Which loan input should be used?

Hi,

When running a commercial photovoltaic PPA simulation, the financing page has 2 locations set as defaults for loans:
- Under "Construction Period" there is a single loan of 100% of the total project cost, set at 4% interest.
- Under "Loan Parameters" there is a 30-year loan with a 50% debt fraction set at 7% interest.

What are these 2 different loan inputs, and are both used in a standard PPA setup?

To me it seems that only 1 of the 2 should be used, but they both appear in the system default. Please clarify.

Thank you!

Dear Anonymous Friend,

SAM uses the construction period loan parameters to calculate the cost of interest during construction (IDC) before the project starts generating and selling electricity. For the Commercial PPA option, SAM includes the Total Construction Financing Cost displayed on the Financing page in the Loan Principal Amount:

Principal Amount = (Installed Cost + Construction Financing Cost) x Debt Fraction

The loan parameters describe the project loan. The project makes annual principal and interest payments on the project loan over the loan term beginning in Year One, which is the first year that the project generates and sells electricity.

You can remove the construction period loan costs from your analysis by setting the Percent of Installed Costs value for each of the five construction loans to zero.

Best regards,
Paul.

Thank you for that explanation!