Jin Gyu Park and Jun-Hyung Kim (2018. 8), "Appraisal of solar photovoltaic systems: reality and solution," Appraisal Studies, 17(2): 5-37.
Abstract
Along with recent growth of the solar photovoltaic(PV) system installation, there has been increase in the real estate appraisal of solar PV system. Moreover, as renewable energy policies receive public attention, demand for such appraisal is only likely to continue to increase going forward. This study aims to recommend reasonable appraisal standards for solar PV system valuation by comparing domestic and international appraisal standards and analyzing 241 cases of valuations done in 2017. First, from cost approach perspective, we should reflect the most recent market price of module, inverter, structure, which account for most of the repurchase cost. In terms of depreciation estimate, the appraisal should be decided from 20-25 year range depending on the economic duration of the module. In addition, the observed condition method should be jointly used to consider functional depreciation. Second, sales approach should be applied when there are enough comparable sale cases. Also, since solar PV system is an income-generating asset based on the cash flow of electricity sales revenue, DCF approach should be combined if necessary. Finally, in order to prepare for the scenario of using cost approach as well as market approach and/or income approach for the solar photovoltaic systems appraisal, the appraisal guideline should be provided to reconcile the value indication of appraisal other than weighting average approach.
Keywords
solar photovoltaic systems; appraisal; cost approach; DCF analysis; market approach