Tioga provides project financing through its SurePathSM Solar (PPAs), which maintains and operates solar systems on behalf of its customers. Tioga needs to estimate future electricity prices and make comparisons by showing the savings from a new solar system.
To forecast price increases, Tioga inputs California’s electricity rate data into a model developed using Palisade’s risk analysis software, @RISK. This generates a probability distribution for electricity rate rises over the 20-year PPA period, which shows that there is a 25% likelihood that price increases will be less than 4.8%, and a 25% chance that rate rises would be more than 8.7%.
The @RISK model helps Tioga evaluate the likelihood that a customer will save money for a variety of PPA scenarios (the rate at which electricity would initially be charged and the amount by which it would then increase each year). It also calculates the magnitude of savings for different combinations of first year costs and subsequent rises. Consumers are able to understand the pricing and make an informed decision about whether to sign up for a PPA.
Kristian Hanelt, vice president of project finance at Tioga, said: “Using historical data and @RISK’s modelling capacity, we can offer consumers a robust view of the potential benefits of a solar PPA. This enables them to hedge against rising electricity rates, as well as feel confident that they are playing a part in tackling global warming.
“@RISK is a flexible and technically adept tool that, in addition to enabling in-depth analysis, makes it easy for us to present relatively complex ideas in an easy-to-understand graphical format. As a result, it plays a key role in helping Tioga Energy to differentiate itself from its competitors.”
