The accounting-and-finance of a solar photovoltaic plant: Economic efficiency of a replacement project

Carlo Alberto Magni and Andrea Marchioni

MPRA Paper from University Library of Munich, Germany

Abstract: In this work we illustrate a simple logical framework serving the purpose of assessing the economic profitability and measuring value creation in a solar photovoltaic (PhV) project and, in general, in a replacement project where the cash-flow stream is nonnegative, with some strictly positive cash flows. We use the projected accounting data to compute the average ROI, building upon Magni (2011, 2019) (see also Magni and Marchioni 2018), which enables retrieving information on the role of the project’s economic efficiency and the role of the project scale on increasing shareholders’ wealth. The average ROI is a genuinely internal measure and does not suffer from the pitfalls of the internal rate of return (IRR), which may be particularly critical in replacement projects such as the purchase of a PhV plant aimed at replacing conventional retail supplies of electricity.

Keywords: Energy project analysis; investment evaluation; value creation. (search for similar items in EconPapers)
JEL-codes: C02 C67 G31 (search for similar items in EconPapers)
Date: 2019-05-16
New Economics Papers: this item is included in nep-cfn, nep-ene and nep-ppm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:95263

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