Financing Options for a Solar Energy Project

843 WordsJan 29, 20183 Pages
As stated earlier we are planning on financing our project through the leasing option. We are looking at a 25 year lease that will work like a loan. The total cost of the project will be $5,630,481,236. We do not plan on putting anything down initially so all of the payments will be paid through annual payments. The Interest rate we used is 7% which is a little low, but we plan to give more to the investors in return of the small interest rate. Now taking into account the 30% tax credit which will be $1,689,144,371, which will lower the total cost to $3,941,336,865. Each year we will be making a payment of $338,208,087, which we will be getting through investors as well as payments from the residents of Alameda. The majority of the payment is the interest that is owed after each year which is $275,893,581. Since we have a commercial solar project that will be sold to residents we do receive depreciation benefits, so for the first five years the federal depreciation is $957,181,810 and then after the fifth year the depreciation is $0. The state depreciation for the first twelve years will be $469,206,770 and after the twelfth year the depreciation goes down to $0. Now let’s look at the State and Federal tax benefits that will be received. The State tax benefit will start at $70,844,216 and over the twenty-five year period will decrease to $6,933,308 in the last year of the lease. The first twelve years there will be a steady decline in the State tax benefits and the

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