
204 Project development in the solar industry
Table 11.6 Value of current and future tax benefits (Mendelsohn, 2012b).
Year 0 1 2 3 4 5 6
Project Cost $100
Tax Rate $35
IRR Target 10%
Current Tax Equity Requirement
ITC 30%
ITC Value $30
Depreciable Basis $85
5-Yr. MACRS + Bonus Schedule
60.0% 16.0% 9.6% 5.8% 5.8% 2.9%
Depreciation Value (schedule × basis × tax rate)
$18 $5 $3 $2 $2 $1
Total Tax Benefit (depreciation value + ITC)
$48 $5 $3 $2 $2 $1
Tax Equity Inv. that Earns 10% IRR on Tax Benefits ($52)
Future Tax Equity Requirement
ITC 10%
ITC Value $10