Cash flowing solar developments for long-term real estate redevelopment opportunities

Abstract

Imagine an opportunity that has thirty-four acres sitting on a thousand feet of beach and a ten-minute drive from an international airport. Two years after site acquisition, the asset could return all of its equity capital to investors while continuing to pay down debt on the land from a ground lease. This scenario is tested as the basis of this paper's case study while answering the question on how real estate investors could use a utility-scale solar development to make profitable returns and cover debt service with high investment value flexibility for future redevelopment. This paper is structured to provide a broad overview of the entire solar industry for the perspective of its intended audience: real estate professionals. The components of solar are simple, but tying them together can be complicated. This paper's first four chapters build on one another providing a broad industry overview, a technical primer, the development schedule, and the economic vehicles that fuel a solar facility's capitalization. The final chapter's case study is presented as a business plan for a property with applied due diligence learned in previous chapters. For the first time, perhaps in modern history, people must choose between aspiring to fundamentally change the energy status quo in a half a generation or bear the culpability for reducing the quality of life for future generations. The energy market has already begun to shift from the 20th-century model of monopolistic, centralized generators to smaller, decentralized renewable technologies due to the economics of falling costs. There is a real opportunity to make quality returns while advancing society's march to a more sustainable future. By the end of this paper, the reader will have the knowledge and confidence to apply skillets they already have to participate in the greatest challenge of our time.