American Solar

1. What are the differences in current solar technologies, and how does this impact American Solar’s business? 2. Who benefits from the tax credits? Should the U.S. provide these tax credits? 3. How would you expect the current industry outlook to impact American Solar’s prospects for growth and profitability?
4. What are the arguments in favor of and against Hanover Inns using American Solar’s solar thermal technology? Kathryn wants to prepare a thorough case to present to Hanover Inn. What are the pros of the project, and how could you counter any of the negatives of the project? Why would a company want to purchase a roof from American Solar?
5. If Hanover Inn invests in the solar thermal roofs with American Solar, they will avoid some current and future costs. What are these avoided costs, what is their impact on cash flow, and how would they affect the analysis? (These can include real costs and/or opportunity costs.)
6. How should Kathryn and John evaluate the proposed hotel project? What factors would impact the amount they might charge for each roof? What cost of capital should be used in the analysis? Although the tax credits are still in effect, if the credits expire, how attractive would the project be then? What does this say about the long term profitability ?
7. How do the available financing options impact the proposed hotel project? How can Enancing add value? Discuss this
question both quantitatively and qualitatively. How should American Solar price its bid for Hanover’s roofs?
8. The aesthetic properties of American Solar roofs are appealing compared to the traditional boxy solar panel roofs. What value could be put on this aesthetic feature?
9. Which economic assumptions are the most crucial in Hanover Inn’s financial assessment of installing a solar thermal roof with American Solar?
10. What non-economic factors were also important in making the solar thermal roof an attractive investment for Hanover Inns?

11. Using Exhibit 6, Retail Electric Prices for 1990-2010, calculate the following:
a. Average annual electric cost per kilowatt hour for residential, commercial, industrial, and government electric consumers.
b. Which sector has the highest costs? Which sector has the lowest costs? Why is there a difference in the average costs for the four sectors?
c. What is the percentage change (increase) in electric costs per sector from 1990-2010. Could these percentage changes for each sector be used as proxies for future electric cost increases (avoided costs in the American Solar reroofing project)? Why or why not