 $1,048,769 $1,025,526 $1,003,095
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 5.24x 5.01x 4.89x 4.78x 4.67x 4.56x 4.46x 4.36x 4.26x 4.17x
Financial Feasibility
117
5% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 11 through 20
Sensitivity Analysis - Rate Reduction 5.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 11 12 13 14 15 16 17 18 19 20
Energy Production (MWh)6,426 6,377 6,330 6,282 6,235 6,188 6,142 6,096 6,050 6,005
Wholesale Price of Electricity (MWh)$68.9274 $70.6506 $72.4169 $74.2273 $76.0830 $77.9851 $79.9347 $81.9331 $83.9814 $86.0809
SREC Income $977,573 $950,837 $924,831 $899,537 $874,935 $851,005 $827,730 $805,092 $783,073 $761,656
Operating Revenue $442,895 $450,563 $458,363 $466,299 $474,371 $482,584 $490,939 $499,438 $508,085 $516,881
Total Revenue $1,420,468 $1,401,399 $1,383,194 $1,365,836 $1,349,306 $1,333,589 $1,318,669 $1,304,530 $1,291,157 $1,278,536
O&M Costs ($146,221)($149,145)($152,128)($155,171)($158,274)($161,440)($164,668)($167,962)($171,321)($174,747)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($146,221)($149,145)($152,128)($155,171)($158,274)($161,440)($164,668)($167,962)($171,321)($174,747)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($479,442)($481,248)($483,171)($485,214)($487,378)($489,667)($492,082)($494,626)($497,302)($500,112)
Operating Profit $941,027 $920,151 $900,023 $880,622 $861,928 $843,923 $826,587 $809,904 $793,855 $778,424
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 3.91x 3.82x 3.74x 3.66x 3.58x 3.51x 3.43x 3.36x 3.30x 3.23x
Financial Feasibility
118
5% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 21 through 30
Sensitivity Analysis - Rate Reduction 5.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 21 22 23 24 25 26 27 28 29 30
Energy Production (MWh)5,960 5,915 5,870 5,826 5,783 5,739 5,696 5,654 5,611 5,569
Wholesale Price of Electricity (MWh)$88.2329 $90.4388 $92.6997 $95.0172 $97.3927 $99.8275 $102.3232 $104.8812 $107.5033 $110.1909
SREC Income $740,824 $720,563 $700,855 $681,687 $663,043 $644,909 $627,270 $610,115 $593,428 $577,198
Operating Revenue $525,829 $534,933 $544,194 $553,615 $563,200 $572,950 $582,869 $592,960 $603,226 $613,669
Total Revenue $1,266,654 $1,255,495 $1,245,049 $1,235,302 $1,226,242 $1,217,859 $1,210,139 $1,203,075 $1,196,654 $1,190,867
O&M Costs ($178,242)($181,807)($185,443)($189,152)($192,935)($196,794)($200,730)($204,744)($208,839)($213,016)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($178,242)($181,807)($185,443)($189,152)($192,935)($196,794)($200,730)($204,744)($208,839)($213,016)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($543,485)($546,572)($549,802)($553,177)($556,701)($560,375)($564,205)($568,191)($572,339)($576,650)
Operating Profit $723,169 $708,924 $695,247 $682,125 $669,542 $657,483 $645,935 $634,883 $624,315 $614,217
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 3.00x 2.94x 2.89x 2.83x 2.78x 2.73x 2.68x 2.64x 2.59x 2.55x
Financial Feasibility
119
5% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 31 through 40
Sensitivity Analysis - Rate Reduction 5.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 31 32 33 34 35 36 37 38 39 40
Energy Production (MWh)5,527 5,486 5,445 5,404 5,363 5,323 5,283 5,244 5,204 5,165
Wholesale Price of Electricity (MWh)$112.9456 $115.7693 $118.6635 $121.6301 $124.6708 $127.7876 $130.9823 $134.2569 $137.6133 $141.0536
SREC Income $561,411 $546,057 $531,122 $516,596 $502,467 $488,724 $475,358 $462,357 $449,711 $437,412
Operating Revenue $624,293 $635,101 $646,096 $657,282 $668,661 $680,237 $692,014 $703,994 $716,182 $728,581
Total Revenue $1,185,704 $1,181,158 $1,177,218 $1,173,878 $1,171,128 $1,168,962 $1,167,372 $1,166,351 $1,165,894 $1,165,993
O&M Costs ($217,276)($221,622)($226,054)($230,576)($235,187)($239,891)($244,689)($249,582)($254,574)($259,665)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($217,276)($221,622)($226,054)($230,576)($235,187)($239,891)($244,689)($249,582)($254,574)($259,665)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($621,553)($626,201)($631,024)($636,024)($641,204)($646,569)($652,122)($657,867)($663,808)($669,948)
Operating Profit $564,152 $554,956 $546,195 $537,854 $529,924 $522,393 $515,250 $508,484 $502,086 $496,045
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 2.34x 2.31x 2.27x 2.23x 2.20x 2.17x 2.14x 2.11x 2.09x 2.06x
Financial Feasibility
120
5% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
Sensitivity Analysis - Rate Reduction 5.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 41 42 43 44 45 46 47 48 49 50 Levelized
Energy Production (MWh)5,127 5,088 5,050 5,012 4,974 4,937 4,900 4,863 4,827 4,791 Energy Production (MWh)
Wholesale Price of Electricity (MWh)$144.5799 $148.1944 $151.8993 $155.6968 $159.5892 $163.5789 $167.6684 $171.8601 $176.1566 $180.5605 Cost of Generation ($/kWh)
SREC Income $425,449 $413,813 $402,495 $391,487 $380,779 $370,365 $360,236 $350,383 $340,800 $331,479 SREC Income
Operating Revenue $741,195 $754,027 $767,081 $780,361 $793,871 $807,615 $821,597 $835,821 $850,291 $865,011 Operating Revenue
Total Revenue $1,166,643 $1,167,839 $1,169,576 $1,171,847 $1,174,650 $1,177,980 $1,181,832 $1,186,204 $1,191,091 $1,196,491 Total Revenue
O&M Costs ($264,859)($270,156)($275,559)($281,070)($286,692)($292,425)($298,274)($304,239)($310,324)($316,531)O&M Costs
Inverter Replacement Cost ($106,575)($102,533)($98,490)($94,448)($90,405)($86,363)($82,320)($78,278)($74,235)$2,869,808 Inverter Replacement Costs
Insurance Costs ($264,859)($270,156)($275,559)($281,070)($286,692)($292,425)($298,274)($304,239)($310,324)($316,531)Insurance Costs
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)Land Lease
Total Costs ($676,293)($682,844)($689,608)($696,588)($703,788)($711,213)($718,868)($726,756)($734,884)$2,196,746 Total Costs
Operating Profit $490,351 $484,995 $479,967 $475,259 $470,862 $466,766 $462,964 $459,447 $456,207 $3,393,237 Operating Profit
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 2.04x 2.01x 1.99x 1.97x 1.96x 1.94x 1.92x 1.91x 1.89x 14.09x
50 Year Pro Forma ⅼYears 41 through 50
Financial Feasibility
121
10% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 1 through 10
Sensitivity Analysis - Rate Reduction 10.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 1 2 3 4 5 6 7 8 9 10
Energy Production (MWh)6,928 6,876 6,824 6,773 6,722 6,672 6,622 6,572 6,523 6,474
Wholesale Price of Electricity (MWh)$51.0120 $52.2873 $53.5945 $54.9343 $56.3077 $57.7154 $59.1583 $60.6372 $62.1532 $63.7070
SREC Income $1,247,028 $1,188,663 $1,156,153 $1,124,533 $1,093,777 $1,063,862 $1,034,765 $1,006,464 $978,938 $952,164
Operating Revenue $353,408 $359,526 $365,750 $372,082 $378,524 $385,077 $391,744 $398,526 $405,426 $412,444
Total Revenue $1,600,436 $1,548,190 $1,521,904 $1,496,615 $1,472,301 $1,448,939 $1,426,509 $1,404,991 $1,384,363 $1,364,608
O&M Costs ($119,952)($122,351)($124,798)($127,294)($129,840)($132,437)($135,085)($137,787)($140,543)($143,354)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($119,952)($122,351)($124,798)($127,294)($129,840)($132,437)($135,085)($137,787)($140,543)($143,354)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($426,904)($427,660)($428,511)($429,461)($430,510)($431,661)($432,916)($434,277)($435,746)($437,325)
Operating Profit $1,173,532 $1,120,530 $1,093,393 $1,067,155 $1,041,791 $1,017,278 $993,593 $970,714 $948,617 $927,283
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 4.87x 4.65x 4.54x 4.43x 4.33x 4.23x 4.13x 4.03x 3.94x 3.85x
Financial Feasibility
122
10% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 11 through 20
Sensitivity Analysis - Rate Reduction 10.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 11 12 13 14 15 16 17 18 19 20
Energy Production (MWh)6,426 6,377 6,330 6,282 6,235 6,188 6,142 6,096 6,050 6,005
Wholesale Price of Electricity (MWh)$65.2997 $66.9322 $68.6055 $70.3206 $72.0786 $73.8806 $75.7276 $77.6208 $79.5613 $81.5503
SREC Income $926,122 $900,793 $876,156 $852,193 $828,886 $806,216 $784,166 $762,719 $741,858 $721,568
Operating Revenue $419,585 $426,849 $434,239 $441,757 $449,404 $457,185 $465,100 $473,152 $481,343 $489,677
Total Revenue $1,345,707 $1,327,642 $1,310,395 $1,293,950 $1,278,290 $1,263,400 $1,249,265 $1,235,870 $1,223,202 $1,211,245
O&M Costs ($146,221)($149,145)($152,128)($155,171)($158,274)($161,440)($164,668)($167,962)($171,321)($174,747)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($146,221)($149,145)($152,128)($155,171)($158,274)($161,440)($164,668)($167,962)($171,321)($174,747)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($479,442)($481,248)($483,171)($485,214)($487,378)($489,667)($492,082)($494,626)($497,302)($500,112)
Operating Profit $866,265 $846,394 $827,223 $808,736 $790,912 $773,734 $757,184 $741,244 $725,900 $711,133
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 3.60x 3.52x 3.44x 3.36x 3.29x 3.21x 3.15x 3.08x 3.02x 2.95x
Financial Feasibility
123
10% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 21 through 30
Sensitivity Analysis - Rate Reduction 10.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 21 22 23 24 25 26 27 28 29 30
Energy Production (MWh)5,960 5,915 5,870 5,826 5,783 5,739 5,696 5,654 5,611 5,569
Wholesale Price of Electricity (MWh)$83.5891 $85.6788 $87.8208 $90.0163 $92.2667 $94.5734 $96.9377 $99.3612 $101.8452 $104.3913
SREC Income $701,834 $682,638 $663,968 $645,809 $628,146 $610,966 $594,256 $578,003 $562,195 $546,819
Operating Revenue $498,154 $506,778 $515,552 $524,477 $533,557 $542,795 $552,192 $561,752 $571,477 $581,371
Total Revenue $1,199,988 $1,189,417 $1,179,520 $1,170,286 $1,161,703 $1,153,761 $1,146,448 $1,139,755 $1,133,672 $1,128,189
O&M Costs ($178,242)($181,807)($185,443)($189,152)($192,935)($196,794)($200,730)($204,744)($208,839)($213,016)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($178,242)($181,807)($185,443)($189,152)($192,935)($196,794)($200,730)($204,744)($208,839)($213,016)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($543,485)($546,572)($549,802)($553,177)($556,701)($560,375)($564,205)($568,191)($572,339)($576,650)
Operating Profit $656,503 $642,845 $629,718 $617,109 $605,003 $593,385 $582,243 $571,563 $561,333 $551,540
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 2.73x 2.67x 2.62x 2.56x 2.51x 2.46x 2.42x 2.37x 2.33x 2.29x
Financial Feasibility
124
10% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 31 through 40
Sensitivity Analysis - Rate Reduction 10.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 31 32 33 34 35 36 37 38 39 40
Energy Production (MWh)5,527 5,486 5,445 5,404 5,363 5,323 5,283 5,244 5,204 5,165
Wholesale Price of Electricity (MWh)$107.0011 $109.6761 $112.4180 $115.2285 $118.1092 $121.0619 $124.0885 $127.1907 $130.3705 $133.6297
SREC Income $531,863 $517,317 $503,168 $489,407 $476,021 $463,002 $450,339 $438,022 $426,042 $414,390
Operating Revenue $591,436 $601,675 $612,091 $622,688 $633,468 $644,435 $655,592 $666,942 $678,489 $690,235
Total Revenue $1,123,299 $1,118,992 $1,115,260 $1,112,095 $1,109,490 $1,107,438 $1,105,931 $1,104,964 $1,104,531 $1,104,625
O&M Costs ($217,276)($221,622)($226,054)($230,576)($235,187)($239,891)($244,689)($249,582)($254,574)($259,665)
Inverter Replacement Cost ($147,000)($142,958)($138,915)($134,873)($130,830)($126,788)($122,745)($118,703)($114,660)($110,618)
Insurance Costs ($217,276)($221,622)($226,054)($230,576)($235,187)($239,891)($244,689)($249,582)($254,574)($259,665)
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)
Total Costs ($621,553)($626,201)($631,024)($636,024)($641,204)($646,569)($652,122)($657,867)($663,808)($669,948)
Operating Profit $501,746 $492,790 $484,236 $476,071 $468,286 $460,869 $453,809 $447,097 $440,723 $434,677
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 2.08x 2.05x 2.01x 1.98x 1.95x 1.91x 1.88x 1.86x 1.83x 1.81x
Financial Feasibility
125
10% Revenue Reduction Sensitivity Analysis
Source: Wert-Berater Feasibility Studies, LLC and the Management of the Company
50 Year Pro Forma ⅼYears 41 through 50
Sensitivity Analysis - Rate Reduction 10.00%
Point MacKenzie Solar Pro Forma
(in actual dollars)
Year 0 41 42 43 44 45 46 47 48 49 50 Levelized
Energy Production (MWh)5,127 5,088 5,050 5,012 4,974 4,937 4,900 4,863 4,827 4,791 Energy Production (MWh)
Wholesale Price of Electricity (MWh)$136.9705 $140.3947 $143.9046 $147.5022 $151.1898 $154.9695 $158.8438 $162.8149 $166.8852 $171.0574 Cost of Generation ($/kWh)
SREC Income $403,057 $392,033 $381,311 $370,882 $360,738 $350,872 $341,276 $331,942 $322,863 $314,033 SREC Income
Operating Revenue $702,185 $714,341 $726,708 $739,289 $752,088 $765,109 $778,355 $791,830 $805,539 $819,484 Operating Revenue
Total Revenue $1,105,241 $1,106,374 $1,108,019 $1,110,171 $1,112,827 $1,115,981 $1,119,631 $1,123,772 $1,128,402 $1,133,517 Total Revenue
O&M Costs ($264,859)($270,156)($275,559)($281,070)($286,692)($292,425)($298,274)($304,239)($310,324)($316,531)O&M Costs
Inverter Replacement Cost ($106,575)($102,533)($98,490)($94,448)($90,405)($86,363)($82,320)($78,278)($74,235)$2,869,808 Inverter Replacement Costs
Insurance Costs ($264,859)($270,156)($275,559)($281,070)($286,692)($292,425)($298,274)($304,239)($310,324)($316,531)Insurance Costs
Land Lease ($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)($40,000)Land Lease
Total Costs ($676,293)($682,844)($689,608)($696,588)($703,788)($711,213)($718,868)($726,756)($734,884)$2,196,746 Total Costs
Operating Profit $428,949 $423,530 $418,411 $413,583 $409,038 $404,767 $400,763 $397,015 $393,518 $3,330,263 Operating Profit
Loan Amount
$4,095,775
Interest Rate
5.50%
Amortization Period (Years)
50
Annual Payment
240,756$ $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756 $240,756
Debt Service Coverage Ratio 1.78x 1.76x 1.74x 1.72x 1.70x 1.68x 1.66x 1.65x 1.63x 13.83x
Financial Feasibility
126
Accounting policies
The management of the Company has engaged a professional
accounting firm.
Availability of short-term credit
The management of the Company indicated self-funding for this
item.
Dependency on other entities
The subject project as planned is an independent solar power
producer.The subject project could be considered independent.
Only independence is on the electricity distribution system.
Market demand forecast
Regard the Independent Statistics and Analysis of the U.S.Energy
Information Administration (EIA),planned additions to U.S.wind and
solar capacity in 2021 and 2022 increase electricity generation from
those sources in our forecast.
EIA estimate that the U.S.electric power sector added 14.6
gigawatts (GW)of new wind capacity in 2020.
EIA expect 17.2 GW of new wind capacity will come online in 2021
and 7.1 GW in 2022.
Utility-scale solar capacity rose by an estimated 10.4 GW in 2020.
Our forecast for added utility-scale solar capacity is 16.2 GW for
2021 and 20.9 GW for 2022.
EIA expect significant solar capacity additions in Texas during the
forecast period.In addition,in 2020,small-scale solar capacity
(systems less than 1 megawatt)increased by 4.4 GW to 27.6 GW.In
particular,Texas and Florida had large increases of small-scale solar
capacity in 2020.
EIA project that small-scale solar capacity will grow by 5.1 GW in
2021 and by 5.0 GW in 2022.
Source: Wert-Berater Feasibility Studies, LLC
Financial Feasibility
127
Financial Feasibility Conclusion
The management of the Company has negotiated two key items:1.
Land lease at $40,000 a year thereby reducing required capital costs
and a 2.PPA whereas the deigned subject project is anticipated to
produce 6,938MWh/year (Year 1).
The DC Capacity Factor was estimated at 13.5 percent.A
Degradation Factor of 0.75 percent was applied,and System
Lifetime of 50-years was estimated.
These key features as well as technical aspects of the subject project
a verified through technical studies provide significant support for
the pro forma statement.
Sensitivity Analysis
The sensitivity analysis was for 5 percent and 10 percent revenue
reductions whereas the contracted rate was discounted.It is not
likely that the contract rate will suffer discounts as indicated by EIA
(Energy Information Administration)demand for electricity is
increasing.
These factors provide support for the revenue indication as
presented in pro forma.Operating costs should be controlled
carefully or reduced if possible because as presented in the
Sensitivity Analysis,the Debt Service Coverage Ratio (DSCR)is
impacted by reduced revenue significantly increasing the risk of loan
default.
Overall,the subject project is financially feasible based on the DSCR
conclusions,yet it is recommended that 1.The subject project cost is
reduced in an effort to borrow less money to increase the DSCR or 2.
Controlled and reduced operating expenses to reduce financial risks.
Financial Feasibility Reconciliation
Overall,based on the market demand for increasing electricity
output as indicated in the Economic Feasibility section of this report,
the subject project is anticipated to be absorbed in 12-months or
less.Debt Service Coverage and Net Present Value of pro forma
revenue indications support a low-risk project.
Source: Wert-Berater Feasibility Studies, LLC
Market Feasibility
128
Management Feasibility
Management
Feasibility
129
Management Feasibility
Analysis of the legal structure of the business or operation;
ownership,board and management analysis.
•History of the business or organization
•Professional and educational background
•Experience
•Skills
•Qualifications necessary to implement the project
The above items were presented in the business plan overview in
the Market Feasibility section of this report.
The following organizational chart presents corporate structure.The
remaining items are presented in the resumes of the principals.
See attached resume.
Source: Wert-Berater Feasibility Studies, LLC
Company Organizational Chart
The subject project is single owner-user and there is no Company
Organizational Chart.
Market Feasibility
130
Resume of the Analyst
Analyst Resume
131
Donald Safranek,MSc
As president and founder of Wert-Berater,Inc.,as manager of the company,Donald has
provided or overseen the production of about 100 studies per year since 1998 on a wide
array of project and enterprise types around the planet.He is based in Munich,Germany
where he leads the branch office for Wert-Berater,Inc.
Education
London School of Economics –LLB Degree of Laws 2000
London School of Economics and Political Science –MSc Economics 2000
Rollins College –BA English Literature and BA Economics 1986
College Employment -Internship
Lehman Brothers 1982 –1986 Asset Management real estate portfolio of $700M
Appraisal Institute Courses Completed 1982 -1986
Basic Appraisal Principles
Basic Appraisal Procedures
National Uniform Standards of Professional Practice (USPAP)Course
General Appraiser Market Analysis
Real Estate Finance Statistics
General Appraiser Market Analysis and Highest and Best Use
Sales Comparison Approach
Site Valuation and Cost Approach
Income Approach parts 1 and 2
Report Writing and Case Studies
Professional History
1998 to present –Wert-Berater Feasibility Studies,LLC dba Wert-Berater,Inc.–
President.
1986 to 1997 French Foreign Legion Sergent-chef/Maréchal des logis-chef Platoon
Leader.Deployments:Central Africa,Zaire (Congo),Cote d’Ivoire,Chad,Djibouti,French
Guiana Jungle Warfare Instructor,Rwanda,Gabon,Cambodia,Sarajevo,Bosnia and
Herzegovina (UN Peacekeeper),Congo-Brazzaville,Lebanon,Gulf War Iraq,and
Afghanistan.
Biography
The depth of project and enterprise understanding and risk assessment was developed
through experience at Lehman Brothers where Donald worked alongside the Hatfield
Philips,Inc.team of risk advisors and asset managers whereas assets which were equity
investments into a wide array of real estate projects including office,multi-and single-
family subdivision and paper lots,condominium,retail,resort,hotel,air cargo,industrial,
factories,distribution,ship salvage and repair,aquaculture,solar &wind energy,RV
parks,truck stops,breweries,gas stations and special use repositioning and new
construction projects all over the globe from the Middle East and Eastern,Central and
Western Europe,Central,South,Central and North America as well as Caribbean markets.
As Asset Manager keen insight and experience was developed due to hands on
experience in managing projects alongside project owners.This experience led to the
current feasibility study business of Wert-Berater,Inc.as risk assessment and project
analysis skills were well honed.Since 1998 Wert-Berater,Inc.has provided about 2,000
feasibility studies in 700 industries and 30 sectors worldwide.See https://www.wert-
berater.com/experience.html.
Thank you