Financial Analyst Brie test based Guide There is a potential commercial rooftop solar PV project which needs to have a f

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Financial Analyst Brie test based Guide
There is a potential commercial rooftop solar PV project which
needs to have a financial analysis done as part of a
pre-feasibility study conducted.
i) The designed capacity is estimated to be 600 kWp, with annual
PV production of 735,840 kWh
(or Capacity Factor of 14%).
ii) Degradation rate of the solar PV production assumed to be
0.5% per annum
iii) An EPC has provided a prelim turnkey quotation at USD
0.65/Watt peak.
iv) O&M assumed by default to be 1% of Capex per annum, with
1% annual inflation
v) Equipment(including inverter) replacement can be assumed to
be $0.10 per Watt peak
v) The prospect’s current electricity tariff is about USD
0.07/kWh.
vii) Any suitable USD to IDR exchange rate can be assumed
The prospect is interested in an offer of a PPA contract and the
sales team requests both a 20 and 25 year option for contract
duration.
Given that the benchmark IRR for most investors is 12%;
a) Based on the sales team suggestion of going with a 20%
discount off tariff(D.O.T) for 20 years and 25% discount off tariff
for 25 years, determine if the project is financially feasible
for
i) Genes as the developer without any
external project investors
ii) Project Investors if they were to come
in with 100% of the CapEx needed, while GENES will earn
as a % of the Net Project
Cashflow
If the above suggestion by the sales team is deemed to be
financially unfeasible,
b) Suggest to the sales team what will be the suitable discount
off tariff(D.O.T) that can be offered to the clients for both 20
and 25 years contract duration, if
i) Genes as the developer without any
external project investors
ii) Project Investors if they were to
come in with 100% of the CapEx needed, while GENES will
earn as a % of the Net
Project Cashflow
c) After prospect has agreed to the offered discount off
tariff based on 1st round of discussions,
how would you further verify the feasibility of the
project?
Hint: Think of at least 2 variables that can quite significantly
affect the outcome from the pre-feasibility study in part a) and/or
part b)?