REP Project Planning & Financial Analysis 3

Question 1

Which contract structure transfers the most construction risk from the project owner to the contractor in a renewable energy project?

Accepted Answer

Fixed-price, date-certain, full-wrap EPC contract

Answer

Cost-plus with a guaranteed maximum price

Answer

Time-and-materials with open-book accounting

Answer

Design-bid-build with separate trade contracts

Question 2

An independent engineer (IE) is engaged during renewable energy project financing primarily to:

Accepted Answer

Provide lenders with an independent assessment of technical and financial assumptions

Answer

Negotiate power purchase agreement terms on behalf of the offtaker

Answer

Obtain environmental permits from state and federal agencies

Answer

Manage the EPC contractor's construction schedule

Question 3

A renewable energy developer uses a 'sensitivity analysis' in their financial model primarily to:

Accepted Answer

Assess how changes in key assumptions affect project returns and viability

Answer

Determine the optimal capital structure for the project

Answer

Calculate depreciation schedules for tax equity investors

Answer

Establish milestone dates for the construction schedule

Question 4

Which federal tax incentive allows renewable energy project owners to depreciate most of the project's cost in the first year of operation under current US tax law?

Accepted Answer

Bonus Depreciation under MACRS

Answer

Production Tax Credit (PTC)

Answer

Investment Tax Credit (ITC)

Answer

New Markets Tax Credit (NMTC)

Question 5

A solar project has a total installed cost of $2,000,000 and generates 500,000 kWh annually over a 25-year life with zero residual value and no discount rate applied. What is the simplified LCOE?

Accepted Answer

$0.16/kWh

Answer

$0.08/kWh

Answer

$0.10/kWh

Answer

$0.04/kWh

Question 6

In a renewable energy project, 'backfill risk' in the interconnection queue refers to:

Accepted Answer

The risk that projects ahead in the queue withdraw, changing cost allocation to remaining projects

Answer

Soil erosion at the project site during construction

Answer

Transmission line overload caused by new generation additions

Answer

The cost of connecting underground conduit to the point of interconnection

Question 7

Which document legally obligates a renewable energy developer to deliver power to an offtaker at a predetermined price for a specified term?

Accepted Answer

Power Purchase Agreement (PPA)

Answer

Letter of Intent (LOI)

Answer

Interconnection Agreement (IA)

Answer

Engineering, Procurement and Construction Contract (EPC)