Timothy P. Runde, MAI, LEED AP - Appraisal Institute · Timothy P. Runde, MAI, LEED AP President,...
Transcript of Timothy P. Runde, MAI, LEED AP - Appraisal Institute · Timothy P. Runde, MAI, LEED AP President,...
© Timothy P. Runde 2016 7/27/2016
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Appraisal Institute – Charlotte, NC July 27, 2016
Presenter:
Timothy P. Runde, MAI, LEED AP President, Runde & Partners, Inc.
.
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Importance of AI Solar Course
Solar Basics
Determining Production Capacity
Valuing Production Capacity
Reconciliation Issues
Key Terminology
Real or Personal Property?
Any Intangible Value?
Anatomy of a Solar Contract
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System
Array
Module (Panel)
Cell
Inverter
Mounting System
Tilt
Azimuth
Derate Factor (system loss)
Degradation
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kW DC vs. kWh
Net Energy Metering (NEM)
Time of Use (TOU) Pricing
Owned vs. Leased vs. PPA
Leased system vs. leased roof
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Tangible
Affixed
Continuity of ownership
Any intangibles?
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First questions to ask:
‒Owned/leased/PPA?
‒Date of installation
‒Obtain copy of contract
‒Get access to monitoring software
‒ Inverter replaced?
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3.5 % Annual Growth Rate
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Solar Installer Inc.
Property Owner Address of Property
Address of Property
Solar Installer Inc. Solar Installer Inc.
What info is needed to determine the production capacity of a
system?
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Sun hours
Orientation of improvements/site
Physical constraints of improvements and/or site
Shading issues
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Is it optimally oriented?
Why might a system be sub-optimally oriented?
‒Unintended (mistake)
‒ Intended
»Physical issues
»Aesthetic reasons
»Arbitrage
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Solar Installation Contract
PV Watts (NREL), PV Value
Comparables
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Solar Installer Inc.
Contract should specify
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Oversized: How (why?) does this
happen?
Right-Sized
Optimally sized
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What’s the right $/kWh + growth rate?
What discount rate to use?
What happens if the array is oversized?
What’s the effect of Net Energy Metering?
How does the ITC affect valuation?
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Energy Information Administration (EIA)
Subject historical electrical bills
‒ Separate volumetric from fixed charges
‒Use weighted average not “spot” price
Comparable electrical bills
‒Use Same Utility Territory
‒PG&E vs SMUD: 24% lower (Why?)
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Source: “The Future of Electricity Prices in California: Understanding Market Drivers and Forecasting Prices to 2040”; Jonathan Cook, Ph.D; December 2013.
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Source: “The Future of Electricity Prices in California: Understanding Market Drivers and Forecasting Prices to 2040”; Jonathan Cook, Ph.D; December 2013.
$7.97
$2.66
67% ↓
WHY?
NEM risk
$/kWh growth rate
Extended Projection Period
Lack of Reversion
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Tariffs are subject to change
Initial = 1:1 for reimbursement
Future = Fixed Charges, Time-of-Use, not
1:1 reimbursements
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Source: DSIRE (Database of State Incentives for Renewable Energy); http://www.dsireusa.org/resources/detailed-summary-maps/
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Source: DSIRE (Database of State Incentives for Renewable Energy); http://www.dsireusa.org/resources/detailed-summary-maps/
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Source: Sage Renewables: “SCE Rate Changes Highlight Tariff Risks Inherent in Solar PV Projects”; March 2016.
• TOU Energy Rates (kWh) ↓22%
• Maximum Demand Rates (kW) ↑13%
Source: Sage Renewables: “SCE Rate Changes Highlight Tariff Risks Inherent in Solar PV Projects”; March 2016.
(per kWh)
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Understand volumetric vs. fixed
$/kW costs usually include fixed costs
Tariff trend is toward fixed + volumetric
Reimburse only volumetric
Growth Rates
‒Consider new costs: RPS, cap & trade
‒Risk (+/-) to fuel cost
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Use current replacement cost
Gross cost versus net cost
Deduct all forms of obsolescence
‒ Physical Deterioration
‒ Functional Obsolescence
‒ External Obsolescence
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Source: “Photovoltaic Pricing Trends: Historical, Recent, and Near-Term Predictions 2015 Edition”; energy.gov/sunshot
AVG=$3.69/WDC AVG=$1.96/WDC AVG=$2.97/WDC
Source: “Photovoltaic Pricing Trends: Historical, Recent, and Near-Term Predictions 2015 Edition”; energy.gov/sunshot
• RANGE = $2.40 - $3.90/WDC
• Modeled vs Reported
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Physical
Functional
‒ Sub-optimal orientation
‒ Sizing
External (Economic)
‒Rebates
‒ Federal Investment Tax Credit (ITC)
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Risk of relying solely on the Income Approach
Role of the Cost Approach
Energy Information Administration (EIA) PV Watts PV ValueTM
NC Clean Energy Technology Center: 50 States of Solar Report
GTM/SEIA: Solar Market Insight Report DSIRE DOE Sunshot, NREL, LBNL Appraisal of Green Commercial Real Estate
(expected early 2017) © Timothy P. Runde 2016
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Timothy P. Runde MAI, LEED AP
Runde & Partners, Inc.
(415) 265-9914
@TimRunde