More and more I crunch numbers, I stipulate that projects of Recurrent will be yieldco.
This was not discussed here well, but ITC credit is a huge power to add to net income potential.
Let's to some theoretical math. Texas and Cali have around 5.5 sun peak hours a day this gives essentially 2 kwh per year for each watt.
If we extend this generation for 35 years each watt will produce around 35*2kWh or 70kwh in the lifetime of the the project. At 90% this is about 63kWh.
Now move on to project, if I am a buyer at $2.3 per watt, I get dollar for dollar ITC credit of 30%. I have $0.69 times 1GW or $690M in tax credits to apply to tax on the income. divide this by 35 years, we have $19.7M per year in credits. I am ignoring tax liabilities or 1603 grant right now.
At $0.055 per kWh, I generate 1411M kWh and $77M in revenue. The depreciation for my investment is $65M, leaving me with 12M in income or 15.5%. I have no taxes to pay at all.
This sounds even better for developer holding to a project.
For example interest borrowing for project construction is added to basis of the calculation. I am CSIQ which builds these projects at $2.07 per watt
(10% GM), this is $0.62 plus 0.02 for interest rate. So we have $0.64 ITC credit applied to $2.07 cost,
$77M depreciated at $59M a year, gives around $18M net and no taxes as I have a credit of $18M or so,
The buyer, like utility if they have tax liability from say generating revenue of selling energy, can benefit on their tax program. Banks can do the same. I guess the tax equity is greater than tax application.
I am not sure if you can logically apply discount to general costs at the 30% rate, but if you could the costs for Canadain would be in line of some $0.02 per kWh, on generation of $0.055, which is amazing.
Japan has great FiT, but has 20 years PPAs with curtailment up to 30 days and around 3 hours or almost half in some case potential for power generation. I think the lucrative selling is in Japan, and lucrative holding is in the US.
