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awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Is Overproduction Costing You? A review of the impacts of solar resource data on financing
and revenues for PV plants
Marie Schnitzer
Paul Thienpont
Vice President of Consulting Services
Meteorologist
Presented by:
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Albany
New York (HQ)
Albany
New York (HQ)
Barcelona
Spain
Barcelona
Spain
Bangalore
India
Bangalore
India
Company Snapshot
Rio de Janeiro
Brazil
Rio de Janeiro
Brazil
Warsaw
Poland (*)
Warsaw
Poland (*)
Istanbul
Turkey (*)
Istanbul
Turkey (*)
Buenos Aires
Argentina (*)
Buenos Aires
Argentina (*)
Denver
Colorado
Denver
Colorado
• Renewable energy professionals providing technical consulting, software, data, and
advisory services for the wind and solar energy markets
• Established in 1983; over 30 years of renewable energy industry experience
• Assessed over 100,000 MW
• Project roles in over 80 countries
• Offices around the globe and *with partnerships in Argentina, Poland and Turkey
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Key Messages
• Obtaining an accurate,
reliable solar resource
assessment
• Overproduction from
unreliable data sources can
result in lost revenue
• Overproduction can result in
lost returns
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Financial Impacts
Power Purchase Agreements (PPA)
• Over/Under production
penalties
• PPA bid process
Financial Models
• Tax Equity Financing
• Debt to Equity ratios
• Debt Service Coverage Ratio
(DSCR)
Cost of Capital and Rate of Return
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Investor Interests
Equity Investors
Long-Term Productions
Estimates
• P50 Estimates
Tax Equity Investors
Interests are greatest in
the beginning of the
project life-cycle
• P50 Estimates
Debt Lenders
Interested only in the
minimum ability to pay
back loan
• P90/99 Estimates
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
How do you quantify these risks?And how the variables impact your bottom line.
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Study Approach
Solar Resource
• GHI, DNI, DHI
• POA
Energy
Revenue
Financial Model
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Resource Assessment Methods
Irradiance Data
NASA SSE
National Solar Radiation Database
(NSRDB) - TMY 3
Satellite Derived Datasets
• Publicly available
• Commercially available (for
purchase)
Measured Reference Networks
• USCRN
• NREL
On-Site Measurements
Site Specific Typical Meteorological Year
AWS Truepower Analysis
• Onsite measurements
• Satellite derived datasets
• Measured reference networks
• Conversion to Plane of Array
(POA)
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Study Approach
Solar Resource
Energy• Losses
• Uncertainty
Revenue
Financial Model
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Energy Modeling
Satellite
Site Specific
TMY
Site Specific
(Advanced)
TMY
Reference
StationOnsite
Measurement
Energy
Model
Energy
Simulation
Model
Plant
Specifications
Environmental
Losses
Environmental
& System
Losses
Uncertainty
from all inputs
Annual Energy
Prediction P50, P90, P99
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Sources of Energy Uncertainty
Annual
Degradation
(0.5 – 1 %)
Transposition
To Plane of Array(0.5 – 2%)
Energy Simulation, Plant
Losses
(3 – 5 %)
Solar Resource Uncertainty
(5 – 17%)
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Energy Estimates and Probability of Exceedance
P90
P90
Probability of exceedance:
the level of confidence that a
plant’s actual energy production
will be at least a certain value
Based on project uncertainty
High Quality Resource DataHigh Quality Resource Data
Reduced uncertaintyReduced uncertainty
Increased value of P90 (99)Increased value of P90 (99)
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Study Approach
Solar Resource
Energy
Revenue• PPA
• Over/Under
Financial Model
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
PPA Pricing
Time of Day Pricing
• Base Price based on Locational
Marginal Pricing (LMP)
• Time of Day Pricing (TOD) multipliers
are used to adjust base price based on
time of day and seasonal adjustments
Production Thresholds
• PPA’s typically include maximum annual
production restrictions
• Restrictions are commonly applied at 110%
of the estimated annual P50 plant production
• Net metering caps
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Study Approach
Solar Resource
Energy
Revenue
Financial Model
• CapEx
• OpEx
• Debt Sizing
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Financial Model
Capital Expenses:
• EPC (full wrap)
• Permitting
• Developer fees
• Land lease
• Other
Production Estimates:
• P50, P90, P99 Energy estimates
• PPA pricing
Operational Expenses:
• Operating costs
• General administration
Project Finance Structures
• Debt finance
− Debt Service Coverage Ratio
• Tax equity or cash equity finance
− Internal Rate of Return
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Quantifying financial riskCase study results for three project locations
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Studies: Methodology
Three sites collocated with United States Climate Reference Network (USCRN)
measured reference stations were selected for evaluation based on geographic location
and consistency of the observations.
• Three resource methods were examined for each location:
– Actual resource data (measured)
– Satellite Derived TMY
– NSRDB TMY3
• Uncertainty and Probability of Exceedance (P-tables) were assessed for each
method
• Energy was simulated in PVsyst using the AWS Truepower standard approach for
each location
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study: Methodology
Plant Design:
• 12.5 MWDC
• 10 MWAC
• DC/AC Ratio: 1.25
• Generic 300 W polycrystalline module
• Generic 500 kW inverter
• Row tilt optimized for each location using PVsyst
• Modeled without near shading
• Plant loss assumptions were applied consistently for each project location and resource
analysis
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Solar and Met Resource Variation
Merced, CA
Millbrook, NY
Tucson, AZ
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
GHI DNI DHI POA Temp
Dif
fere
nce
Fro
m A
ctu
al (%
)
Satellite
TMY3
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
GHI DNI DHI POA Temp
Dif
fere
nce
Fro
m A
ctu
al (%
)
Satellite
TMY3
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
GHI DNI DHI POA Temp
Dif
fere
nce
Fro
m A
ctu
al (%
)
Satellite
TMY3
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Energy Variation
Merced, CA
Satellite
Tucson, AZ
Satellite
Millbrook, NY
TMY3
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Gross Energy Long-Term Net Energy
Dif
fere
nce
Fro
m A
ctu
al
(%)
Merced, CA
TMY3
Tucson, AZ
TMY3
Millbrook, NY
Satellite
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study: PPA Revenue Assumptions
Financial model used LMP data to calculate baseline PPA pricing and TOD
based off of the Day Ahead Market (DAM) prices
PPA Pricing Assumptions:
• Base price: $66/MWh
• TOD and seasonal multipliers
• PPA overproduction: Assumed 75% decreased payment structure beyond
110% of the guaranteed energy production level (P50 Production)
Energy > Annual P50 Production = 0.75 x (Base Price x TOD Multiplier)
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study: PPA Revenue
• TOD revenue is based of long-term energy 8760 results for each resource file utilizing the
TOD and seasonal multipliers to the baseline PPA price
• Lost revenue is based off of using 110% of the estimated long-term net energy P50
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
Financed With Satellite TMY Financed with NSRDB TMY3
Dif
fere
nce
in
Re
ve
nu
e F
rom
Act
ua
l(%
)
TOD Revenue Lost Revenue to Cap
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study: Debt Finance Structure Model Assumptions
Financial Model Assumptions:
• CAPEX: $2.2/WAC installed capacity
• OPEX: $25/kWAC/year installed capacity
Debt sizing:
• Debt ratio sized using a DSCR of 1.0 and P99 production estimates
Financial Models:
• Three independent models were created:
1. Actual resource data
2. Satellite derived TMY
3. NSRDB TMY3
Analysis:
• Satellite and TMY3 model financing assumptions were stressed using the actual
resource data
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study: Debt Finance Structure Key Metrics
Debt Ratio:
• The amount of acquired debt
Projected IRR:
• The estimated IRR for the cash equity investor when financing with each resource
dataset
Actual IRR:
• The realized IRR for the cash equity investor when running the actual resource
data file through the financial model for the Satellite TMY and NSRDB TMY3
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study Results: Debt Financing – Merced, CA
-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
Financed With Satellite TMY Financed With NSRDB TMY3D
iffe
ren
ce F
rom
Gro
un
d C
orr
ect
ed
(%
)
Debt Ratio Projected IRR Actual IRR
The project
should have
financed using
3% more debt
The forecasted
IRR was 2%
lower than
optimal results
As a result the
actual IRR was
0.5% lower than
optimal results
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study: Tax Equity Financial Model Assumptions
Financial Model Assumptions:
• CAPEX: $2.2/WAC installed capacity
• OPEX: $25/kWAC/year installed capacity
Tax Equity Investment:
• Tax equity investment sized assuming an 8.0% IRR
Financial Models:
• Three independent models were created:
1. Actual resource data
2. Satellite derived TMY
3. NSRDB TMY3
Analysis:
• Satellite and TMY3 model financing assumptions were stressed using the actual
resource data.
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study: Tax Equity Finance Structure Key Metrics
Tax Equity Contribution:
• The difference in tax equity contribution
Projected IRR:
• The estimated IRR for the cash equity investor when financing with each resource
dataset
Actual IRR:
• The realized IRR for the cash equity investor when running the actual resource
data file through the financial model for the Satellite TMY and NSRDB TMY3
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Case Study Results: Tax Equity Financing – Merced, CA
The project should
have financed using
0.3% more Tax
Equity Contribution
The forecasted IRR
was 0.9% lower than
optimal results
As a result the
actual IRR was
0.5% lower than
optimal results
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
Financed With Satellite TMY Financed With NSRDB TMY3
Dif
fere
nce
Fro
m O
pti
ma
l (%
)
Tax Equity Contribution Projected IRR Actual IRR
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Conclusions
Site Specific Resource yields more
accurate P50 analysis and improved
uncertainty bounds
• Many sources of unreliable data
resulting in higher uncertainty
• Overproduction results in lost
revenue
• Overproduction results in lost
returns for both debt, tax equity
and cash equity finance
awstruepower.com | +1 518-213-0044
©2014 AWS Truepower, LLC
Thank You
+1 518-213-0044
awstruepower.com
Marie Schnitzer
Vice President of
Consulting Services
Paul Thienpont
Meteorologist