Solar Photovoltaic Project Simple Financial Model

RPS Solar Carve-Out Program v1.0

DATA ENTRY AND FINANCIAL SUMMARY
Key Entry Cells Calculation Cells (Not for Entry) Select Taxable or Non-Taxable Entity Project and Customer Cost Assumptions Solar Photovoltaic System Size Total System Cost/Watt Total System Cost CEC Rebate Assumptions Rebate$ per/Watt Total Rebate $ $/Watt (DC STC) $ $ 200000 Watts (DC STC) 5.500 $/Watt (DC STC) 1,100,000.00 Taxable Scenario Definitions Scenario A: Non-Taxable Rebate - Assumes that the state rebate is non-taxable, but is subtracted from the cost basis for purposes of determining tax credits and accelerated depreciation. Scenario B: Taxable Rebate - Assumes that the state rebate is taxable, but is not subtracted from the cost basis for purposes of determining tax credits and accelerated depreciation. Both Scenarios assume that the project owner can use both federal and state tax benefits

Taxable Non-Taxable

1 Tax Assumptions Federal Tax Rate State Tax Rate Effective Tax Rate Federal Tax Credit State Tax Deduction 5 Year Accelerated Depreciation Schedule (MACRS) Depreciation Asset Basis Gross Cost Rebate Less 50% of Federal Tax Credit Asset Basis Financing Assumptions % Financed w/ Cash % Financed w/ Loan Loan Interest Rate Loan Period Net Cost Customer Discount Rate Loan 35% 10% 42% 30% 100% 20.00% 20.00% $ $ $ $ 1,100,000 (165,000) 935,000

2

3

4

5

6

7

8

32.00% 32.00%

19.20% 19.20%

11.52% 11.52%

11.52% 11.52%

5.76% 5.76% 0.00% 0.00%

Project Performance and Savings/ Cost Assumptions Annual Net Capacity Factor Annual Production Degradation Project Life Depreciation Life Electricity Revenue (Avoided Costs) Electricity Revenue (Avoided Costs) Annual Adjustor Solar Renewable Energy Certificate (SREC) Auction Price SREC Auction Opt-In Term SREC Revenue Annual Adjustor SREC Contract Price SREC Contract Term Annual Operations and Maintenance Cost Factor Annual Operations and Maintenance Cost Annual Operations and Maintenance Adjustor Future Inverter Replacement Cost Inverter Life, Replace Every X Years 13.0% kW (DC STC) to kWh AC 0.50% % 25 20 0.16 3.0% 0.285 10 0.0% Years Years
$/kWh

$ $

$ $ $

17.59 3,518 3.0% 0.30 10

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

$ $

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

Solar Project Financial Analysis Summary Net Present Value Simple Payback (100% Cash only) Estimated Return on Equity Scenario A: Guess Return on Equity

$

52,425 Year 7 9.4% 10%

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

149848955.xls.ms_office

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327) (4.712 $ 95.909 42.309 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 51.542 Year 13 214.886) $ 179.847) (7.580 $ 47.085) $ (287.497) 26.712) (8.738 $ 48.391) 25.102 $ $ $ 24.392 Year 15 212.327) 101.ms_office 2 .960) (3.120 $ 23.520 $ 120.275 $ 39.621 Year 3 225.123 Year 7 221.169 No (3.316) $ 187.624) 98.387) 6.427 (53.000) $ 7 122.232 $ (408.592) $ 107.948 314.870) (4.386 $ No - $ $ $ $ $ $ $ - - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - (693.908 (13.442 $ 37.868 42.708 (9.686 $ $ $ 26.818 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 62.167) (4.844) 99.924 $ 50.646) $ (95.015 11 210.349 $ 45.100.988 105.968) $ $ $ $ $ $ $ $ $ $ $ $ $ $ 64.000 $ 122.907 Year 9 218.016) (5.092 59.804 $ (11.590) (60.102 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 46.518) 97.092 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 62.835 (187.309 287.166) (5.078 $ $ $ 25.870) 42.252 102.012 (31.048 107.185) 24.166) 44.948 26.464 Year 14 213.868 (13.632 (9.102 25.456) (4.430 9 160.316) $ 1 $ 162.316) $ (408.743 53.102 185.973 (14.064 (14.140 $ 51.264 102.606) 26.590) 42.624) (3.036 15 314.225) 59.499 Yes (4.948 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 64.092 $ $ $ 59.686 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 50.120 $ (95.321) 46.908) $ $ $ $ $ $ $ $ $ $ $ $ $ $ 63.165) (89.043) 23.571 (12.909 42.451 $ 46.212 No (4.804 $ (191.908) $ 107.973 44.412 (9.932) (11.620 101.818 59.484 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 47.503) (4.886) $ $ $ $ $ $ $ $ $ $ $ $ $ $ 63.712 $ 96.889) (200.686 25.684 $ (570.807 (179.516) (4.526) $ 5 $ 77.226 $ 40.599 $ (17.488 Year 4 224.064 46.448 $ $ $ 59.986) (11.430 $ $ $ $ $ $ 25.165) 34.451) $ (191.518) (3.889) 73.819) (10.807 Year 10 217.824 No (3.684 $ (136.305 104.361 Year 5 223.934 No (3.484 210.309 $ $ $ 26.868 42.673 105.599 $ $ $ 59.387) (8.016) 43.973 44.273 $ 44.012 101.000 (693.078 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 48.844) (3.634 $ (287.784) (64.010) (10.818 160.785) (10.162) 59.852 41.000) (89.613 $ $ $ $ $ $ 59.571 46.448 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 62.000) $ (693.732) 98.451) $ 3 $ 95.505 No (4.587 101.728) 41.743 $ $ $ $ $ $ $ $ $ $ $ $ $ $ 62.252 (32.484 $ $ $ 25.646) $ 4 $ 96.Solar Photovoltaic Project Simple Financial Model PRO FORMA AND PRODUCTION Project Output Annual Generation (kWh) Start-Up 0 Year 1 227.510) (4.000) $ $ (693.709 No (4.943 103.908 43.064 46.881) (58.xls.000) $ $ $ $ $ $ $ (64.752 (9.000) 77.927) $ 6 $ (570.200 $ 162.927) $ 149848955.092 41.634 $ (11.200) (200.532 10 185.818 $ $ $ 25.201) (4.252 102.620 (32.738 No (4.712) (7.686 260.732) (3.912 101.713) (80.165 7 41.625 Year 12 215.224 $ 43.291) 25.713 Year 11 216.847) 6.239 Year 6 222.353 No (3.012 Year 8 219.532 $ $ $ $ $ $ 24.078 235.183) (4.036 $ $ $ $ (1.209) (10.620 101.968) $ 299.015 $ $ $ $ $ $ 25.856 77.000 330.623 103.831) (4.232 $ (58.316) $ $ $ $ $ $ $ $ $ $ $ $ $ $ 64.000) (64.779 13 260.580 No (4.201) 101.311 (299.456) 102.613 8 100.386 No (5.852 41.012 101.347 $ 38.728) (4.321) (5.948 36.831) (136.200 $ 42.909 (13.960) 99.852 (13.713) 31.078) (4.760 Year 2 226.165 7 $ $ $ $ $ $ 59.908 43.287) 25.078) 100.089 14 287.448 100.539 No (3.947 No (4.592) $ $ $ $ $ $ $ $ $ $ $ $ $ $ 63.325 FINANCIAL SCHEDULES INCOME STATEMENT Electricity Revenue (Avoided Cost) CEC Rebate SREC Auction Revenue SREC Contract Revenue Total Revenue (Avoided Costs) Replace Inverter? Operations & Maintenance Costs Inverter Replacement Cost Total Operating Expenses EBITDA Federal Depreciation Expense EBIT Interest Expense EBT Federal taxes saved/(paid) State taxes saved/(paid) [can not deduct federal depreciation expense] Net Income CASH FLOW STATEMENT Cash From Operations Net Income Federal Depreciation Expense Cash Flow From Operations Cash From Investing Installed PV Cost One Time State Solar Investment Tax Deduction (Actual Cash Value) One Time Federal Solar Investment Tax Credit Cash Flow From Investing Cash From Financing Loan Disbursement Loan Repayment (Principle) Cash Flow From Financing Annual Cash Flow Cumulative Cash Flow Simple Payback Net Investment Simple Payback Year $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 59.085) $ 2 $ 120.089 $ $ $ $ $ $ 26.520) (80.140 No (5.201 $ 41.360 106.865 (107.779 $ $ $ $ $ $ 26.856) 46.093 12 235.484 24.309 26.325 (107.526) $ (17.101) 59.448 59.093 $ $ $ $ $ $ 25.078 25.924 No (5.242 (9.

Finally. process. method. the use of information contained. and reference to any specific method does not constitute an implied or expressed recommendation or endorsement of it.xls. or accuracy of any processes. the information contained in this model does not necessarily reflec Resources or the Commonwealth of Massachusetts. 149848955. Neither the Department of Energy Resources nor the Commonwealth of Massachusetts make any warranties or representations completeness. disclosed. described. described.Solar Photovoltaic Project Simple Financial Model DEBT SCHEDULES Scenario A Loan: Debt Schedule Beginning Balance Debt Service Principle Interest Ending Balance Year 1 $ $ $ $ $ Year $ $ $ $ $ Year Year 2 $ $ $ $ $ Year Year 3 $ $ $ $ $ Year Year 4 $ $ $ $ $ Year Year 5 $ $ $ $ $ Year Year 6 $ $ $ $ $ Year Year 7 $ $ $ $ $ Year Year 8 $ $ $ $ $ Year Year 9 $ $ $ $ $ Year Year 10 $ $ $ $ $ Year Year 11 $ $ $ $ $ Year Year 12 $ $ $ $ $ Year Year 13 $ $ $ $ $ Year Year 14 $ $ $ $ $ Year Year 15 - Disclaimer: This Unofficial Cash Flow Model is intended to provide non-residential entities that are considering the purchase and installation of solar energy equipment with a general understanding of possible financial implications of such purchase and installation.ms_office 3 . apparatus. Those entities interested in learning purchase and installation of solar energy equipment are urged to consult their own tax and financial experts. Furthermore. The information contained in the Unofficial Cash Flow Model may not be relied on by anyone for any purposes. disclosed. neither the Department of Energy Resources nor the Commonwealth of Massachusetts makes any representation that the use of any product. or other information will not infringe privately owned property rights and assumes no liability of any kind or nature for any resulting from. or occurring in connection with. or referred to in this Unofficial Cash Flow Model. methods or other information contained. or referred to in this model.

00% 149848955.ms_office 4 .00% 0.xls.00% 0.00% 0.00% 0.9 10 11 12 13 0.

698 50.498 49.ms_office 5 .601 341.592) (4.658 428.096 Yes (6.182 47.069 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 52.523 $ $ $ $ $ $ (4.440) 424.073) (8.498 (15.271 $ $ $ 28.971 No (5.971 53.312 55.523 19 428.645) 48.271 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 55.718) 27.073) (8.498 49.908 $ $ $ $ $ $ 28.156 Year 19 208.082 20 424.687 56.169) (8.663 No (5.956 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 56.263 Year 17 210.326 48.207 Year 18 209.826 807 (4.865 $ $ $ $ $ $ 29.096 58.601 $ $ $ 28.862) (4.481) (5.645) (5.638 $ $ $ $ $ $ 28.182 (14.070) 29.658 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 58.182 47.956 398.970) (5.440) $ - $ - $ - $ - $ - $ $ $ $ $ $ 27.601 27.223) (4.658 29.989) (5.271 28.950) 28.698 (15.073) 2.326 (15.638 16 341.082 149848955.989) 50.908 17 369.169) (60.698 50.865 18 398.Year 16 211.833) 28.956 $ $ $ 29.000) (66.440) (4.312 No (5.663 52.658 $ $ $ (4.815) (5.110 Year 20 207.271 369.481) 47.xls.440) $ $ $ 27.815) 49.687 No (5.326 48.601 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 53.956 28.

Year 16 $ $ $ $ $ Year $ $ $ $ $ Year 17 Year $ $ $ $ $ Year 18 Year $ $ $ $ $ Year 19 Year $ $ $ $ $ Year 20 Year hose entities interested in learning more about the financial implications of the s model does not necessarily reflect the views of the Department of Energy any warranties or representations. or damage directly or indirectly 149848955. expressed or implied. injury. as to the usefulness.xls.ms_office 6 . bility of any kind or nature for any loss.

Back This model assumes that the cost of electricity will increase at 5% per year. kilowatts (kW) Kilowatts are a measure of power. Back Annual Production Degradation Depreciation Life Electricity Revenue (Avoided Costs) Electricity Revenue (Avoided Costs) Annual Adjustor Over the course of the life of the PV system. An optimal system in Massachusetts that is fixed a tilt of 42 degrees. The amount of energy consu electric meter. A kilowatt is 1. Back Annual Net Capacity Factor This is a ratio between the amount of energy produced by your solar PV system a production capability.285/kWh. Another fa is able to face due south.8 kW. and the amount of shading. inverter utility. it descr single solar PV panel might be rated at 180 watts.5% per year. In this case. its orientation. Depreciation life is the "useful life" of the system. the more it should produce. This includes your panels (modules). Back The solar photovoltaic (PV) system. This is the price per kWh that you will save on your electricity bill using this solar P this is a state average price for electricity. there costs will also increase at 5% a year. also known as green tags. Back SREC Auction Opt-In Term The model uses a default term of 10 years. Solar R environmental commodities in Massachusetts which represent proof that 1 megaw generated from an eligible renewable energy resource. A 12. For example. Tilt angle also impacts prod latitude the more it will produce. a system will produce less roof) than if they are on an axis that tracks the sun throughout the day. If a system uses 10 panels rat be 1800 watts. which is the price owners will receive for their SRECs if sold through Account. Back optimal fixed south facing free from shading location System Size Back The best case scenario for how much electricity a solar PV system will produce. Back Back Depreciation is the reduction in the value of an asset due to usage. All projects with an Opt-In Term of 10 years will be their Opt-In Term by depositing them in the end of year Solar Credit Clearinghous expected to be a measure of last resort for projects that have not signed bilateral required to purchase SRECs by the end of the compliance year. 24 hours per day at the optimal tilt and orientation with no shade then that sy in other words. These certificates may ha traded so that the owner of the SREC can claim to have purchased renewable en $. its production capability will decrease Our default assumption is that this degradation will be 0.Definitions Back Kilowatt-hours (kWh) Solar System Estimated Optimal Annual Generation (kWh) Unit of energy. electricity depending on several factors.8% net capacity factor is average for solar PV system the angle of the system. or 1. This is a measure of how much energy is consumed by a home o much electricity is produced by a solar PV system. system will provide an economic benefit. it would produce its rated output. passage of ti obsolescence or other factors. If a solar PV day. Back Solar Renewable Energy Certificate (SREC) Auction Price Solar Renewable Energy Certificates (SRECs). This models allows the value of RECs to change by this percentage each year Back Back SREC Revenue Annual Adjustor SREC Contract Price The price of SRECs as agreed upon in a bilateral contract with a compliance entit .000 watts. This term is based upon the length o qualified in 2010 will receive.

Back SREC Contract Term Future Inverter Replacement Cost Annual Generation (kWh) Total System Cost The term of the bilateral contract with a compliance entity or other entity purchasin Back A solar inverter is a component of a PV system that changes the direct current (D alternating current (AC) for use with home appliances or any AC load. In the case of taxable commercial entities. The life of the life of the PV panels and will likely need to be replaced during the lifetime of th This model assumes the default cost to replace the inverter will be $0. equip etc.75/watt. the Total System Cost should incl equipment . This is the estimated amount of energy that your solar PV system will produce in Back Back Total System Cost includes all elements of the installation including design.

passage of time. ction capability will decrease as it deteriorates to a degree over time. and meter which connects you to the ar PV system will produce. are tradable epresent proof that 1 megawatt-hour (MWh) of electricity was . PV systems will produce more or less a system will produce less energy if the panels are fixed (e. . The closer a system's tilt is to its Massachusetts that is fixed. due to usage. The more the system Tilt angle also impacts production.5% per year. It is also a measure of how he amount of energy consumption or production is measured by an r panels (modules). wear and tear. the system size will d by your solar PV system and its optimimum nameplate (labeled) verage for solar PV systems in Massachusetts. therefore your savings from avoided electricity nown as green tags. technological "useful life" of the system. 0. Another factor is orientation. inverter. meaning the estimated length of time the ectricity bill using this solar PV system. The default is $0. The Auction is at have not signed bilateral contracts with compliance entities that are ance year. Their default value is set at heir SRECs if sold through the Solar Credit Clearinghouse Auction is based upon the length of the Auction Opt-In Term that all projects In Term of 10 years will be eligible to sell SRECs generated during r Solar Credit Clearinghouse Auction Account. These certificates may have a value and they can be sold and ve purchased renewable energy. If a solar PV system had the sun shining on it every n with no shade then that system would have a 100% capacity factor. Solar Renewable Energy Credits.y is consumed by a home or facility. faces due south (180 degrees) and has watts. is percentage each year ract with a compliance entity or other entity purchasing SRECs.18/kWh as rease at 5% per year.g. to a oughout the day. it describes the size of the solar PV system. A system uses 10 panels rated at 180 watts each. In this case. This value varies by nt of shading.

tal System Cost should include Massachusetts sales tax on the . PV system will produce in kilowatt hours (kWh) each year. The life of a solar PV system's inverter is less than aced during the lifetime of the system which can be 25 years or more.ntity or other entity purchasing SRECs. verter will be $0. labor. interconnection. tion including design.75/watt. permitting. equipment. hanges the direct current (DC) electricity from the PV array into or any AC load.

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