Integrating Solar Photovoltaic Energy Degradation and Financial Performance for Debt Service Capacity Assessment: A Life-Cycle Response Surface Approach

The development of utility-scale solar photovoltaic projects is subject to energy performance degradation risks that may affect project revenues and the ability to meet financing obligations. Therefore, project evaluation should consider the interrelationship between technical and financial performance throughout the project lifetime. This study aims to analyze the relationship between energy production degradation, revenue, Cash Flow Available for Debt Service , and debt service capacity over a 25-year operational period of a utility-scale solar PV project. The study employs quantitative financial modeling based on an assumed annual module degradation rate of 0.5%. The relationships among the key parameters are analyzed using a Rational 2D Response Surface model and analysis of variance. The results show that energy production decreases by 11.3% over the 25-year operational period, while revenue declines by 11.4%, operating expenditure increases by 103.5%, and Cash Flow Available for Debt Service decreases by 36.7%. The Rational 2D Response Surface model indicates strong relationships among energy production, revenue, Cash Flow Available for Debt Service, and debt service capacity, with R² values exceeding 0.99. These findings demonstrate that reductions in energy production and revenue are accompanied by declines in Cash Flow Available for Debt Service and debt service capacity throughout the operational lifetime of the project. Maintaining the technical performance of solar photovoltaic projects throughout their operational lifetime is essential, as energy production degradation directly affects revenue, Cash Flow Available for Debt Service, and debt service capacity. Quality control from the planning stage through construction is therefore an important component of maintaining the project's financial viability and bankability