Updated Solar and Wind Valuation Model in Place

by | Dec 10, 2024

Over the years, renewable energy has seen a steep increase in usage within the commercial and residential marketplaces. It is important that we are able to determine the value of these renewable energy utility systems in today’s market.

In 2021, the New York State Department of Taxation and Finance (DOTF) developed an appraisal methodology for solar and wind energy systems. DOTF provided a standard manual with clear protocols for developers, investors, and taxation officials to use in the assessment of solar and wind projects. Read Walden’s previous blogs about this here and here.

This year, the DOTF worked with the New York State Energy Research and Development Authority (NYSERDA) and the New York State Assessors Association and completed an extensive public comment and review process to update the solar and wind valuation model.

 

Summary of Changes to the Updated 2024 Model

The major changes seen in the new appraisal model include:

  • Net energy metering projects have been incorporated.
  • Market transition credits/community credits and community adders now default to the highest credit amounts unless overridden by the user.
  • Revenue forecasts, expense forecasts, and discount rates have been updated.

 

2024 Model Discount Rates

The complete 2024 discount rate breakdowns are available on the DOTF website.

The discount rates are separated into two categories based on the different investment risks associated with solar and land-based wind systems.

  • Solar (1 MW and larger) given a real weighted average cost of capital (WACC) (pre-tax) of 6.68%
  • Land-based wind (1 MW and larger) given a real WACC (pre-tax) of 7.69%

The model includes a downloadable Excel-based tool along with a 16-page user guide. DOTF also provides additional resources on the model and WACC, as well as summaries of feedback and responses from the public comment period.

Valuation of utility systems (water, wastewater, broadband, gas, renewables) still remains complex, but Walden has vast experience working on valuation projects and continuously monitors transactions nationwide to update our methods and resources.

Contact us at 516-518-3705 for assistance with your sustainability and/or utility valuation projects.

 

Photo credits:

Solar photo by Tom Fisk: https://www.pexels.com/photo/photography-of-solar-energy-farm-9893727/

Wind photo by Bruno from Pixabay