The value of electricity generation property, plant and equipment is commonly based on discounted cash flow analysis of the future earnings of the assets. The major inputs in the valuation model that require significant expertise, include the forward price of electricity, sales volume forecasts, operational and capital expenditure, discount rates and useful life assumptions in relation to generation assets.
In all cases there is a requirement for expert judgement. Crighton Anderson has experience in this area and undertakes electricity generation asset valuations of:
- Geothermal developments
- Biomass & landfill