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Analysis of the Innovative Solar Systems M&A Renewable Energy Deal for Sale for $150 million

Updated: Feb 12

Analysis of the Innovative Solar Systems M&A Renewable Energy Deal for Sale for $150 million

The Inflation Reduction Act will accelerate M&A in Clean Energy

It’s an exciting time to be in the renewable energy industry with U.S. tax credits set to spur bigger and greater SOLAR green energy deals - and to do so, require new and advanced siting strategies. Investors and bankers need to find and value deals faster and more accurately, and require data and technology to foster the growth.

As an investor, developer, or banker in renewables, you’re constantly seeking opportunities, whether it's at the operator level with entire platforms, at the asset, at the project, or at the land greenfield level. You need accurate and reliable data and analytics to access M&A comp data in the renewable energy space, and value the active opportunities immediately. In this analysis, you will discover how to leverage LandGate's data and technology to streamline and scale the valuation of renewable deals.

We also discussed how to leverage data and tech to value renewable deals in our webinar with Michael Hafter:

Analysis of a closed solar M&A deal - Solar farm future operating cash flows bought at 5.5% discount rate in a 5% interest rate environment

You can determine how solar energy deals transacted, the trends going from 10% discount rate a few years ago down to 5.5% discount rate in the recent deals where LandGate could locate purchase prices.

Reviewing a comparable closed deal (Three Wisconsin Utilities Purchase Stake in Paris Solar Project developed by Invenergy), LandGate bottoms-up renewable energy asset valuation using all data available is $450M using a 6% discount rate on cash flows. The purchase price is $433M, showing a PV discount rate of 5.5%.  This shows how all the historical deal data is helping formulate the base sensitives on our active deal valuations, as well as on the research analytics valuation and sensitivities of every renewable energy operator’s platform in the US.

Cash Flow and Net Generation on every developer and site – historical and future cash flows that include incentive revenue.

LandGate does so using a bottoms up valuation approach, including every project whether active, built, planned or queued – in this case, we can study the economics of the Paris solar project. It will include the 2D solar irradiance at this solar farm location converted to 3D solar irradiance using the local topography and the panel types. The 3D solar irradiance will change during the day and each month based on the incidence angle of the sun. It also uses the local commodity prices, whether LMP PNode combined with IRA incentives, or a PPA. O&M costs are estimated based on operators’ average costs in this area.

Using LandGate’s PowerM&A research analytics to review Innovative Solar Systems, LLC for Sale

Quoting their press release, Innovative Solar Systems, LLC (ISS), a national utility-scale solar project developer based in Asheville, NC (USA) with an active 10GW project portfolio is being offered for immediate sale at a firm price of $150MM USD. The buyer of ISS has an opportunity to net $1.7 to $4.8BN in gross profits within 3 years…..A complete 3rd party valuation report was recently received on ISS and the report places a current valuation on ISS at $220M to $328M.” This deal is circulating the industry today and they’ve posted information of the underlying projects on their website, press release and Business Insider.

This is a pre-NDA public teaser, so useful data to start the screening process, especially when combined with LandGate data. LandGate gives you all the data and tools to run the most accurate due diligence of the active deals, and an opportunity to quickly analyze the provided economics to make the best offer. Let’s look at all the data and research analytics that LandGate’s PowerM&A has already prepared for you in its database for a quick first-pass valuation, but also allows you to edit and model any of the data and assumptions for a more customized valuation.

Survey Comprehensive Substation and Interconnection Queue Data

With LandGate’s data, you can easily verify the assumptions provided by the seller, whether there will be additional costs, and where the projects stand in the queue.  This holy grail of information includes: 

  1. Transmission/electric grid data, Buildable Areas, LMP nodes etc on all 170M US parcels including 

  2. 60% coverage max & available capacity of substations, transmission, distribution lines

  3. Expected COD (Prod Start) - Click on nearest substation find innovative solar systems & capacity (85 MW) - Verify COD/Capacity and place in the queue are confirmed by noting it on the substation.

  4. May have additional costs to add if adding a substation and you may need to update the production dates on this project based on this information.

  5. Development stage (Risk category): How much work is left to do, how much risk of failure. 

Easily Examine Capacity - Gain Unparalleled Pricing Clarity

Next step is typically to understand the historic and future energy production and forecast and model pricing within the power market.  The tool allows you to use System plan or Location (point of interconnection), what do we sell it for?  At the substation screen, you can determine what your LMP pricing is over time (and the forecast would apply to valuation)  Automatically included in the calculation are: 

  1. 99.9% coverage LMP / PNodes.

  2. PPA types and data - Real time pricing. Model PNode, hub, or custom PPA.

Take advantage of once in a lifetime ever-changing incentives

LandGate took all the Federal, State and Local Incentives including the Inflation Reduction Act and translated and mapped the inputs into the Model - saving you hundreds of hours. Included are ITC, PTC, REC - how are the economics changing the updates to incentives?

  1. When it's built or planned to be built. Depending on what year construction began the project may be eligible for different Tax Credit Programs and Rates.

  2. If it's not built yet, you may qualify for new incentives etc. Including the Energy Community Bonus (extra 10% increases ITC from 30% to 40%)

  3. How would changing political situations impact investment? Projects scheduled to start construction after 2024 may have additional risk factors depending on presidential / senate / congressional elections and agenda’s. New administration could remove these programs.

  4. REC’s dependence on Renewable Portfolio Standards and the penetration of renewable energy projects, the market value of REC’s may fluctuate significantly in the future (up / down).

Utilize a comprehensive prepared valuation or edit it by modeling any economic input parameters like commodity prices or O&M costs

  1. ITC is based on Construction and equipment costs, PTC is based on production yield over the first 10 years, different ways of calculating, and timing for the vesting of the tax credits.

  2. Calculate based on our solar panel choice and other factors that can be customized.

  3. Precalculate based on Tax-Equity incentives - encouraging energy transition.

  4. Take in account Premiums/Supply Chain constraints.

Ensure all CAPEX and O&M (Operation & Maintenance) costs are taken in account in the model

  1. Construction, Electrical, Network Upgrade costs, New Transmission lines

  2. Based on NREL Utility Scale Solar Inputs (High, Low, middle), and enhanced through proprietary datasets.

  3. Model Project Length: 20 Year Primary Term, with four 5 year extension options

  4. Take in account Risk factors to apply

Understand and Visualize the Location

Farm & Array outline/layout

Are there expansive, buildable opportunities in the surrounding area?  Are there any other nearby solar projects (in each of the stages)?  Our developer may leverage ownership data to determine who owns the underlying surrounding land?  

Value the deal by accessing prepared sensitivities and even model instantly 

Observing the below results on the Innovative Solar Systems deal, we supply the case and sensitivities using all the data and factors injected into the platform.  Additionally, we update several inputs that can be edited and rerun with your own custom sensitivities, risk criteria or strategies. 

Landgate Base Results:

Base ITC = 30% Active Domestic Content Incentive= 10% active Energy Community Incentive = 0% not active Value: $145,838,613

Sensitivity on electricity commodity price

Changed Inputs:

Energy Community Bonus = 10% active

Project Start Date pushback 1 year (if 2024 changed to 2025)

Sensitivity Results 2:

Base ITC = 30%

Active Domestic Content Bonus = 10% active

Energy Community Bonus = 10% active

Project Start Date pushback 1 year (if 2024 changed to 2025)

Value: $285,741,364

Sensitivity on capital costs and IRA electricity incentive

Changed Input 3:

Energy Community Bonus = 10% active

Project Start Date pushback 1 year (if 2024 changed to 2025)

Increase Solar Panel Cost Only from .31 $/W to .35$/W (13% increase from Base)

Sensitivity Results 3:

Base ITC = 30% Active Domestic Content Bonus = 10% active

Energy Community Bonus = 10% active

Project Start Date pushback 1 year (if 2024 changed to 2025)

Increase Solar Panel Cost Only from .31 $/W to .35$/W (13% increase from Base)

Value: $229,050,113

Arm yourself with the best M&A database and research analytics for wind and solar energy

Developers must value deals, and find suitable and financially attractive sites, as the US energy industry shifts to reduce fossil fuel, reduce emissions and accelerate green energy. Investors are hunting from thousands of opportunities (projects, developers, land), value suitable sites, model NAV/cashflows, forecast future Cash Flows with proper sensitivities. Bankers must accurately and timely construct Comparable deals for risk Assessment and underwriting due diligence.  Additionally, they need to quickly screen without 3rd party engineers until the deal is active.  Leveraging LandGate’s big data and powerful software is vital to save your time, money and win versus your competitors, and mitigate risk against ever changing factors.

Most comprehensive database of renewable energy M&A deals with research analytics

Search the largest database of active and closed renewable energy M&A deals with accurate economic valuation reports, along with sensitivities on electricity commodity prices / PPA / incentives. Also access NAVs (Net Asset Values of each renewable energy operator platform), incentives, cashflows (historical and future) and valuation data. Access all the solar M&A and wind M&A historical deals with bottoms up valuations using actual PPA data (Power Purchase Agreement), LMP PNodes, and incentives with forecasted commodity prices. LandGate has the most complete database of PPA data  historical deals and edit to make comparables.  


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