Financial Parameters, Project Term Debt, DSCR model does not bound debt fraction

[tyneises]

The DSCR model does not limit the debt fraction of total installed cost. For systems with a lot of revenue, the model results in a debt fraction > 100% and negative equity, which causes an IRR = NaN.

Fix by adding an input to set an upper limit on allowable debt fraction when using the DSCR model?

To replicate, open the CSP generic model, single owner model. On the revenue page, switch to 'Specify PPA Price' and change the PPA price to 0.18.

[cpaulgilman]

For the PPA financial models, we leave it up to the user to evaluate results and determine whether they are valid. For example, for the Single Owner model in "Specify PPA price" mode, any of NPV, IRR, and debt size metrics being negative or unreasonably high indicates either a problem with inputs or a financially infeasible project. That is tricky for users who are not very familiar with financial metrics.

Limiting the size of debt may be a reasonable solution, but doing so limits the insights you can get from the model. For example, these parametric results (pvwatts-single-owner-dscr-test.zip) show how those metrics vary with PPA price. You can see that the PPA price sweet spot is around 7.5 cents/kWh: Anything below that or above that results in unreasonable IRR and/or debt size, and you can see how NPV alone can be misleading. The "invalid" results can help you identify patterns that would not be visible if the debt fraction input were limited.

If we limit the debt fraction, should we also limit other inputs, like the IRR?

Another solution might be to highlight results in the metrics table that don't meet predetermined criteria, for example highlight table cell in red when NPV < 0, IRR > 100%, equity < 0, etc.

[cpaulgilman]

@n8blair, any thoughts on this discussion?

[sjanzou]

@cpaulgilman , @n8blair - do we have a solution for the Fall 2021 release?

[cpaulgilman]

This issue is similar to #551

[cpaulgilman]

This specific issue is addressed in #734.