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Making Clean Energy Simple and Profitable for Our Clients
Page
Solar Power @ Closed Landfills:
Project Economics in Massachusetts
June 2009
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 2
Introduction• Agenda
– Key Issues Impacting Project Economics• Screen 1: Cost and
Performance• Screen 2: Incentives
– Case Study: 220 kW Solar Project• Taxable Entity Owner• Non Taxable Entity Owner• Host w/ 3rd Party Owner
– Looking Forward• Policy• Tracking?
• Nexamp, Inc.
– Turnkey Clean Energy Solutions Provider.
– Leading Solar Installer Headquartered in Massachusetts.
– 32 Employees: engineers, designers, construction managers, installers, electricians, HVAC technicians, etc.
– Recipient: Association of Energy Engineers Best Energy Reduction Project in New England 2008.
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 3
Landfill Solar Project Development
• Nexamp Turnkey Installations Capabilities– Advisory Services– Technical and Financial
Feasibility– Design and Engineering– Rebates and Incentives– Permitting and
Interconnection– PPA and Other Financing
Support Options– Installation– Operations and Maintenance
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 4
Ground Mounted Experience
• Nexamp ground mounted solar projects:– Attached– Ballasted (ideal for Landfills)
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 5
Ground Mounted ExperienceAs a sub contractor to BlueWave, Nexamp provided preliminary technical and financial assessment to Western Massachusetts Electric Company to support DTE Solar Program Filing.
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 6
Today’s Assumptions• This presentation applies to the MA Solar Market as of last
Monday. – Market is subject to rapid change (equipment cost and
policy).• Solar is still very reliant on incentives and incentives
remain the primary financial driver.– Only projects that qualify for Commonwealth Solar or a
similar incentive make financial sense.• Land in MA is relatively valuable and finite. Even
brownfields may have a competing use (e.g., park, parking lot, etc.). – kWh/sqft (power density) may be a more important
consideration than it is in other portions of the U.S.
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 7
Key Issues: Cost and Performance
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 8
Key Issues: Focus on Power Density
• February/March 2009 edition of SolarPro Magazine about the Tilt Angle and Power Density (kWh/sqft):
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 9
Key Issues: Maximize Incentives• Incentives: Order of
Importance on Project Economics
1. Commonwealth Solar Rebate or equivalent (~50% of project cost)
2. Federal 30% Tax Credit/ Grant for Taxable Entities
3. Federal Depreciation4. MA State Tax Deduction5. $/kWh energy savings and
REC revenue
~95% of initial investment recovered by first 4 incentives if you can use them!
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 10
Key Issues: Maximize Incentives
• Today’s MA market is rebate driven and rebates ($/watt) decrease faster than economies of scale improve as project size increases:
Estimated After Tax Rate of Return for a Taxable Owner
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
110 220 330 440 550 1100 2200
Solar Project Size (kW)
Aft
er
Ta
x R
ate
of
Re
turn
Note: No Public Building Adder
Making Clean Energy Simple and Profitable for Our Clients
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Case Study: 220 kW Ground Mounted• 220 kW Ground Mounted• Fixed Tilt @ 20°• Polycrystalline Modules• Commonwealth Solar Rebate
Eligible
• Scenarios– Taxable Owner
• No Public Adder
– Non-Taxable Owner• w/ Public Adder
– 3rd Party PPA• Both
• Assumptions– Installed cost: $6/watt– Capacity Factor:13.2%– Degradation: .5%/yr– Avoided Electricity: $.14/kWh– RECs: $.35/kWh for 7 years– Inverter replacement in Yr.
20– 25 year project life– Previously discussed
incentives as applicable
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 12
Case Study: 220 kW Ground Mounted
• Taxable Owner: No Public Building Adder
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 13
Case Study: 220 kW Ground Mounted
• Non-Taxable Owner: w/ Public Building Adder
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 14
Case Study: 220 kW Ground Mounted
• Power Purchase Agreement: No Public Building Adder • $.11/kWh w/ a 3% annual escalator for 20 years w/ a 5
year extension option (savings is pre-tax)
Example: Nexamp Solar PV PPA Cumulative Savings
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Year
Utility Electricity Price Inflation Rate: 10.00%
Utility Electricity Price Inflation Rate: 7.50%
Utility Electricity Price Inflation Rate: 5.00%
Utility Electricity Price Inflation Rate: 2.50%
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 15
Case Study: 220 kW Ground Mounted
• Power Purchase Agreement: Public Building Adder • $.07/kWh w/ a 3% annual escalator for 20 years w/ a 5
year extension option
Example: Nexamp Solar PV PPA Cumulative Savings
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Year
Utility Electricity Price Inflation Rate: 10.00%
Utility Electricity Price Inflation Rate: 7.50%
Utility Electricity Price Inflation Rate: 5.00%
Utility Electricity Price Inflation Rate: 2.50%
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 16
MA Conclusions and Outlook
• Financial– Sweet spot is in 110 kW to 220 kW range
– PPA make most sense for Public Entities
– Tremendous value today, but expect changes
• Outlook– Equipment Costs
– Stimulus
– Net Metering
– CS Solar to S-REC Transition (better for larger projects?)
– Increased use of Tracking Systems
Making Clean Energy Simple and Profitable for Our Clients
Page June 2009 17
Contact Information
Jon Abe, Nexamp, Inc.V.P. Business Developmentphone: 978.688.2700 x707 email: [email protected]
Dan Leary, Nexamp, Inc.President and COOphone: 978.688.2700 x706 email: [email protected]