This model indicates the economics of a typical utility-scale solar project, as a function of a dozen economic inputs: capex costs per MW, power prices, solar insolation, panel efficiency, decline rates, curtailment, opex, DD&A, loan metrics and tax rates.
Capex costs are also disaggregated across a dozen categories, derived from technical papers and our own calculations (chart below).
Our base case calculations show utility scale can be extremely economic on a standalone basis, with 10% levered returns achieved at 4-7c/kWh input prices.
However, it is interesting to note how quickly the economics deteriorate: by c3-5c/kWh in areas where solar penetration is already high; and by 5-7c/kWh in less sunny locations. There is also a 3-4% risk to IRRs if projects have been under-written with unrealistic decline rates.