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System Advisor Model (SAM)

Sale Leaseback interest rates

mcs41
Topic Author

19 Jul 2017 21:09 #5562 by mcs41

Sale Leaseback interest rates was created by mcs41

Hello,
I have noticed that the Sale Leaseback financial model does not include the option of applying interest rates. Is there some way of including debt into the equation? If not why is it set up like this?
Thank you for your time,
Mahayla

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pgilman

21 Jul 2017 21:26 #5563 by pgilman

Replied by pgilman on topic Sale Leaseback interest rates

Dear Mahayla,

That is correct. SAM's sale leaseback financial model does not consider project term debt. SAM assumes that the tax investor (lessor) purchases 100% of the project from the developer (lessee), and then leases it back to the developer. In your scenario, which partner is borrowing money for the project?

Best regards,
Paul.

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mcs41
Topic Author

25 Jul 2017 19:36 #5564 by mcs41

Replied by mcs41 on topic Sale Leaseback interest rates

Hello Paul,
I was interested in a scenario where the tax investor acquires financing for the project. Or are the sale leaseback projects usually internally financed?
Thank you for your response.
Mahayla

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mcs41
Topic Author

25 Jul 2017 20:02 #5565 by mcs41

Replied by mcs41 on topic Sale Leaseback interest rates

Also, what do the costs of acquiring financing refer to in this scenario? Does that category apply to acquiring the construction phase financing?
Thanks again,
Mahayla

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pgilman

26 Jul 2017 16:01 #5566 by pgilman

Replied by pgilman on topic Sale Leaseback interest rates

The "cost of acquiring financing" for the sale leaseback model is for cost of securing the participation of tax investors.

Construction financing is treated as part of the investment cost.

There are a few articles on the web that discuss some of the details of these financial structures that might be helpful. For example:

woodlawnassociates.com/tax-equity-101/

www.wsgr.com/PDFSearch/ctp_guide.pdf

www.greenbiz.com/blog/2014/04/07/4-ways-make-solar-financing-less-weird

Best regards,
Paul.

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mcs41
Topic Author

18 Sep 2017 03:03 #5567 by mcs41

Replied by mcs41 on topic Sale Leaseback interest rates

Hello again Paul,
I am still confused why there isn't an option for the tax equity partner to finance their purchase of the project from the developer. This seems like a concern because all equity projects tend to result in significantly higher LCOEs than at least partially financed projects.
thank you,
Mahayla

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