Category: Finance and Asset Management
The IRS has recently issued the guidelines in August of 2018 for solar re-powering providing ITC benefits to older solar farms. The importance of this topic is to provide developers, owners, and utilities with information on the requirements of complying with the 80/20 rule and safe harbor as it relates to re-powering.
1. The introduction of the presentation will provide:
- A brief history of the solar power market in the US over the last 15 years to today as well advancements in technology (reduction in degradation rates, lower overnight costs, increased efficiencies with Inverters, etc.).
- What is re-powering?
* What is partial re-power?
* What is full re-power?
- Current status on ITC benefits
2. An explanation of Solar Re-powering as per the IRS will be provided including:
- The requirements for compliance with the 80/20 rule
- An explanation of fair market of the retained components
- Discussion regarding Safe Harbor requirements
- ITC benefits regarding compliance with the IRS 80/20
3. Appraisal techniques applied to arrive at the fair market value of the retained components. This would include:
- The three approaches to value:
* Income Approach
* Cost Approach
* Market Approach
- Determination of the replacement cost new
* Physical Depreciation
* Functional Obsolescence
- How does improved technology decrease the fair market value of existing solar farms and their respective components.
* Economic Obsolescence
- How do external factors affect the value of solar farms and their respective equipment
* US Tariffs on solar modules
* US Tariffs on steel and aluminum
4. Takeaway from the presentation:
- Why should you consider re-powering a solar farm?
* Which is better? partial or full re-powering?
- What are the benefits of re-powering?
- How to identify a suitable project to re-power?
- Who should be on my re-powering team?
Fernando Sosa– Director, Cushman & Wakefield