net salvage value of land?

[Rahul]

Hi,

I was wondering if someone could help me with a query. I am trying to
model a Utility PV array (Utility IPP) roughly 5MW in scale. I noticed
that the default cost for land is $0.03/watt. The default financing
option is for 30 years but the net salvage value is set to 0%. I found
this strange because after 30 years, the land should have a value and
hence there should be a salvage value. The current options would make
sense only if the cost for land reflects the lease cost. Is this what
the $0.03/W is supposed to represent?

Thank you for your help !
Rahul

[Paul Gilman]

Hello Rahul,

The Land cost (along with all of the other costs in the both the
direct and indirect capital costs categories) is a one-time cost that
SAM applies in Year 0 of the project cash flow, so it is not a
periodic lease payment.

SAM calculates the salvage value using the Net Salvage Value variable
on the Financing page. You specify it as a percentage of the total
installed cost, and SAM applies it in the final year of the project
cash flow (adjusting for inflation).

The default values ($0.03/Watt land cost, and 0% salvage value)
represent a project with an initial land cost but no salvage value.

The default values in SAM are just a starting point, you should change
them to reflect the assumptions you want to make for your analysis.

Best regards,
Paul.