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Investment and financing perspectives for a solar photovoltaic project

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  • Marchioni, Andrea
  • Magni, Carlo Alberto
  • Baschieri, Davide

Abstract

In this work we illustrate a simple logical framework serving the purpose of measuring value creation in a real-life solar photovoltaic project, funded with a lease contract, a loan contract and internal financing (i.e., withdrawal from liquid assets). We use the projected accounting data to compute the value created. We assess the project from both an investment perspective (operating assets and liquid assets) and a financing perspective (debt and equity). Furthermore, focusing on value creation for equityholders, we calculate the expected contribution on shareholders’ wealth increase of operating and financing activity. In particular, we highlight the role of the distribution policy in financial modeling by describing the strict logical connections between estimated data and financial decisions.

Suggested Citation

  • Marchioni, Andrea & Magni, Carlo Alberto & Baschieri, Davide, 2020. "Investment and financing perspectives for a solar photovoltaic project," MPRA Paper 107374, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107374
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    References listed on IDEAS

    as
    1. Lupangu, C. & Bansal, R.C., 2017. "A review of technical issues on the development of solar photovoltaic systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 950-965.
    2. Marchioni, Andrea & Magni, Carlo Alberto, 2018. "Investment decisions and sensitivity analysis: NPV-consistency of rates of return," European Journal of Operational Research, Elsevier, vol. 268(1), pages 361-372.
    3. Pham, An & Jin, Tongdan & Novoa, Clara & Qin, Jin, 2019. "A multi-site production and microgrid planning model for net-zero energy operations," International Journal of Production Economics, Elsevier, vol. 218(C), pages 260-274.
    4. Carlo Alberto Magni, 2020. "Investment Decisions and the Logic of Valuation," Springer Books, Springer, number 978-3-030-27662-1, December.
    5. Carlo Alberto Magni, 2010. "Average Internal Rate of Return and investment decisions: A new perspective," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 0021, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    6. Sinke, Wim C., 2019. "Development of photovoltaic technologies for global impact," Renewable Energy, Elsevier, vol. 138(C), pages 911-914.
    7. Ezbakhe, Fatine & Pérez-Foguet, Agustí, 2021. "Decision analysis for sustainable development: The case of renewable energy planning under uncertainty," European Journal of Operational Research, Elsevier, vol. 291(2), pages 601-613.
    8. Kang, Jidong & Ng, Tsan Sheng & Su, Bin, 2020. "Optimizing electricity mix for CO2 emissions reduction: A robust input-output linear programming model," European Journal of Operational Research, Elsevier, vol. 287(1), pages 280-292.
    9. Magni, Carlo Alberto & Marchioni, Andrea, 2019. "The accounting-and-finance of a solar photovoltaic plant: Economic efficiency of a replacement project," MPRA Paper 95263, University Library of Munich, Germany.
    10. Carlo Magni, 2013. "The Internal Rate of Return Approach and the AIRR Paradigm: A Refutation and a Corroboration," The Engineering Economist, Taylor & Francis Journals, vol. 58(2), pages 73-111.
    11. Baschieri, Davide & Magni, Carlo Alberto & Marchioni, Andrea, 2020. "Comprehensive Financial Modeling of Solar PV Systems," MPRA Paper 103886, University Library of Munich, Germany.
    12. Dong, Changgui & Sigrin, Benjamin & Brinkman, Gregory, 2017. "Forecasting residential solar photovoltaic deployment in California," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 251-265.
    13. Federica Cucchiella & Idiano D’Adamo & Massimo Gastaldi & Vincenzo Stornelli, 2018. "Solar Photovoltaic Panels Combined with Energy Storage in a Residential Building: An Economic Analysis," Sustainability, MDPI, vol. 10(9), pages 1-29, August.
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    More about this item

    Keywords

    photovoltaic solar energy; project evaluation; net present value; distribution policy;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • G00 - Financial Economics - - General - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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