Examine the relevant factors that come into play and write a brief feasibility report (3-5 pages; single spacing) that informs the winemaker with a recommendation as to whether or not to pursue the project.

Feasibility Report   

Due by 11:00am Friday, July 29

 

Situation:

Rex Hill (a winery located in Newberg, Oregon) has asked you to investigate a proposal for installing a PV solar panel system at their property. As Rex Hill’s consultant, you will examine the relevant factors that come into play and write a brief feasibility report (3-5 pages; single spacing) that informs the winemaker with a recommendation as to whether or not to pursue the project.

 

In planning your report, assume that Sunbridge Solar is the solar installation company and that the project would include a ground-mounted 20-kW solar array. Also assume that the owners of Rex Hill, including their financial and business advisors, will be reading the report.

 

The capital cost of the solar panel system is $82,000. The system is warranted for 20 years and has an expected lifespan of 40 years. If Rex Hill moves forward with the project, they would finance the system with a 5-year loan at 6% interest. The payments over the life of the loan are $1,585 per month.

 

After investigating and researching the benefits of the project, you calculated/found the following information:

 

  • Based on the current electrical rate, the project will save around $900 per year on utility costs over the first 5 years. That amount will likely increase in the future.

 

 

 

 

  • By installing the system, Energy Trust of Oregon would provide a first-year rebate of $20,000.

 

  • Rex Hill qualifies for a state Business Energy Tax Credit worth 50% of the cost of the system. The tax credit would be spread evenly over the course of 5 years. $41,000ztax credit would be spread evenly over the course of 3 years.

 

  • Rex Hill would also receive a tax benefit relating to the rapid depreciation of the equipment (which allows the winery to write off 85% of the entire cost of the system over 5 years). After talking with a tax advisor, you find out that the actual tax savings for Rex Hill amount to $2,500 per year for the first 5 years.

 

  • As part of the solar project, Sunbridge Solar would also provide an energy monitoring system, which would allow Rex Hill to display energy-saving data on a flat panel screen s

 

In writing your report, be sure to take into consideration design strategies and visual aids. If you want to use other assumptions in writing your report, please be sure to list them (or run them by me beforehand).

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