By Justin Seward
Mikhail Ivanchikov of Dandelion Renewables presented the company’s proposed project in Irvine to Cypress County council on April 20.
The solar renewables company proposed to develop, permit, construct, commission and operate a 600-kilowatt solar farm due east of the Irvine Sports Complex on three acres of land.
The hope was to get a note to proceed by June and a construction completion of October.
Capital expenditures to Cypress County would be an estimated $568,086, which would include a Fortis transformer upgrade, fence and Sports Complex reconnection.
The power generation would cover 73 per cent of the County’s municipal annual power consumption.
“If there is an appetite to further work with us, I think it might take about two months to get through the due diligence and get everything lined up (and) firm up the costs,” said Ivanchikov.
There would be $457,394 (45 per cent) of Alberta Municipal Solar Program (AMSP) paid at the end of the project’s completion and the remaining funds will have to come from Cypress County.
Investment in the solar farm could yield 17 per cent unlevered return and generates $1.9 million positive Net Present Value and has positive levered cash flow in year one.
“In the first year, what you’re going to experience is that you need to pay the debt services on this amount and also on top of it you’re going to have some savings from less energy being consumed, said Ivanchikov.
“The net benefit, which means your savings minus the debt services is going to come to $21,280 in the first year.”
Year two’s net solar cash flow would be $23,794, the third year $26,397, year four $29,094, year five $31,887, $34 781 in year six, $37,777 in year seven and year eight $40,881.
“This cash flow is what’s left over after servicing the debt,” he said.
The total life of the project is 30 years and in year 15 the debt service will be fully paid and the revenue to increase to an anticipated over $100,000 per year.
The Net Present Value (NPV) is calculated over 30 years.
“The modules we use have 30-year deforms guaranteed, potentially it’s going to be a longer term,” he said.
Ivanchikov says the county has room in terms of how much money can be borrowed.
“You need to take a look at this carefully because it’s going to tie up your borrowing capacity in the future,” said Ivanchikov.
“If you’re not concerned about the future very much, I’ve seen municipalities where they’ve just made prudent decisions not to borrow any money and I understand that. So that’s one negative thing because you need to finance.”
The second negative thing is that the AMSP is paid at the end of the project and the county will have to secure breech financing during the construction of the project.
The project would provide risk mitigation to volatile power prices and proposed solar development has very low environmental impact.
Council accepted the presentation for information.