VALUATION OF…
Solar Farms
Utility-scale solar photovoltaic generation facilities, valued on power purchase agreement income and land rights.
Content status: Methodology and evidence log — Sources, Caselaw and Market Information are added incrementally.
Methodology
Solar farms are valued primarily using the Discounted Cash Flow Method applied to the income generated under the power purchase agreement (PPA) with the offtaker, given the long-term, contracted nature of the revenue stream over the PPA term.
Applying the Big Five framework, the Income Generating Unit is the generation facility as a whole, with income defined by the PPA tariff and generation capacity (MW) rather than floor area; ‘contract versus market’ income is reinterpreted as the contracted PPA tariff against current market PPA tariffs for new projects, and the discount rate applied reflects offtaker covenant, remaining PPA term, resource risk and technology/degradation risk.
A Direct Comparison cross-check on a rate per MW of installed capacity, drawn from sales of comparable operating solar farms, should be used to test the primary DCF valuation, alongside the underlying land value where the land is separately held.
Caselaw
Case law, regulatory rulings and expert-determination disputes relevant to valuing this asset class. Each entry cites its source and summarises the practice implication for valuers — this is not investment, financial, or legal advice.
The Evidence Log is for VDH Members
The Evidence Log for Solar Farms — sourced sales, disposals and rentals with Valuer’s Lens commentary — is included in VDH Membership: from R125/month for SACPVP candidates and students, R399/month standard. All prices include VAT.
The methodology and case law on this page remain free to read.