Feasibility Report
Situation:
Rex Hill (a winery located in Newberg, Oregon) has asked you to investigate a proposal for installing a PV solar panel system at their property. As Rex Hill’s consultant, you will examine the relevant factors that come into play and write a brief feasibility report (single spacing; cover page; professional formatting) that informs the winemaker with a recommendation as to whether to pursue the project.
In planning your report, assume that Sunbridge Solar is the solar installation company and that the project would include a ground-mounted 20-kW solar array. Also, assume that the owners of Rex Hill, including their financial and business advisors, will be reading the report (therefore, don’t include any information pertaining to the class, such as “WR 327” or “Technical Report Writing”).
The capital cost of the solar panel system is $82,000. The system is warranted for 20 years and has an expected lifespan of 40 years. If Rex Hill moves forward with the project, they would finance the system with a 5-year loan at 6% interest. The payments over the life of the loan are $1,585 per month. After investigating and researching the benefits of the project, you (as the consultant) determined the following information:
• Based on the current electrical rate, the project will save around $900 per year on utility costs over the first 5 years. That amount will likely increase in the future.
• By installing the system, Energy Trust of Oregon would provide a first-year rebate of $20,000.
• Rex Hill qualifies for a state Business Energy Tax Credit worth 50% of the cost of the system. The tax credit would be spread evenly over the course of 5 years.
• Rex Hill also qualifies for a Federal Tax Credit worth 30% of the cost of the system. The tax credit would be spread evenly over the course of 3 years.
• Rex Hill is eligible for a tax benefit relating to the ability to write off the rapid depreciation of the equipment. After talking with a tax advisor, you find out that the actual tax savings amount to $2,500 per year for the first 5 years.
• As part of the solar project, Sunbridge Solar would also provide an energy monitoring system, which would allow Rex Hill to display energy-saving data on a flat panel screen (hint: think of the public relations opportunity of incorporating environmental responsibility/sustainable practices)
In writing your report, please assume that the tax-related benefits are directly proportional to the other savings. Also, in writing your report, be sure to take into consideration design strategies and visual aids. If you want to use other assumptions in writing your report, please be sure to list them (or run them by me beforehand).
Environmental benefits/Energy generation potential
http://www.solarcity.com/commercial/agriculture-solar-projects/king-estate-winery
Operations and Maintenance costs/considerations
http://assets.fiercemarkets.net/public/smartgridnews/1021496AddressingPVOaMChallenges7-2010_1_.pdf
https://energizeohio.osu.edu/sites/energizeohio/files/imce/TB-1291-2.pdf
Sustainability considerations
http://www.rexhill.com/?method=pages.showPage&PageID=1F6BF17A-BBCF-FC9B-6697-77981AF8BC9B&originalMarketingURL=The-Winery/Our-People/Vineyards
http://www.rexhill.com/?method=pages.showPage&PageID=21162A77-F149-11D7-B9AC-A215B3DE4789&originalMarketingURL=The-Winery/Our-People/Finance
https://www.wineinstitute.org/initiatives/sustainablewinegrowing/benefits
For the financial evaluation, I highly recommend developing a table and comparing all costs/savings/outlays.
Planning the feasibility report
A feasibility reports investigates whether to pursue a project, sizing up the project before it is undertaken. A feasibility report is an analysis of the practicality of an idea through a disciplined and documented process of thinking through the idea from its logical beginning to its logical end. The analysis is carried out to assess the viability of a new project and should lead the reader to the desired conclusion. The structure of your report should embrace a rational thought process, arriving at a decision that is justified.
For planning a feasibility report, remember to:
• Consider the audience
• Determine the criteria
o Selecting logical criteria is crucial to the entire feasibility report because you will ultimately provide a recommendation that is based on those criteria.
• Determine the standards
o To determine standards is to state the limits of the criteria.
• Organize your discussion around the criteria
With your feasibility report, consider the structuring of your report:
• Introduction
o Purpose statement
o Explanation of methods of investigation
o Statement of scope
? A scope statement reveals the topics in a report. With a feasibility study or recommendation report, the scope statement will cite the criteria you used to evaluate the data. You can also explain their ranking.
o Background or explanation of the situation
• Conclusions
• Recommendations/Rationale section
• Discussion section
