3 ms·

What has the land to do woth power plant on it? Value wise I mean.

by hef19898 3y ago

the8472 3y ago
I think the argument is that if land value were ~zero you could put the new panels next to the old ones that are still producing power.
- hef19898 3y ago
  That's not how those projects are financed so. The initial investment is calcupated based on, usually, 20 years, after which the performance guarantee of the big panel producers, and only those are used for big projects, run out. After that, the business case resets. So, in your example, the investors would repower the existing plant, anf xash whatever they get for the old gear on the second market, and build a new obe next to it. Not to forget, costs per kWp go doen year after year. At the sake time Wp per panel go up year after year as well. This alone makes repowering much more attractive than just letting old plant running.
  - konschubert 3y ago
    If you have a fully written if asset that is still producing amazing returns, that may be better cash flow wise than taking on a new loan.
    - hef19898 3y ago
      In theory, but not all written off, old assets are a good idea. Especially if the new one generates a lot more revenue than the old one. Just one thing, depreciation is all about cost accounting and has exactly zero to do with cash flow.
      - konschubert 3y ago
        My point is, if the discounted cash flow from (new panels - loan repayment)is smaller than the discounted cash flow of keeping the old panels, over a sufficiently large future period, then it’s better to keep the old panels.
        hef19898 3y ago
        Those plant, utility scale I mean, are not paying loans, those are using special project investment vehicles. Discounted cashflow is not used in these cases (I know it as a way to determine the valuation of a company), things like ROI are used for utility scale projects. And guess why the vast majority is repowered with new panels...
        konschubert 3y ago
        I feel like the of action that makes the most economic sense should be invariant of the exact financing vehicle. (Loan or investment fund).
        hef19898 3y ago
        Feelings are completely irrelevant when it comes to investments in the tens to hundreds of millions. Those things are extremely well defined and unserstood, that's why people in accounting, finance and business development are crucial and have rather high paying jobs. The back of napkin maths I do for household level purchases and investments do not scale to those levels. Nor do they to company level finances. Following those practices are, obviously, no guarantee for success. Not following them on the other hand is a near guarantee for failure.
maxerickson 3y ago
It's the other way around, the suitability for a power plant makes the land valuable (and that value driver is relatively unlikely to go down over the lifetime of the plant, for the reasons that lots of people have already commented on). The reason I said the other comment was banal is because it amounts to "do what makes sense", which well, yeah.

What has the land to do woth power plant on it? Value wise I mean.

I think the argument is that if land value were ~zero you could put the new panels next to the old ones that are still producing power.

hef19898 3y ago
That's not how those projects are financed so. The initial investment is calcupated based on, usually, 20 years, after which the performance guarantee of the big panel producers, and only those are used for big projects, run out. After that, the business case resets. So, in your example, the investors would repower the existing plant, anf xash whatever they get for the old gear on the second market, and build a new obe next to it. Not to forget, costs per kWp go doen year after year. At the sake time Wp per panel go up year after year as well. This alone makes repowering much more attractive than just letting old plant running.
- konschubert 3y ago
  If you have a fully written if asset that is still producing amazing returns, that may be better cash flow wise than taking on a new loan.
  - hef19898 3y ago
    In theory, but not all written off, old assets are a good idea. Especially if the new one generates a lot more revenue than the old one. Just one thing, depreciation is all about cost accounting and has exactly zero to do with cash flow.
    - konschubert 3y ago
      My point is, if the discounted cash flow from (new panels - loan repayment)is smaller than the discounted cash flow of keeping the old panels, over a sufficiently large future period, then it’s better to keep the old panels.
      - hef19898 3y ago
        Those plant, utility scale I mean, are not paying loans, those are using special project investment vehicles. Discounted cashflow is not used in these cases (I know it as a way to determine the valuation of a company), things like ROI are used for utility scale projects. And guess why the vast majority is repowered with new panels...
        konschubert 3y ago
        I feel like the of action that makes the most economic sense should be invariant of the exact financing vehicle. (Loan or investment fund).
        hef19898 3y ago
        Feelings are completely irrelevant when it comes to investments in the tens to hundreds of millions. Those things are extremely well defined and unserstood, that's why people in accounting, finance and business development are crucial and have rather high paying jobs. The back of napkin maths I do for household level purchases and investments do not scale to those levels. Nor do they to company level finances. Following those practices are, obviously, no guarantee for success. Not following them on the other hand is a near guarantee for failure.

maxerickson 3y ago

It's the other way around, the suitability for a power plant makes the land valuable (and that value driver is relatively unlikely to go down over the lifetime of the plant, for the reasons that lots of people have already commented on). The reason I said the other comment was banal is because it amounts to "do what makes sense", which well, yeah.