Automating Pricing for Mid-Market Solar Projects

Conductor Solar makes it easy for solar developers to price their projects with free automated tools. But how do you know it’s accurate? What have we done to make this tool useful for solar projects of all sizes across the country?

I could write a 20-page thesis on project pricing but nobody would read it, so I’ll break it into a few separate posts over the next couple of weeks to keep it digestible. This one is focused on the fundamentals which allow us to automate the process: consistency, accuracy, and representative data.

Consistency: We keep our underlying assumptions consistent such as the dates we use for cash flows and how operating expenses scale with size. As a result, when we notice overall pricing getting better or worse for a given type of project or market, we’re able to quickly dig in to determine if one of our underlying assumptions needs to be adjusted or if this is more of a macro pricing shift (e.g., interest rate hikes driving up overall returns).

Accuracy: Building a solar project has never been easier, but that doesn’t mean that the financials are simple, and we need to be sure our model accounts for as many situations as possible. For example, should you factor in residual value for the solar project after its 25-year offtake contract, and if so, how much? How do you value uncontracted SRECs in Ohio or DC? What premium does a floating discount without any sort of collar command on a community solar project? We’re relentlessly validating our assumptions with the best partners in the market to understand how these situations and many others should be modeled, and our modeling tools are continuously updated with data validation rules and market feedback to help ensure accuracy on every project. After all, garbage in, garbage out, right?

Representative Data: It’s hard to know the market pricing for all shapes and sizes of mid-market solar projects because there are so many differences between these projects. A developer may have their 1,200 kWdc muni project valuations nailed down, but what about a 300kW non-profit? Is that a 50 or 500 bps premium? This uncertainty causes many developers to whiff on pricing proposals by either leaving value on the table, or worse, tarnishing their reputation because they can’t deliver the project at the promised price to the customer. It takes a few valuations to hone in on pricing for a certain flavor of project, and it’s important to keep those fresh as macro changes occur.

Here at Conductor Solar we’re fortunate to have a large dataset and experienced modelers that allows us to address the three fundamentals of project pricing and deliver you automated estimates on demand.