Updated Solar and Wind Valuation Model in Place
As renewable energy adoption continues to grow in both commercial and residential markets, accurately assessing the value of solar and wind energy systems has never been more critical. To address this need, the New York State Department of Taxation and Finance (DOTF), in collaboration with NYSERDA and other key organizations, has updated the solar and wind valuation model for 2024.
This revised methodology aims to provide clearer, more accurate guidelines for developers, investors, and tax assessors involved in renewable energy projects. Read Walden’s previous blogs about this here and here.
What’s New in the 2024 Solar and Wind Valuation Model?
Several significant changes have been incorporated into the updated 2024 model, including:
- Net Energy Metering Projects: Now explicitly included in the valuation model.
- Market Transition Credits and Community Adders: Defaulted to the highest credit amounts unless overridden by the user.
- Updated Forecasts: Revenue, expense, and discount rate projections have been revised to reflect current market conditions.
These changes ensure that the model aligns with today’s renewable energy landscape, making it more robust and adaptable for all stakeholders.
Discount Rates in the 2024 Model
The updated valuation model includes revised discount rates to better account for the risks associated with solar and wind energy projects. Key highlights include:
Solar Projects (1 MW and larger):
- Real weighted average cost of capital (WACC) (pre-tax): 6.68%
Land-Based Wind Projects (1 MW and larger):
- Real WACC (pre-tax): 7.69%
The DOTF provides a comprehensive breakdown of discount rates and other model details on their website, along with a downloadable Excel-based tool and a 16-page user guide for ease of use.
Why the Updates Matter
The updated valuation model reflects changes in the renewable energy market, ensuring that valuations are fair, accurate, and transparent. These updates are critical for:
- Developers: To properly evaluate project feasibility and investment potential.
- Investors: To understand long-term returns and market risks.
- Tax Assessors: To maintain consistency in tax assessments across solar and wind energy projects.
By incorporating public feedback and working with industry experts, the DOTF has created a tool that balances the needs of all stakeholders.
Walden’s Expertise in Renewable Energy Valuation
Valuing utility systems—including solar, wind, water, wastewater, and broadband—is a complex process that requires in-depth expertise. At Walden, we bring years of experience and stay updated on nationwide trends and transactions to provide precise and reliable valuations.
Our team is equipped to assist with:
- Solar and wind project appraisals.
- Sustainability project assessments.
- Comprehensive utility system valuations.
Get Expert Help with Renewable Energy Valuations
Contact Walden today at 516-518-3705 for assistance with your renewable energy 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