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Light House Loans: Cash Flow Positive and Debt Service Coverage Ratio
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Solar ProductionModel Instructions
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Model Purpose
This model calculates loan rate and terms that would likely result in a positive cashflow for borrowers implementing solar + storage under different scenarios.
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Solar Array Size and ProductionKey Terms
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Total Solar + Storage Size (150 Projects) 11,100 KWDirect Pay Rebate Percentages: Direct Pay is a provision in the Inflation Reduction Act that allows non-tax paying entities (e.g., local governments and nonprofits) to receive a tax rebate for installing projects allowed through the Investment Tax Credit. The percentages correspond to rebate amounts that correspond to designated criteria.
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Average Solar + Storage Cost (per Project) 74 KWDebt Service Coverage Ratio (DSCR): The ratio of an organization's revenues compared to debt service. A DSCR of 1.1 and above is generally considered favorable.
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Cash Flow Positive: A loan that results in new revenues meeting or exceeding debt service payments.
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Total Solar + Storage Annual Energy Production (150 Projects)
13,803,400 KWHGrid Resilience and Innovation Partnerships (GRIP): GRIP is a DOE program designed to increase the flexibility, efficiency, and reliability of the electric power system. This model assumes that GRIP grants will cover 50% of project installation costs.
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Average Solar + Storage Annual Energy Production
92,023 KWHAdditional Grants: The model includes scenarios with additional grant capital from $0 to $6M
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Transaction Charge: A charge applied to each loan to cover underwriting and loan closing costs.
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Captial, O&M Costs, and Energy Savings
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Total Solar + Storage Capital Cost (150 Projects) $ 54,331,630 Model Description
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Average Solar + Storage Capital Cost (per Project) $ 362,211 The "Average Loan Payment with GRIP + ITC" tables (i.e., Scenario Tables). The scenario tables caculate the loan term (in years) required for repayments to be covered by ITC rebates and energy savings (i.e., "cash flow positive). Any loan terms over over 20 years are not considered since that time period could exceed the life of equipment.
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Scenario Groups. Scenario tables are grouped and color coded according to assumed additional grant capital, ranging from $0 to $6M. Each scenario group includes a rangde of ITC rebate amounts, from 30% to 70%
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Total Solar + Storage Annual O&M Costs $ 155,400 The Loan Scenario Summary Table. The Summary Table displays results of the corresponding, color matched "Average Loan Payment with GRIP + ITC" tables. The DSCR for each Direct Pay percentage assumed is displayed. A DSCR under 1.1 is colored red. A DSCR over 1.1 is colored green.
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Average Solar + Storage O&M Cost (per Project)$1,036
Assumptions and inputs are listed under the Solar Production Table and the GRIP Grant and Transacton Charge Tables. Any cell in those tables colored green are adjustable.
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Total Solar + Storage Annual Savings $ 1,522,576
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Average Solar + Storage Savings (per Project) $ 10,151
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Simple Payback
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Simple Payback without GRIP36Years
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Simple Payback with GRIP18Years
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Simple Payback without GRIP + ITC 14 Years
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Simple Payback with GRIP + ITC 7 Years
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Cost Assumptions
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Average Cost per kWh$0.111
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Average Annual O&M Costs per kW$14
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O&M Costs Escalator2%
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Utility Rate Escalator2%
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ESCRO Interest3%
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GRIP Grant and Transaction Charge
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Investments, Grants, and ITC
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GRIP Grants
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GRIP Grant (50%) $ 181,105
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Transaction Charge (percent of loan amount)2%
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Loan Scenario Summary
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Additional Grant Capital (150 Projects)Additional Grant Capital
(per project)
Summary Metrics
Direct Pay Rebate Percentages
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30%40%50%60%70%
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$0 $ - Cash Flow Positive Term
(years)
N/A141011
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DSCRN/A0.92 $ 1.00 $ 1.07 1.24
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$1M $ 6,667 Cash Flow Positive Term (years)N/A12411
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DSCRN/A0.930.97 $ 1.15 1.28
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$2M $ 13,333 Cash Flow Positive Term (years)1910311
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DSCR0.940.941.041.151.33
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$3M $ 20,000 Cash Flow Positive Term (years)1610111
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DSCR0.940.951.011.201.39
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$4M $ 26,667 Cash Flow Positive Term (years)147111
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DSCR0.940.971.051.251.45
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$5M $ 33,333 Cash Flow Positive Term (years)12.005111
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DSCR0.950.971.091.301.51
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$6M $ 40,000 Cash Flow Positive Term (years)10.004111
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DSCR0.951.001.141.361.58
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Average Loan Payment with GRIP Grant + ITC
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Rate7.5%ITC Rebate30%
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Term36Additional Grant $ -
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Year01234567891011121314151617181920
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Principal Balance (incl transaction charge) $ 184,728 $ 198,582 $ 197,475 $ 196,284 $ 195,005 $ 193,629 $ 192,150 $ 190,560 $ 188,852 $ 187,014 $ 185,039 $ 182,916 $ 180,634 $ 178,181 $ 175,543 $ 172,708 $ 169,660 $ 166,384 $ 162,861 $ 159,075 $ 155,005
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Payment $ (28,816) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962) $ (14,962)
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Principal $ (1,107) $ (1,190) $ (1,280) $ (1,376) $ (1,479) $ (1,590) $ (1,709) $ (1,837) $ (1,975) $ (2,123) $ (2,282) $ (2,453) $ (2,637) $ (2,835) $ (3,048) $ (3,276) $ (3,522) $ (3,786) $ (4,070) $ (4,376)
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Interest $ (13,855) $ (27,709) $ (13,772) $ (13,682) $ (13,586) $ (13,483) $ (13,372) $ (13,253) $ (13,125) $ (12,987) $ (12,839) $ (12,680) $ (12,508) $ (12,324) $ (12,127) $ (11,914) $ (11,685) $ (11,440) $ (11,176) $ (10,892) $ (10,586)
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End Principal Balance $ 198,582 $ 197,475 $ 196,284 $ 195,005 $ 193,629 $ 192,150 $ 190,560 $ 188,852 $ 187,014 $ 185,039 $ 182,916 $ 180,634 $ 178,181 $ 175,543 $ 172,708 $ 169,660 $ 166,384 $ 162,861 $ 159,075 $ 155,005 $ 150,629
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ITC Refund $ 108,663
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Energy Savings $ 10,354 $ 10,561 $ 10,772 $ 10,987 $ 11,207 $ 11,431 $ 11,660 $ 11,893 $ 12,131 $ 12,373 $ 12,621 $ 12,873 $ 13,131 $ 13,393 $ 13,661 $ 13,934 $ 14,213 $ 14,497 $ 14,787 $ 15,083
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O&M Costs $ 1,057 $ 1,078 $ 1,099 $ 1,121 $ 1,144 $ 1,167 $ 1,190 $ 1,214 $ 1,238 $ 1,263 $ 1,288 $ 1,314 $ 1,340 $ 1,367 $ 1,394 $ 1,422 $ 1,451 $ 1,480 $ 1,509 $ 1,539
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Carry over $ - $ 91,818 $ 88,929 $ 86,149 $ 83,484 $ 80,943 $ 78,533 $ 76,262 $ 74,138 $ 72,171 $ 70,369 $ 68,742 $ 67,300 $ 66,053 $ 65,011 $ 64,185 $ 63,587 $ 63,230 $ 63,124 $ 63,284
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Cash Flow $ - $ 89,144 $ 86,339 $ 83,639 $ 81,052 $ 78,585 $ 76,245 $ 74,040 $ 71,979 $ 70,069 $ 68,320 $ 66,740 $ 65,340 $ 64,129 $ 63,117 $ 62,316 $ 61,735 $ 61,388 $ 61,286 $ 61,440 $ 61,865
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Average Loan Payment with GRIP Grant + ITC
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Rate7.5%ITC Rebate40%
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Term14Additional Grant $ -
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Year01234567891011121314151617181920
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Principal Balance (incl transaction charge) $ 184,728 $ 198,582 $ 190,676 $ 182,177 $ 173,041 $ 163,220 $ 152,662 $ 141,312 $ 129,111 $ 115,995 $ 101,895 $ 86,737 $ 70,443 $ 52,927 $ 34,097 $ - $ - $ - $ - $ - $ -
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Payment $ (35,615) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ (21,760) $ - $ - $ - $ - $ - $ -
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Principal $ (7,906) $ (8,499) $ (9,136) $ (9,821) $ (10,558) $ (11,350) $ (12,201) $ (13,116) $ (14,100) $ (15,157) $ (16,294) $ (17,516) $ (18,830) $ (20,242) $ - $ - $ - $ - $ - $ -
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Interest $ (13,855) $ (27,709) $ (13,262) $ (12,624) $ (11,939) $ (11,202) $ (10,411) $ (9,559) $ (8,644) $ (7,661) $ (6,603) $ (5,466) $ (4,244) $ (2,930) $ (1,518) $ - $ - $ - $ - $ - $ -
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End Principal Balance $ 198,582 $ 190,676 $ 182,177 $ 173,041 $ 163,220 $ 152,662 $ 141,312 $ 129,111 $ 115,995 $ 101,895 $ 86,737 $ 70,443 $ 52,927 $ 34,097 $ 13,855 $ - $ - $ - $ - $ - $ -
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