Utility Sale Lease-back Model

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kaiyer
Topic Author

08 Dec 2011 04:03 #90 by kaiyer

Utility Sale Lease-back Model was created by kaiyer

In the Utility Sale Lease-back model how does one add leverage via debt. Model does not have any inputs. Is there a indirect way to model debt.
I can think of using CBI in Payment Incentives sheet and then use an O&M expense to pay off the debt?
Would this work if proper care is taken to account for tax and depreciation basis.

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Paul Gilman

08 Dec 2011 18:02 #91 by Paul Gilman

Replied by Paul Gilman on topic Utility Sale Lease-back Model

The SAM financial structures only show debt at the project level. The tax investor (lessor) in the sale-leaseback model may have debt, but at the corporate level.

To consider a tax investor with debt, you could use a weighted average cost of capital (WACC) as the required return on equity (RROE), or IRR target on the Financing page, where

WACC = (Debt Fraction * Cost of Debt * (1- tax rate)) + ((1-Debt Fraction) * RROE)

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kaiyer
Topic Author

09 Dec 2011 22:41 #92 by kaiyer

Replied by kaiyer on topic Utility Sale Lease-back Model

I was looking for a solution where there is debt at the project level, not on the tax investor side. Is it possible to model that in SAM?

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Paul Gilman

09 Dec 2011 23:42 #93 by Paul Gilman

Replied by Paul Gilman on topic Utility Sale Lease-back Model

SAM's Utility Sale Leaseback financing option does not include project debt. The financing options that include project debt are Leveraged Partnership Flip and Single Owner or Independent Power Producer.

See the Financing Overview topic in SAM's help system for a table summarizing the Utility financing options and their features.

Best regards,
Paul.

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