The Analyst recommends maintaining the Project’s 5+ rating. The assigned rating reflects cash flow predictability and visibility from a long-term PPA with an investment grade off-taker, equipment technology complexity, and the expected amortization of the Term Loan balance by the maturity date in 2032.
Met Atrium is comparable to Thunder Bay Solar 2 LP (“TB2”) (5+) and First Light 2 (“First Light”) (5+). Both of these solar facilities, like the Project, have long-term PPAs with the investment grade off-takers.
TB2’s operating profile is slightly better than the Met Atrium’s operating profile given TB2 has lower volume and demand volatility risk than Met Atrium. The other operating risk factors are similar for both the projects. In terms of the Financial & Structuring risk factors, TB2 has a reasonable PPA Tail compared
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The variance was largely due to a conservative approach used by the SFS EF AM in forecasting the operating expenses.
Solar insolation was slightly lower than the SFS EF AM forecast (about 1%).
Debt Service Coverage Ratio (“DSCR”) for the review period was 1.3x, somewhat below the SFS EF AM forecast of 1.5x, reflecting lower than expected net operating cash flows, largely due to lower energy output.
Given the location of the Project, the Analyst is of the opinion that strength of the solar insolation will remain relevant in the future as well and influence the energy output. Met Axium Solar Cluster 1 LP (f.k.a. Met Fiera Solar Cluster 1 LP) (“Met Axium” or the “Borrower) is composed of three solar projects: Midhurst 2 (“MH2”), Midhurst 3 (“MH3”), and Midhurst 6 (“MH6”) (the “Projects” or the “Portfolio”), all of which are located in Ontario, Canada and have an aggregate capacity of 15.5MWac. The Projects achieved COD in December, 2013 and each has a 20-year Power Purchase Agreement (“PPA”) with the Independent Electricity System Operator (“IESO”) (Aa2; SFS Equivalent
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The present value of the net incremental cash flows, totaling $5,740K, is added to the present value of the Capital Cost Allowance (CCA) tax shield, provided by the Plant and Equipment of $599K, to arrive at the project’s NPV of $6,339K. (Please refer to Exhibit 4 and 5 for assumptions and detailed NPV calculations.) This high positive NPV means that the project will add a significant amount of value to FMI. In addition, using the incremental cash flows (excluding CCA) generated by the NPV calculation, we calculated the project’s IRR to be 28%. This means that the project will generate a higher rate of return than the company’s cost of capital of 10.05%. This is also a positive indication that the company should undertake the project.
Thanks to its more advanced technology over its competitors, First Solar has been able to produce and deliver higher energy density. The company ensure that the plants are able to produce more energy, and more consistently over the long term. This competitive advantage allows First Solar to see its assets to depreciate at a lower rate, and ensure the company’s ongoing bankability. These benefits guarantee First Solar advantages by lowering the LCOE (Levelized Cost Of Electricity) prices, that are competitive with traditional energy
4. What kind of debt (agency debt, bank debt, or Rule 144a bonds) should the sponsors of the project use to fund the deal? What are the advantages and disadvantages of each kind of debt? In your view will project bonds receive an investment grade rating? What is the“weakest link” of the project? How can they improve the likelihood of getting an investment grade?
Using the calculated WACC and the company’s hurdle rate for this project, under Bob Prescott’s cost savings and additional revenues assumption, the project’s IRR is now greater than the hurdle rate. Furthermore, the net present value (NPV), payback period and the additional value added to the earnings per share (EPS) are shown in Table 4 below. Using just these figures, the project should be accepted.
The Analyst recommends maintaining the Project’s 4- rating. The assigned rating reflects cash flow stability and visibility from a long-term PPA with an investment grade off-taker, expectations that the Term Loan will fully amortize by the maturity date, and a slightly weak operating profile given higher than the normal equipment failure rate.
where CFt is the cash flow at time t, k is the appropriate discount rate. Our project can be acceptable if the NPV is greater than or equal to zero and unacceptable otherwise. An NPV profile that shows the NPV for various discount rates will show how sensitive the project's NPV is to the discount rate assumption. Taking into account our Project's key financial data, we can compute the NPV as follows:
Finally, in order to complete a more accurate comparison between the two projects, we utilized the EANPV as the deciding factor. Under current accepted financial practice, NPV is generally considered the most accurate method of predicting the performance of a potential project. The duration of the projects is different, one lasts four years and one lasts six years. To account for the variation in time frames for the projects and to further refine our selection we calculated the EANPV to compare performance on a yearly basis.
In the two capital budgeting cases corporations (A and B) have different revenues values and expenses as well as variable depreciation expenses, tax rates and discount rates. The members of our team had to compute both corporate cases NVP, IRR, PI, Payback Period, DPP, and project a 5-year income statement and cash flow in a Microsoft Excel spreadsheet. The future cash flows of the project and discounts them into present value amounts using a discount rate that represents the project's cost of capital and its risk is what’s needs to forecast the investment. Next, all of the asset's
Based on the results, Project 3 would satisfy the high annual cash flow requirement with a shorter payback period of 5 years.
After inspecting the facility, the team also took into consideration the location, and the 33,000 sq-ft roof of the facility to analyze the possibility of adding solar panels on roof to introduce a clean sustainable energy source in the facility. The average-high sun hours peak in charlotte, the Federal Tax credit, and the unused space on the
Navy Real Estate corporation is a 100% private business which operates as a Limited company. Founded in 2000, after ten years of
“Today, the industry’s production of PV modules is growing at approximately 25 percent annually, and major programs in the U.S., Japan and Europe are rapidly accelerating the implementation of PV systems on buildings and interconnection to utility networks.” (Florida Solar Energy Center, 2007)
In the solar industry, there are many opportunities for innovation and technology not only in the products themselves, but also in the channel development and pricing strategies. The Mexican government and the domestic market in general are primed to facilitate the widespread development of solar power. The CFE, the CRE and the Government Department for Energy are invited to discuss the outlook for renewable energy in Mexico, what support it will receive and what targets are to be reached (Herrera, 2012).
The company experienced a sharp decline in their interest cover ratio between 2012 and 2013, with a decrease of 7,65 from 2012 to 2013’s numbers. They were still more than able to pay the interest on their debt and the ratio fairly improved from 2013 to 2016 with 2,1, though there was a slight decrease from 14,66 in 2015 to 14,50 in 2016.