Midwestern University Solar Facility – Appraisal

A row of solar panels installed on a grassy field during dusk or dawn.

Bluechip Asset Management performed an inspection and written appraisal of a 2.1 MWdc ground mount solar facility located in central Ohio on the grounds of a university. The intended us of the appraisal was to determine fair market value for the purposes of exercise of the purchase option specified in the Solar Energy Service Agreement (the “PPA”). Bluechip Asset Management inspected the solar electric facility (“SEF”), including inspection of the panels, the interconnects, the inverters, and reviewed the O&M data and 5 years of production history to determine the value according to the income approach to value as specified by the Uniform Standards of Professional Appraisal Practice.

In the last decade the solar industry has experienced an average annual growth rate of 50%, driven in recent years by the need for the need for energy alternatives to carbon emitting fossil fuels. In 2023 the world installed 510 GW of new renewable power, an increase of 50% over 2022. In 2010 there were 7 countries with more than 1GW of capacity – this figure grew to 43 1+GW countries in 2020. More capacity is being added in many new countries, but China continues to consume 25% – 28% of new solar capacity. In 2023 China installed 217 GW of new solar power, 500 million solar panels, more than the entire solar installed capacity of the US. This explosion of new renewables in China, including 76 GW of new wind, may result in China’s greenhouse gas emissions peaking in late 2024, many years earlier than has been forecast.

China’s peak installation year was 50GW in 2017; demand in China is in a transformational phase as the market moves towards solar being unsubsidized and competing with other forms of generation. Growth of solar in China is fast and large, but China still bills itself on the international stage as “developing”, so China is also on schedule to build within the next five years new coal fired power plants equal to the US’s total coal capacity in 2020, so China can hardly be called “green”. 

The United States is the second largest solar market, and experienced 20% growth in capacity in 2020 and 34.5% growth in 2021, with the largest regions being California, Texas, Florida, North Carolina and New York. The US installed an estimated 21GW AC of solar in 2021.

After nearly doubling installations in 2019, Europe is continued growth in solar, adding 24GW in 2020, a 5% increase over 2019. The leading sources of demand in Europe are Spain, Germany, Netherlands, France, Italy, and Ukraine, countries which will account for 63% of new capacity in Europe.

In India, 2019 growth was flat, due to policy uncertainties and the impact of import duties on solar cells and modules; growth returned in 2020 with 14GW of new capacity added that year.

Rapid technology advances continue in the solar market, with continued rapidly declining solar project costs. The cost of utility-scale solar projects has declined 80%+ during 2010-2022. The political environment has promoted rapid development of solar energy – the climate change crisis, the Paris climate agreement, the rapid politically-motivated closure of coal and natural gas power plants, and the increasing political incorrectness of nuclear power however safe the newer nuclear plants are. 

While PV solar panels are available for purchase on eBay and on other equipment sales websites, the sale and redeployment of mature operating solar arrays is actually quite common. Sale as an operating project is the only reasonable outcome for a large project. Power is a commodity with readily determinant value. Many large developers commonly purchase operating facilities when the offtaker goes bankrupt or otherwise has no further need for the project. Solar farms generally stay in place and stay in operation. Most solar projects have PPAs, which are easily transferrable to the new owner, so that the value of the project is specifically spelled out by the 25-year PPA pricing schedule

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