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Business Plan For Solar Energy
System
ContentsExecutive Summary........................................................................................................................2
Company Overview.......................................................................................................................4
Stage of Product Life Cycle.............................................................................................................8
Industry Analysis............................................................................................................................9
Market Place Analysis..................................................................................................................10
Customer Analysis........................................................................................................................10
Competitor Analysis.....................................................................................................................11
Marketing Strategy.......................................................................................................................12
Distribution Strategy....................................................................................................................15
Advertising And Promotion Strategy............................................................................................16
Operating Strategy.......................................................................................................................17
Development Strategy..................................................................................................................18
Revenue Generation.....................................................................................................................18
Legal Structure & Ownership........................................................................................................22
Pricing Strategy.............................................................................................................................25
Financial Risks...............................................................................................................................31
Exit Strategies...............................................................................................................................32
Financial Analysis..........................................................................................................................33
Executive Summary
Company Overview. The Nixon Company will design solar electric plan for the
underdeveloped areas where the electricity is still a hope for the people. Agriculture is
the sector which affected by the less supply of the electricity the company will try hard
to become the leading producer of the solar energy by installing the efficient solar
electric systems at various places.
Industry & Marketplace Analysis. As per the survey reports of the great economists.
The demand of electricity is high in May terms of the supply of the electricity. Nearly
One fourth of the world wide population is abundant from the power of electricity.
There is no electricity in these areas. The majority of the area is rural. The farmers and
villagers are main survivors. As per the records the demand for the electricity has risen
by 40 % in the past years and is expected to rise even more in the coming years. The
demand might increase to three times. The company will try hard to position itself and
help the environment socially with the effective solar energy system. The company will
establish a plant in the Eastern region of the Abu Dhabi. The project will target the
street lights and villagers to help them in irrigation.
Products & Services. Nixon will introduce such a system in the market which affordable
in every term for class. The small families will be offered financing options so that they
are able to afford the product and make the biggest use of it. The company will open
various distribution centers at various corners to make easy availability for the
consumers. Seminars and workshops will be organized by the company to make people
aware about the pros and cons of the product and how to use the product effectively to
earn highest amount of benefit. This step will enhance the economic prosperity of the
area and the country as a whole in the world market.
Marketing Strategy. The target area has a population of more than 3 million. As per the
survey done by the company people nearly rare percentage of the people are able to
afford electricity from the grid. The industrial companies take the advantage of the
overhead grid lines and because of that the villagers remain abundant of the benefit of
the electricity.
Currently the alternative of the electricity is the kerosene, which is somehow equal in
cost to the solar electric plant in the long run.
A solar electric system is reliable and gives more value to the customers as compared to
the alternatives.
Operations and Development. In the month of august the Nixon will begin with its
work. Experts will be hired to look after the designing of the solar electric system.
One person in the team will look after the documentation process and the remittances.
Whereas one will look after the relationships with the suppliers. One staff member will
be responsible to look after the shipping process and one will look after the assembling
of the elements.
Management Team. Jaz is the founder of the project. He is an engineering graduate
and has completed MBA in Entrepreneurship. He has been travelling in United Arab
Emirates and has analyzed various suppliers for the partnership. The founder with its
team will look after the process of the solar energy system and will make it a success in
terms of value to the customers.
Summary of Financials and Offering to Investors. As per the financial statements the
solar energy system will generate 1104000 $ in the second year as net income and
1385250 $ in the third year.
Nixon will require $20 million for the installation in the initial stage. The company will
identify various sources of funds and will employ one person to look after the incentives
from the government. The presence of the company will improve the economic
condition of the area targeted and will increase the level of prosperity. The target
customers will be well informed and will be able to earn more with the employment
opportunities in the company. The company will able to bring a diversified change in the
life’s of the people.
Company Overview
This project for Solar System for electricity is designed to make good for investors,
customers and community at large. It is being developed to earn financially and to be
technically feasible.
Nixon, has come up with an innovative approach to increase the electricity utility.
Vision
Today the people are more educated and developed as compared to the previous time.
Science has come so far in achievement that it sky is no limit for it. Technology has
brought various tools to solve the problems of the people. The vision of the company is
energy efficiency.
Mission Statement: The Mission is to establish the product’s leadership in the market.
The product will give the customer’s a desirable mix of quality. To ensure economic
activity for the progress
Goals and Objectives
The goals for the project are :
Financially profitable concern
Low risk for investors
Safe opportunity
Positive impact on society
To establish leadership in market
Increase sales thereby increasing the share price.
Creating a new market segment.
The Investment Opportunity
The basic problem of the households and other consumers is the electricity. Energy
consumption is the basic need of an hour. There are varied opportunities in the
industry. The sector is a driver for the future prosperity. So far United Arab Emirates
investors it is a major area for investment. The growing development and energy
economics has made the area real attractive one. The market study reveals that the
sector has major potential. But eventually the growth rate is slow.
Strategy, Organization and Management
The company will target the existing contractors for working level who get disinterested
because of the complex incentives, regulations and paper work .
Keys to Success
Availability of technology makes it economical
Experienced and talented staff
Customer Satisfaction
Availability
Quality services
Marketing of product
Products And Services
The company will make users get rid of electricity deficits. Through this product the
company will bring renewable source of energy to everyone’s home. Nixon will offer
electricity through solar means.
This option will be popular amongst the street lights and the agriculture sector of the
United Arab Emirates.
Solar systems will be imported from Zuzho Solar Group Co. Ltd.
Battery and charger will be purchased from distributors.
Solar Systems
As per the research there are 2 types of solar panels available
Mono crystalline
Multi crystalline
Though both the products are same but the company will target the Multi one as
storage of battery ranges for two to three days in the case of Multi Crystalline.
Battery
Lead acid batteries will be used for the storage of solar energy as these batteries have
higher capacity in comparison to other batteries.
Charger
This device will help to electrify even in the night hours.
Services
Sale of Solar System for villagers.
Rent solar panel for advertisement boards.
Stage of Product Life Cycle
Industry Analysis
Over the past ten years, for instance, the demand for electricity has increased in a huge
way. People in may areas are still living without the electricity. As per the research the
world’s demand has increased by 42 % in these years. The various electricity experts
says that the demand for electricity will get three times of this or even more by 2020.
Agriculture being the first area which is being affected by the less supply of the
electricity in the areas.
The solar power system has many opportunities in the market as per the reports. The
system has varied advantage over the competing systems.
The major competitors are natural gas fired turbines and hydroelectric power. But both
the sources are unable to produce as per the demands of the customers.
Market Place Analysis
United Arab Emirates is amongst the powerful nations in the world. The country has
political stability since the past many years and has multiparty government. United Arab
Emirates has an economical growth rate of 3.5% over the past decades. The expected
GDP is 5.5%. 24% of the population lives in rural areas which is quite a big percentage,
meaning of it is that nearly 30 million people are living in rural areas where electricity is
a big problem.
Customer Analysis
The eastern range of Abu Dhabi is like a dispersed village. Te result shows that there are
many places where even people don’t even have centralized homes. Only 0.6% are
electrified with solar system. The industries are using the grid systems whereas the
villagers are still longing for electrified house.
The people believe that the modernization is linked with the electrification. As a result
many of the people in the area stood up to support the company in working.
Competitor Analysis
The major thought while designing and implementing the solar power plan is the cost
involved in the process. This is a basic reason why people think it is a luxurious process.
So people chose to use kerosene and dry cells. But the fact is that both products almost
cost the same if seriously analyzed. Neither of them is cheap.
Some families use gasoline while others opt for genset batteries.
The solar system has much advantage over them. They are not dangerous in use as
compared to the crude oils. On the other hand the batteries are expensive so they need
to be replaced.
A solar electric system is safe and is capable of illuminating the room with white light.
The solar electric systems are reliable in comparison to others and require minimum
amount of maintenance.
Though the product is expensive but only if we look in the short run , if considered for
long run the product economical.
Competing Service Providers
PTL is providing solar energy solution in many parts of the middle east countries. The
company uses varied current technologies in providing external lightning systems. The
company has partnerships with many of the renewable energy companies around the
world.
Furthermore, there are few other organizations in the northwestern region offering
solar energy equipments.
Marketing Strategy
Strengths
• Solar power is unlimited.
• Because a large area is required for installation our company is
assembling rooftops.
• Consumers are benefited by reduced retail electricity rates.
• Reducing brownouts.
• The system can be used worldwide.
• Reducing brownouts.
• Technology advancements have reduced installation costs.
• It can work with existing grids.
• The project satisfies government on the note of green revolution.
Weaknesses
• The sunlight quantity is not constant at all time.
• Weather forecast is necessary
• Current rate of PV panel is low(but expected to grow )
• Company can generate power during day time.
• Legal hurdles – many states and many regulations.
• Liability issues – damage due to installation.
• Technical knowledge base staff needed at high rate.
• Loss of copy of plan.
Opportunities
• Green revolution trend
• Governmental incentives for green era.
• Awareness regarding solar plants.
• Global warming concerns.
• Growing electricity demands.
• Technology advancemements.
• The industry will provide job opportunities.
Threats
• Other alternatives can be opted hydroelectric, geothermal.
• Advancement in technology can make the product obsolete.
Market Opportunity
Many companies are in the industry of energy; this shows a clear mark of opportunity
in the market.
First predicted growth for electricity. According to the United Arab Emirates, the
demand for energy is supposed to increase by 40% over the coming years.
Second: Growing trend in the market of the green revolution.
Third: the power of energy by sun in one hour is more than the yearly energy
consumption of the world.
Total Available Market & Expected Market Share
Extensive Testing: light soak, Hail ball tests to ensure performance in long run.
Supply Demand Gap
1. Based on the official papers it can be judged that supply can be double the
demand.
2. There is large gap between customers and solar products because of the
Unawareness
Dynamic changes in technology
High installation costs involved
Target Market
1. Rural areas of Abu Dhabi, where the basic population is of farmers.
2. Around 90% of the villagers are still waiting for the electricity in their areas.
3. As agriculture is the main part of the economy, the electricity is the basic need for
the farmers.
4. Electrification will increase, productivity, reverse the trends, will educate the
people, growth will develop the market.
Distribution Strategy
Various distributors will be contracted and many community centers will be used as an
administrative cell for the company. Certain elements will be shipped from suppliers
around the world. The company will try hard to look for the suppliers within the country
so as to reduce the shipping cost. There will be separate department for handling the
resources after they have arrived their destined point. The manpower will assemble the
elements and will make them ready for the installation. Then these plants will be sent to
various distribution centers so that it becomes easy for the customers to avail them.
Workshops will be held to make the customers realize of the use of the product. With
this the company will be able to gain more of the trust and confidence of its customers
and will be able to acquire a larger market share.
Advertising And Promotion Strategy
As the product is service based, so the company will basically rely on the word of
mouth. Seminars will be conducted at various places and at various time intervals to
attract the advertising agencies.
Information will be updated on the web site so that customers are made aware of the
product.
Newspaper advertisements and bill boards are other options to be opted for promotion.
More than 1000 people will be needed for the employment purpose this will be one of
the biggest news and will definitely attract the audience towards reading the article of
the company. As the target customers are basically from the agriculture background so
the company people need to attract the customers through conversation.
The visibility of the plant will itself call for advertisement. Brochures will be printed
giving basic knowledge of the description of the product and financials.
Operating Strategy
Operations strategy will take place in two stages:
“Stage 1” will have a pilot program which will be a mere design of the concept. It will be
implemented to just meet the basic requirements of being the Curtailment Service
Provider. “Stage 2” will have a installation map of 1000 houses will be sized to generate
revenues.
Stage One: in this stage there will be one person who will responsible for handling the
relationship with the clients and suppliers, as this is the basic step in the
implementation. The person will be responsible for contracts made with theses
contractors.
Another person will be responsible for developing the process line so that the
agreements are handled in a streamlined manner. This person will also be responsible
for handling the government relations. He will be looking after the permitting process
so that the running process of the solar system plant is not affected.
Stage Two: the main objective will be to ensure the continuity of the process. The
persons will be responsible for positioning the product and developing the staff across
the market.
Development Strategy
The Nixon will be targeting to assemble a legal advisors team by the end of the market
research activity. After the business plan revision the company will be looking forward
for the alliances with various suppliers and venture capitalists in order to lower the cost
of installation and for this purpose the company will be getting engage in the overseas
transactions.
There are four components of the product
Harnessing of the energy
Conversion of energy into electricity
Conditioning of the electricity
Electricity is sent to the battery with the help of the charger for storage purpose.
The charger has the main objective of protecting the electricity from being damaged.
The system connected with the battery receives the current. This system is able to
provide electrification even in the night hours when there is no electricity. The company
will establish centers for the customers to make them aware of the installation process
and the handling process. Prototyping will also be done with project enhancement so as
to make the work easier for the customer.
Revenue Generation
Signing a bilateral contract with generation companies. In this case the transmission
power will be in the hands of the company.
Second, capacity payments are made in advance. This attracts companies to invest in
new plant.
Third, energy is purchased from the government for load reduction at prevailing market
prices.
Milestones
Stage 1: Conceptualization.
Stage 2: Commercialization
Stage 1
• August: Business Plan writing.
By this time the business plan need to be written well and in formatted
manner so that it can be sent to the managerial position holders to
review the project highlights and to analyze whether it will be beneficial
for them to invest in the project or not.
• September- November: Staffing the board members.
As per the requirement of the project the owner of the project, recruits
the board members and thereafter these members elect the several staff
members for their assistance and working completion the staff is
selected based on the required skill criteria. As solar energy system is a
new concept so company needs to hire those people who are capable of
delivering the required information to the customers. As the first end
employees are the first face of the company they need to well trained
and personality wise developed.
• September- December: sources of funds.
In this time period the company needs to identify the sources from
where they will be receiving the required funds for the installation of the
project. The company might look for partnerships with suppliers so that
they lower the cost. There is a possibility that the project becomes an
attraction for the venture capitalists and he gets interested in financing
the project. This is possible when the company is deliverables are strong
enough to portray a good image of the company and are able to show
the advantages and benefits the project will bring along with its
installation. Looking at the current scenario the possibility of venture
capitalists option is high as the solar energy system is a new trend in the
market and generally the venture capitalists look forward for such
innovative ideas which are beneficial for them as well as for the society.
• January: Legal work
In this time period the company officials has to finish the documentation
related with the legal works. Documents related with site plan,
remittance, various taxes involved, should be done within this time
period to avoid the last minute delay. The company needs to hire a legal
advisor so that he is able to suggest which option will profitable in terms
of legal issues.
• February: Analyzing the Marketing Plan
In this month the marketing team will come into operation and their
major task will be to analyze the profitability of the marketing plan. They
should justify, whether the selected target market is worthy? Whether
the strategies opted for the target market will turn out to be beneficial or
not?
If the analyzers identify any flaws in the marketing plan they should
immediately inform the board members so that the constraints can be
rectified if needed.
• February –March: develop relationships with suppliers.
In these two months the company’s staff members will be required to
identify the suppliers for the solar energy system. The members should
identify such suppliers who turn out to be beneficial for the company’s
future. One member will appointed by the company officials to look after
the relationships with the suppliers. Suppliers are the part of the
foundation of the project so it is very much necessary to have strong and
long term trust worthy relationships with suppliers.
• April – August : Test the market plan
In these months the marketing team will test the market plan on some
part of the targeted segment, to identify the prospects of the project.
This will be done to know the basic requirements of the customers and
the offering of the project.
• Sept.-April: Finalizing site and contracts.
During these months the site plan will be finalized and various supplier
contracts will be legally documented. Company might enter into contract
with the suppliers in the overseas market. This will involve many cultural
differences and currency translation risks. So steps should be taken to
mitigate the arising risks and contracts should be documented as and
when the company finalizes the contract at certain conditions.
• May : Documentation finalization.
In this month all kinds of documents will be collected and prepared in a
well organized manner.
• June – September: Implementation
Legal Structure & Ownership
Legal Structure
The company will be set up as a C-Corporation for the following reasons.
The installation of the system needs much higher investment so the company
people need to adopt the C- Corporation to be on a safer side. The process will
involve less liability on the part of the investors.
Second, transparency will be the basic mode in this structure.IPO will be
considered as an exit strategy.
The C-Corporation is logical in defini9ng value of shares and compensation to
owners.
Proposed Division of Equity Shares
At present the owners will held 60% of the available shares. The remaining 40% will be
held by outside investors and advisory board members. In the later years the company
can have different structure depending upon the need.
Advisory Board
• Utility industry insider : A person who is familiar with regulatory
requirements.
• Residential Market Expert :A person having knowledge of industry cost and
contacts with regional contractors.
• Finance and Funding Expert : person who is aware about the Grants commission.
• Regulatory Counsel : utility lawyer with experience.
Management Structure & Staffing
Pricing Strategy
Operation CommitteeFinance CommitteeSales Committee
Prices
Affordability
The revenues for the solar energy plant come from the supply of material and the
efforts made by the staff in completing the project. Whereas in case of car
manufacturing the revenue arises from the sale of the product, i.e. car.
Just like the cars are leased and financed same way the solar electric system
companies should opt for such kinds of financing dimensions to be economical in a
way.
Prices
The prices of installation are going down day by day as the people are becoming aware
of the solar electric systems and finding it as a beneficial product. The government is
also helping the companies coming forward such solar electric system plans.
The price value is based on the cost benefit analysis. The customers’ satisfaction level
determines the price value. The prices are determined with the help of the analysis of
The price of the product determines the return the investors will get. So it is a big
question of concern. As the market prices are declining the investors are finding not
much profit in the industry. But because of the lower price of the elements, the
installation cost of the product has reduced to a satisfactory level.
Costs
In the starting the project team is able to manage in small cost which is needed for
supervision but later on theses cost turn out to be overload on the company. As per the
survey details in the Germany, cost in these countries turn out to be uncontrollable.
Labor costs
The study related to labor class suggests that cost of labor is higher in United Arab
Emirates but practically it depends upon the classification format. The cost depends
upon the operating issues.
Soft costs
As the awareness of the solar system is rising there has come a boom in the soft cost.
Soft Cost includes the architectural fees and the pre and post construction fees. The soft
cost is attached with the size of the project.
The more the size the higher the cost. Higher costs does not reflect efficiency in the
solar electric system business.
Following are some of the soft costs involved:
Customer Acquisition marketing
Advertisement cost
Customer acquisition cost
System design cost
Permitting fee
Installation labor
Sales tax
Overhead profit
Other residual costs
The soft costs can be mitigated to certain levels if the company is managed at efficient
level.
If the labor employed works at the required rate and gives excellent output.
If the finance team is able to manage the sourcing of funds.
If the promotion is more of all based on the word of mouth.
The elements of soft cost in the marketing function.
System Design Cost
Non-project specific marketing and advertising
Specific customer acquisition.
Incentives, Profit and Benefit
Government incentives
The government gives incentives but these are of not much concern for the company.
Though the facts say that the government is thinking of rising the incentives for the
projects related with the solar energy system, the basic facts lies within the global
economics.
The company will try hard to take advantage of these incentives offered by the
government.
One member of the company will be held responsible for taking care of these
transactions. He will have the responsibility of keeping an eye on the upcoming policies
and scheme of the government.
Profit and Benefits
The benefits which the people acquire from the solar energy system is much more
important the profits which are actually in hand. The potential of profit is very much
substantial in nature. Technology is one factor which has reduced cost to least level.
Labor costs are negotiable and depends upon te trends in the market.
Soft costs can be minimized by having good management staff and controlling power.
Low prices are a gift for the owner or user of solar electric system On the other hand
low price is a curse for the project installer. To build equilibrium is the key to success.
Once the prices of substitutes go up, the benefit of having a solar system also goes up.
Solar electric system is a money saving instrument and this instrument has a great
future and likely to rise in the coming times.
Social Concerns:
The solar energy plant does not omit carbon. The plant offers employment to many.
Every job is associated with a family and satisfies their needs.
In the United Arab Emirates, high costs exist because of the poor management of the
organization. Which can be mitigated to a greater extent with help of proper
management skills?
In addition the replacement of the project with carbon items is beneficial for the
society as this will not affect the healths of the concerns. The motive of the company is
not just to offer the product. They have a concern attached with the product that it
does not harm the society of the people.
It can be concluded that the solar power system’s foundation are economically sound.
And can be termed as efficient from the point of view of the investors. As per the cost
benefit analysis, the customers will be benefited by the product to a greater extent so
the product can be termed as a potential one from the point of view of the profit
terms.
Capital Budget
There is always uncertainty about from where the funds will come. The company tries
hard to identify the various sources of funds, to secure the prosperity of the project. In
the initial time phase the company can go for loans from the banks or financial
institutions , but there is a possibility that because of low level of pay back these
sources may not show a positive sign but on the other hand there might be a possibility
that venture capitalist get attracted by the benefits involved in the project. Now days
energy projects are gaining attention in the market, especially the solar electricity
plants so there is a indication that the venture capitalist might find the project
profitable. The company might opt for partnership with the solar panel manufacturers
which can be a way of winning the supplier financing. There are suppliers in the
market who wish to increase their market area and for that the fund the projects
supply on installation basis. The company people can look forward angel funding too.
Government funding schemes should also be countered in order to gain profit out of
the policies and schemes launched by the central or state government.
The business owners might think of diluting the ownership in the current stage but after
two or three years when the company starts earning substantial amount of profit the
owners might not be in mode of dilution of ownership or there is a possibility that after
looking at the growing stage of the product, there might be a case that other venture
capitalists might get interested in the business and may like to fund the business in the
long run. The grants and the tax credits given by the government are very useful in
terms of costing. Such offers can turn down the project cost too much level.
Financial RisksCurrency Translation: the company will have suppliers from various countries and they
will have different currencies. So the payments will be made in various currency modes.
There is a possibility that the currency value of country might fall in value at the time of
transaction. This way the company will always be in a pendulum state where there
might have profits from translation or they might occur losses. In order to reduce the
translation effect the company can open a forex account through which all currency will
be automatically converted to domestic currency. This forex account will help the
company in translation. The currency exchange rate will be set as per the competitive
market rate at that time. The company will be able to wire transfer the funds into
corporate accounts of the banks of country. By diversifying the holdings the company
will able to mitigate the currency translation effect in the long run.
Political and Economic Stability : The countries surrounding the middle east countries
have experienced a great amount of ups and downs in terms of economic stability in the
past years. Inflation has retarded the economic systems of most of the surrounding
countries. As a major effect the country has a large unemployment state. United Arab
Emirates has a good political stability structure which has been observed in past
decades. The government has adopted various majors to bring back the economical
prosperity. Because of these measures it has become favorable for the companies to
initiate business ideas in the countries. This way the companies are hiring staff members
in their companies for vacant positions which a great step towards fighting with the
unemployment stage.
Irrigation: The people in United Arab Emirates depend upon the agriculture in the
country. Agriculture is dependent in may terms on the climate and many times on the
market prices, this can be a major threat for the company. However the presence of the
company will enhance the structure of the economy. The farmers will be able to get
electricity in areas where there are no grids. The promise of value return will mitigate
this risk to much extent.
Cross-Cultural: Cross- cultural risk is involved in every business which has no country
boundaries. The distance between the two companies brings lots of cultural diffrenecs
as risk. The company can hire a person to look after the daily overseas transactions so
that the company is able to manage the day-to-day operations without the fear of the
cultural risks.
Exit Strategies
The founders of the company are completely dedicated towards the objective of
earning maximum profits, to make the investors satisfied with their capital investors.
If a company takes long time to be in a profitable situation, then IPO’s are launched in
the very initial phase only. The market environment changes drastically which is
necessary in order to attract the investors to show rapid returns on the investments
made by them in the company for the product.
Option One: Option 1 is to become a Curtailment Service Provider to improve the
competitive position of a business concern In the energy market. This option is
currently the major opted one in the market as the companies are dying hard to
improve their green image in the solar energy market.
Option Two: option two suggest for a partnership with a manufacturer. A manufacturer
who is willing to capture the dominance might find the company attractive.
Financial Analysis
A base case scenario
Below is the financial summary of three years. This shows a base for the product
implementation future. The stakeholders will get an idea about the future prospects
of the product. This is a case which shows the working calculation of how the project
will work.
Profit And Loss Account: profit and loss statements reveals that the company will
earning 1104000$ after tax in the first year after the installation of the solar energy
plant. This is indeed a good figure. The company will be earning 1385250$ in the second
year after installation. There is a sign that there might be possibilities that venture
capitalist get attracted by the benefits involved in the project. As the company is
showing a good profit range the venture capitalists might feel to get associated with
such green revolution project to make their image green.
Cash Flow Statement: Cash flow is a statement which tells about the flow of cash of the
business concern of the solar energy plant.. Company will decide the diversification of
the cash or funds based on the analysis of the cash flow statement. The company might
opt for continuation even if the company is not occurring with sufficient amount of cash
balance. The statement of the company shows that the solar energy system project has
incurred a cash balance of 1640000$ in the first year, 8280000$ in the second year and
8930000 in the third year. This shows that company is running on the right track and
there might not occur any stage in the future when the company will be in a state of
scarcity of funds.
Balance sheet: The company professionals have the job to look after the smooth
running of the business because the investors look forward for the company balance
sheet before investing in the company. The objective of a good investor is to identify the
company which has good financial state so that the investor is able to avoid the
disastrous stage. The fund managers of the company select the portfolio on the basis of
analyzing the balance sheets of the different companies. So that they are able to avoid a
major portion of the losses. The analyzers look forward whether the company has a
good or bad balance sheet, good or bad business model and strong or poor
management. Out of the three the balance sheet concern is the first which is analyzed
at priority by the fund managers of the company.
The balance sheet of the company shows that the shareholder’s equity for the company
in the second year after installation is 502000$ and in the third year after installation is
2489250$
Profit And Loss Account
Profit And Loss Account
Year 1 Year 2 Year 3
Revenues
outright sale of solar
installations 1,500,000 2,500,000 2,500,000
income from solar installations 200,000 1,500,000 2,600,000
Total Revenue 1,700,000 4,000,000 5,100,000
Cost Of Sales
Cost of Installation Sold 1,160,000 1,180,000 1,180,000
expenses 0 0 0
Total Cost OF sales 1,160,000 1,180,000 1,180,000
Gross Margin
Sales of solar installations 200,000 360,000 360,000
Total 200,000 360,000 360,000
General Expenses 200,000 230,000 240,000
Marketing Entity 700,000 710,000 750,000
total 900,000 940,000 990,000
Financing Cost 200,000 600,000 1,000,000
EBITDA -560,000 1,280,000 1,930,000
Depriciation 42000 96000 144750
Cash Flow
Cash Flow
Year 1 Year2 Year3
Profit After Tax -602000 1104000 1385250
Depriciation 42000 96000 144750
Cash From Operation -560000 1200000 1530000
Cash From Loan
Instruments 5,000,000 10,000,000 10,000,000
Total Sources Of Cash 4,440,000 11,200,000 11,530,000
Changes in WORking
Capital
Inventory 0 0 0
Accounts Receivables 0 0 0
Construction In progress 1,060,000 0 0
Prepayments 60000 0 0
Accounts payables 0 0 0
Taxes 0 -80000 -400000
Total 1,000,000 -80000 -400000
Acquisition Of Funds
Fixed Assets 1,800,000 3,000,000 3,000,000
Total 1,800,000 3,000,000 3,000,000
Total Use of Funds 2,800,000 2,920,000 2,600,000
Net Change in cash 1,640,000 8,280,000 8,930,000
Cash at the end 1,640,000 9,920,000 18,850,000
Balance Sheet
Opening year1 year2 year3
ASSETS
CURRENT ASSETS
Cash 0 1640000 9920000 18850000
Inventory 0 0 0 0
Accounts Reccivables 0 0 0 0
Construction in progress 0 1,060,000 1,060,000 1,060,000
Prepayment 0 60000 60000 60000
Total Current Assets 0 2,760,000 11,040,000 19,970,000
Fixed Assets
At Cost 0 1,800,000 3,000,000 3,000,000
Dep 0 58050 96750 96750
Net 0 1,741,950 2,903,250 2,903,250
Short term Investments 0 0 0 0
Total Assets 0 4,501,950 13,943,250 22,873,250
Liabilities And Stockholder's
Equity
Current Liabilities
Accounts Payable 0 0 0 0
Corporate Tax 0 0 80000 400000
Total 0 0 80000 400000
Long Term
Financing loan 0 5,103,950 13,441,250 20,384,000
Total 0 5,103,950 13,441,250 20,384,000
Stockholders Equity
Subscribed Cap. 0 0 0 0
Loan Cap. 0 0 0 0
Retained Earnings 0 -602000 1104000
Net Income -602000 1104000 1385250
Stakeholder's Equity 0 -602000 502000 2489250
Total Staockholder's Equity 0 4,501,950 13,943,250 22,873,250
BibliographyHarder, E. S. (2008). THE COSTS AND BENEFITS OFLARGE SCALE SOLAR PHOTOVOLTAIC POWERPRODUCTION IN ABU DHABI, UAE. Thesis . University of North Carolina.
Jim Krane. (2014). AN EXPENSIVE DIVERSION: ABU DHABI’S RENEWABLE ENERGY INVESTMENTS AMID A CONTEXT OF CHALLENGING DEMAND. JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY RICE UNIVERSITY.
Regulation and Service Bureau. (n.d.). Electricity tariffs for large users in the emirate of abu dhabi. Retrieved from http://www.rsb.gov.ae/uploads/InfoElecTariffsLargeUsers.pdf .
S.Borenstein. (2008). The market value and cost of solar photovoltaic,electricity production. CSEMworkingpaper . University of Californeia Energy Institute.
