Business Plan For Solar

Energy System
Contents
Executive Summary..........................................................................................................
Company Overview..........................................................................................................
Stage of Product Life Cycle...............................................................................................
Industry Analysis...............................................................................................................
Maret Place Analysis....................................................................................................
Customer Analysis..........................................................................................................
Competitor Analysis........................................................................................................
Mareting Strategy.........................................................................................................
!istri"ution Strategy.......................................................................................................
Advertising And Promotion Strategy...............................................................................
Operating Strategy.........................................................................................................
!evelopment Strategy....................................................................................................
#evenue $eneration.......................................................................................................
Legal Structure % Owners&ip..........................................................................................
Pricing Strategy..............................................................................................................
'inancial #iss.................................................................................................................
Exit Strategies................................................................................................................
'inancial Analysis............................................................................................................
Executive Summary
Company Overview. (&e )ixon Company will design solar electric
plan for t&e underdeveloped areas w&ere t&e electricity is still a &ope
for t&e people. Agriculture is t&e sector w&ic& a*ected "y t&e less
supply of t&e electricity t&e company will try &ard to "ecome t&e
leading producer of t&e solar energy "y installing t&e e+cient solar
electric systems at various places.
Industry & Marketplace Analysis. As per t&e survey reports of t&e
great economists. (&e demand of electricity is &ig& in May terms of t&e
supply of t&e electricity. )early One fourt& of t&e world wide population
is a"undant from t&e power of electricity. (&ere is no electricity in
t&ese areas. (&e ma,ority of t&e area is rural. (&e farmers and villagers
are main survivors. As per t&e records t&e demand for t&e electricity
&as risen "y -. / in t&e past years and is expected to rise even more
in t&e coming years. (&e demand mig&t increase to t&ree times. (&e
company will try &ard to position itself and &elp t&e environment
socially wit& t&e e*ective solar energy system. (&e company will
esta"lis& a plant in t&e Eastern region of t&e A"u !&a"i. (&e pro,ect
will target t&e street lig&ts and villagers to &elp t&em in irrigation.
Products & Services. )ixon will introduce suc& a system in t&e
maret w&ic& a*orda"le in every term for class. (&e small families will
"e o*ered 0nancing options so t&at t&ey are a"le to a*ord t&e product
and mae t&e "iggest use of it. (&e company will open various
distri"ution centers at various corners to mae easy availa"ility for t&e
consumers. Seminars and wors&ops will "e organi1ed "y t&e
company to mae people aware a"out t&e pros and cons of t&e
product and &ow to use t&e product e*ectively to earn &ig&est amount
of "ene0t. (&is step will en&ance t&e economic prosperity of t&e area
and t&e country as a w&ole in t&e world maret.
Marketing Strategy. (&e target area &as a population of more t&an 2
million. As per t&e survey done "y t&e company people nearly rare
percentage of t&e people are a"le to a*ord electricity from t&e grid.
(&e industrial companies tae t&e advantage of t&e over&ead grid lines
and "ecause of t&at t&e villagers remain a"undant of t&e "ene0t of t&e
electricity.
Currently t&e alternative of t&e electricity is t&e erosene3 w&ic& is
some&ow e4ual in cost to t&e solar electric plant in t&e long run.
A solar electric system is relia"le and gives more value to t&e
customers as compared to t&e alternatives.
Operations and Development. In t&e mont& of august t&e )ixon will
"egin wit& its wor. Experts will "e &ired to loo after t&e designing of
t&e solar electric system.
One person in t&e team will loo after t&e documentation process and
t&e remittances. 5&ereas one will loo after t&e relations&ips wit& t&e
suppliers. One sta* mem"er will "e responsi"le to loo after t&e
s&ipping process and one will loo after t&e assem"ling of t&e
elements.
Management Team. 6a1 is t&e founder of t&e pro,ect. 7e is an
engineering graduate and &as completed M8A in Entrepreneurs&ip. 7e
&as "een travelling in 9nited Ara" Emirates and &as analy1ed various
suppliers for t&e partners&ip. (&e founder wit& its team will loo after
t&e process of t&e solar energy system and will mae it a success in
terms of value to t&e customers.
Summary of Financials and Oering to Investors. As per t&e
0nancial statements t&e solar energy system will generate ::.-... ;
in t&e second year as net income and :2<=>=. ; in t&e t&ird year.
)ixon will re4uire ;>. million for t&e installation in t&e initial stage. (&e
company will identify various sources of funds and will employ one
person to loo after t&e incentives from t&e government. (&e
presence of t&e company will improve t&e economic condition of t&e
area targeted and will increase t&e level of prosperity. (&e target
customers will "e well informed and will "e a"le to earn more wit& t&e
employment opportunities in t&e company. (&e company will a"le to
"ring a diversi0ed c&ange in t&e life?s of t&e people.
Company Overview
(&is pro,ect for Solar System for electricity is designed to mae good
for investors3 customers and community at large. It is "eing developed
to earn 0nancially and to "e tec&nically feasi"le.
)ixon3 &as come up wit& an innovative approac& to increase t&e
electricity utility.
Vision
(oday t&e people are more educated and developed as compared to
t&e previous time. Science &as come so far in ac&ievement t&at it sy
is no limit for it. (ec&nology &as "roug&t various tools to solve t&e
pro"lems of t&e people. (&e vision of t&e company is energy e+ciency.
Mission Statement@ (&e Mission is to esta"lis& t&e product?s
leaders&ip in t&e maret. (&e product will give t&e customer?s a
desira"le mix of 4uality. (o ensure economic activity for t&e progress
Goals and O!ectives
(&e goals for t&e pro,ect are @
'inancially pro0ta"le concern
Low ris for investors
Safe opportunity
Positive impact on society
(o esta"lis& leaders&ip in maret
Increase sales t&ere"y increasing t&e s&are price.
Creating a new maret segment.
"#e $nvestment Opportunity
(&e "asic pro"lem of t&e &ouse&olds and ot&er consumers is t&e
electricity. Energy consumption is t&e "asic need of an &our. (&ere are
varied opportunities in t&e industry. (&e sector is a driver for t&e future
prosperity. So far 9nited Ara" Emirates investors it is a ma,or area for
investment. (&e growing development and energy economics &as
made t&e area real attractive one. (&e maret study reveals t&at t&e
sector &as ma,or potential. 8ut eventually t&e growt& rate is slow.
Strategy% Organi&ation and Management
(&e company will target t&e existing contractors for woring level w&o
get disinterested "ecause of t&e complex incentives3 regulations and
paper wor .
Aeys to Success
Availa"ility of tec&nology maes it economical
Experienced and talented sta*
Customer Satisfaction
Availa"ility
Buality services
Mareting of product
Products 'nd Services
(&e company will mae users get rid of electricity de0cits. (&roug& t&is
product t&e company will "ring renewa"le source of energy to
everyone?s &ome. )ixon will o*er electricity t&roug& solar means.
(&is option will "e popular amongst t&e street lig&ts and t&e
agriculture sector of t&e 9nited Ara" Emirates.
Solar systems will "e imported from Cu1&o Solar $roup Co. Ltd.
8attery and c&arger will "e purc&ased from distri"utors.
Solar Systems
As per t&e researc& t&ere are > types of solar panels availa"le
Mono crystalline
Multi crystalline
(&oug& "ot& t&e products are same "ut t&e company will target t&e
Multi one as storage of "attery ranges for two to t&ree days in t&e case
of Multi Crystalline.
Battery
Lead acid "atteries will "e used for t&e storage of solar energy as
t&ese "atteries &ave &ig&er capacity in comparison to ot&er "atteries.
Charger
(&is device will &elp to electrify even in t&e nig&t &ours.
Services
Sale of Solar System for villagers.
#ent solar panel for advertisement "oards.
Stage o( Product )i(e Cycle
$ndustry 'nalysis
Over t&e past ten years3 for instance3 t&e demand for electricity &as
increased in a &uge way. People in may areas are still living wit&out t&e
electricity. As per t&e researc& t&e world?s demand &as increased "y ->
/ in t&ese years. (&e various electricity experts says t&at t&e demand
for electricity will get t&ree times of t&is or even more "y >.>..
Agriculture "eing t&e 0rst area w&ic& is "eing a*ected "y t&e less
supply of t&e electricity in t&e areas.
(&e solar power system &as many opportunities in t&e maret as per
t&e reports. (&e system &as varied advantage over t&e competing
systems.
(&e ma,or competitors are natural gas 0red tur"ines and &ydroelectric
power. 8ut "ot& t&e sources are una"le to produce as per t&e
demands of t&e customers.
Mar*et Place 'nalysis
9nited Ara" Emirates is amongst t&e powerful nations in t&e world. (&e
country &as political sta"ility since t&e past many years and &as
multiparty government. 9nited Ara" Emirates &as an economical
growt& rate of 2.=/ over t&e past decades. (&e expected $!P is =.=/.
>-/ of t&e population lives in rural areas w&ic& is 4uite a "ig
percentage3 meaning of it is t&at nearly 2. million people are living in
rural areas w&ere electricity is a "ig pro"lem.
Customer 'nalysis
(&e eastern range of A"u !&a"i is lie a dispersed village. (e result
s&ows t&at t&ere are many places w&ere even people don?t even &ave
centrali1ed &omes. Only ..D/ are electri0ed wit& solar system. (&e
industries are using t&e grid systems w&ereas t&e villagers are still
longing for electri0ed &ouse.
(&e people "elieve t&at t&e moderni1ation is lined wit& t&e
electri0cation. As a result many of t&e people in t&e area stood up to
support t&e company in woring.
Competitor 'nalysis
(&e ma,or t&oug&t w&ile designing and implementing t&e solar power
plan is t&e cost involved in t&e process. (&is is a "asic reason w&y
people t&in it is a luxurious process.
So people c&ose to use erosene and dry cells. 8ut t&e fact is t&at "ot&
products almost cost t&e same if seriously analy1ed. )eit&er of t&em is
c&eap.
Some families use gasoline w&ile ot&ers opt for genset "atteries.
(&e solar system &as muc& advantage over t&em. (&ey are not
dangerous in use as compared to t&e crude oils. On t&e ot&er &and t&e
"atteries are expensive so t&ey need to "e replaced.
A solar electric system is safe and is capa"le of illuminating t&e room
wit& w&ite lig&t.
(&e solar electric systems are relia"le in comparison to ot&ers and
re4uire minimum amount of maintenance.
(&oug& t&e product is expensive "ut only if we loo in t&e s&ort run 3 if
considered for long run t&e product economical.
Competing Service Providers
P(L is providing solar energy solution in many parts of t&e middle east
countries. (&e company uses varied current tec&nologies in providing
external lig&tning systems. (&e company &as partners&ips wit& many
of t&e renewa"le energy companies around t&e world.
'urt&ermore3 t&ere are few ot&er organi1ations in t&e nort&western
region o*ering solar energy e4uipments.
Mar*eting Strategy
Strengt#s
Solar power is unlimited.
8ecause a large area is re4uired for installation our
company is assem"ling rooftops.
Consumers are "ene0ted "y reduced retail electricity rates.
#educing "rownouts.
(&e system can "e used worldwide.
#educing "rownouts.
(ec&nology advancements &ave reduced installation costs.
It can wor wit& existing grids.
(&e pro,ect satis0es government on t&e note of green
revolution.
+ea*nesses
(&e sunlig&t 4uantity is not constant at all time.
5eat&er forecast is necessary
Current rate of PE panel is lowF"ut expected to grow G
Company can generate power during day time.
Legal &urdles H many states and many regulations.
Lia"ility issues H damage due to installation.
(ec&nical nowledge "ase sta* needed at &ig& rate.
Loss of copy of plan.
Opportunities
$reen revolution trend
$overnmental incentives for green era.
Awareness regarding solar plants.
$lo"al warming concerns.
$rowing electricity demands.
(ec&nology advancemements.
(&e industry will provide ,o" opportunities.
"#reats
Ot&er alternatives can "e opted &ydroelectric3 geot&ermal.
Advancement in tec&nology can mae t&e product o"solete.
Mar*et Opportunity
Many companies are in t&e industry of energyI t&is s&ows a clear mar
of opportunity in t&e maret.
'irst predicted growt& for electricity. According to t&e 9nited Ara"
Emirates3 t&e demand for energy is supposed to increase "y -./ over
t&e coming years.
Second@ $rowing trend in t&e maret of t&e green revolution.
(&ird@ t&e power of energy "y sun in one &our is more t&an t&e yearly
energy consumption of t&e world.
"otal 'vailale Mar*et & Expected Mar*et S#are
Extensive (esting@ lig&t soa3 7ail "all tests to ensure performance in
long run.
Supply !emand $ap
:. 8ased on t&e o+cial papers it can "e ,udged t&at supply can "e
dou"le t&e demand.
>. (&ere is large gap "etween customers and solar products "ecause
of t&e
9nawareness
!ynamic c&anges in tec&nology
7ig& installation costs involved
(arget Maret
:. #ural areas of A"u !&a"i3 w&ere t&e "asic population is of
farmers.
>. Around J./ of t&e villagers are still waiting for t&e electricity in
t&eir areas.
2. As agriculture is t&e main part of t&e economy3 t&e electricity is
t&e "asic need for t&e farmers.
-. Electri0cation will increase3 productivity3 reverse t&e trends3 will
educate t&e people3 growt& will develop t&e maret.
,istriution Strategy
Earious distri"utors will "e contracted and many community centers
will "e used as an administrative cell for t&e company. Certain
elements will "e s&ipped from suppliers around t&e world. (&e
company will try &ard to loo for t&e suppliers wit&in t&e country so as
to reduce t&e s&ipping cost. (&ere will "e separate department for
&andling t&e resources after t&ey &ave arrived t&eir destined point.
(&e manpower will assem"le t&e elements and will mae t&em ready
for t&e installation. (&en t&ese plants will "e sent to various
distri"ution centers so t&at it "ecomes easy for t&e customers to avail
t&em. 5ors&ops will "e &eld to mae t&e customers reali1e of t&e use
of t&e product. 5it& t&is t&e company will "e a"le to gain more of t&e
trust and con0dence of its customers and will "e a"le to ac4uire a
larger maret s&are.
'dvertising 'nd Promotion Strategy
As t&e product is service "ased3 so t&e company will "asically rely on
t&e word of mout&. Seminars will "e conducted at various places and
at various time intervals to attract t&e advertising agencies.
Information will "e updated on t&e we" site so t&at customers are
made aware of t&e product.
)ewspaper advertisements and "ill "oards are ot&er options to "e
opted for promotion.
More t&an :... people will "e needed for t&e employment purpose
t&is will "e one of t&e "iggest news and will de0nitely attract t&e
audience towards reading t&e article of t&e company. As t&e target
customers are "asically from t&e agriculture "acground so t&e
company people need to attract t&e customers t&roug& conversation.
(&e visi"ility of t&e plant will itself call for advertisement. 8roc&ures
will "e printed giving "asic nowledge of t&e description of t&e product
and 0nancials.
Operating Strategy
Operations strategy will tae place in two stages@
KStage :L will &ave a pilot program w&ic& will "e a mere design of t&e
concept. It will "e implemented to ,ust meet t&e "asic re4uirements of
"eing t&e Curtailment Service Provider. KStage >L will &ave a
installation map of :... &ouses will "e si1ed to generate revenues.
Stage One@ in t&is stage t&ere will "e one person w&o will responsi"le
for &andling t&e relations&ip wit& t&e clients and suppliers3 as t&is is
t&e "asic step in t&e implementation. (&e person will "e responsi"le
for contracts made wit& t&eses contractors.
Anot&er person will "e responsi"le for developing t&e process line so
t&at t&e agreements are &andled in a streamlined manner. (&is person
will also "e responsi"le for &andling t&e government relations. 7e will
"e looing after t&e permitting process so t&at t&e running process of
t&e solar system plant is not a*ected.
Stage "wo@ t&e main o",ective will "e to ensure t&e continuity of t&e
process. (&e persons will "e responsi"le for positioning t&e product
and developing t&e sta* across t&e maret.
,evelopment Strategy
(&e )ixon will "e targeting to assem"le a legal advisors team "y t&e
end of t&e maret researc& activity. After t&e "usiness plan revision t&e
company will "e looing forward for t&e alliances wit& various suppliers
and venture capitalists in order to lower t&e cost of installation and for
t&is purpose t&e company will "e getting engage in t&e overseas
transactions.
(&ere are four components of t&e product
7arnessing of t&e energy
Conversion of energy into electricity
Conditioning of t&e electricity
Electricity is sent to t&e "attery wit& t&e &elp of t&e c&arger for
storage purpose.
(&e c&arger &as t&e main o",ective of protecting t&e electricity from
"eing damaged. (&e system connected wit& t&e "attery receives t&e
current. (&is system is a"le to provide electri0cation even in t&e nig&t
&ours w&en t&ere is no electricity. (&e company will esta"lis& centers
for t&e customers to mae t&em aware of t&e installation process and
t&e &andling process. Prototyping will also "e done wit& pro,ect
en&ancement so as to mae t&e wor easier for t&e customer.
-evenue Generation
Signing a "ilateral contract wit& generation companies. In t&is case
t&e transmission power will "e in t&e &ands of t&e company.
Second3 capacity payments are made in advance. (&is attracts
companies to invest in new plant.
(&ird3 energy is purc&ased from t&e government for load reduction at
prevailing maret prices.
Milestones
Stage :@ Conceptuali1ation.
Stage >@ Commerciali1ation
Stage :
August@ 8usiness Plan writing.
8y t&is time t&e "usiness plan need to "e written well and
in formatted manner so t&at it can "e sent to t&e
managerial position &olders to review t&e pro,ect &ig&lig&ts
and to analy1e w&et&er it will "e "ene0cial for t&em to
invest in t&e pro,ect or not.
Septem"erM )ovem"er@ Sta+ng t&e "oard mem"ers.
As per t&e re4uirement of t&e pro,ect t&e owner of t&e
pro,ect3 recruits t&e "oard mem"ers and t&ereafter t&ese
mem"ers elect t&e several sta* mem"ers for t&eir
assistance and woring completion t&e sta* is selected
"ased on t&e re4uired sill criteria. As solar energy system
is a new concept so company needs to &ire t&ose people
w&o are capa"le of delivering t&e re4uired information to
t&e customers. As t&e 0rst end employees are t&e 0rst face
of t&e company t&ey need to well trained and personality
wise developed.
Septem"erM !ecem"er@ sources of funds.
In t&is time period t&e company needs to identify t&e
sources from w&ere t&ey will "e receiving t&e re4uired
funds for t&e installation of t&e pro,ect. (&e company
mig&t loo for partners&ips wit& suppliers so t&at t&ey
lower t&e cost. (&ere is a possi"ility t&at t&e pro,ect
"ecomes an attraction for t&e venture capitalists and &e
gets interested in 0nancing t&e pro,ect. (&is is possi"le
w&en t&e company is delivera"les are strong enoug& to
portray a good image of t&e company and are a"le to s&ow
t&e advantages and "ene0ts t&e pro,ect will "ring along
wit& its installation. Looing at t&e current scenario t&e
possi"ility of venture capitalists option is &ig& as t&e solar
energy system is a new trend in t&e maret and generally
t&e venture capitalists loo forward for suc& innovative
ideas w&ic& are "ene0cial for t&em as well as for t&e
society.
6anuary@ Legal wor
In t&is time period t&e company o+cials &as to 0nis& t&e
documentation related wit& t&e legal wors. !ocuments
related wit& site plan3 remittance3 various taxes involved3
s&ould "e done wit&in t&is time period to avoid t&e last
minute delay. (&e company needs to &ire a legal advisor so
t&at &e is a"le to suggest w&ic& option will pro0ta"le in
terms of legal issues.
'e"ruary@ Analy1ing t&e Mareting Plan
In t&is mont& t&e mareting team will come into operation
and t&eir ma,or tas will "e to analy1e t&e pro0ta"ility of
t&e mareting plan. (&ey s&ould ,ustify3 w&et&er t&e
selected target maret is wort&yN 5&et&er t&e strategies
opted for t&e target maret will turn out to "e "ene0cial or
notN
If t&e analy1ers identify any Oaws in t&e mareting plan
t&ey s&ould immediately inform t&e "oard mem"ers so
t&at t&e constraints can "e recti0ed if needed.
'e"ruary HMarc&@ develop relations&ips wit& suppliers.
In t&ese two mont&s t&e company?s sta* mem"ers will "e
re4uired to identify t&e suppliers for t&e solar energy
system. (&e mem"ers s&ould identify suc& suppliers w&o
turn out to "e "ene0cial for t&e company?s future. One
mem"er will appointed "y t&e company o+cials to loo
after t&e relations&ips wit& t&e suppliers. Suppliers are t&e
part of t&e foundation of t&e pro,ect so it is very muc&
necessary to &ave strong and long term trust wort&y
relations&ips wit& suppliers.
April H August @ (est t&e maret plan
In t&ese mont&s t&e mareting team will test t&e maret
plan on some part of t&e targeted segment3 to identify t&e
prospects of t&e pro,ect. (&is will "e done to now t&e
"asic re4uirements of t&e customers and t&e o*ering of
t&e pro,ect.
Sept.MApril@ 'inali1ing site and contracts.
!uring t&ese mont&s t&e site plan will "e 0nali1ed and
various supplier contracts will "e legally documented.
Company mig&t enter into contract wit& t&e suppliers in
t&e overseas maret. (&is will involve many cultural
di*erences and currency translation riss. So steps s&ould
"e taen to mitigate t&e arising riss and contracts s&ould
"e documented as and w&en t&e company 0nali1es t&e
contract at certain conditions.
May @ !ocumentation 0nali1ation.
In t&is mont& all inds of documents will "e collected and
prepared in a well organi1ed manner.

6une H Septem"er@ Implementation
)egal Structure & Owners#ip
)egal Structure
(&e company will "e set up as a CMCorporation for t&e following
reasons.
(&e installation of t&e system needs muc& &ig&er investment so
t&e company people need to adopt t&e CM Corporation to "e on a
safer side. (&e process will involve less lia"ility on t&e part of t&e
investors.
Second3 transparency will "e t&e "asic mode in t&is structure.IPO
will "e considered as an exit strategy.
(&e CMCorporation is logical in de0niJng value of s&ares and
compensation to owners.
Proposed ,ivision o( E.uity S#ares
At present t&e owners will &eld D./ of t&e availa"le s&ares. (&e
remaining -./ will "e &eld "y outside investors and advisory "oard
mem"ers. In t&e later years t&e company can &ave di*erent structure
depending upon t&e need.
'dvisory Board
9tility industry insider@ A person w&o is familiar wit&
regulatory re4uirements.
#esidential Maret Expert@A person &aving nowledge of
industry cost and contacts wit& regional contractors.
'inance and 'unding Expert@ person w&o is aware a"out t&e
$rants commission.
#egulatory Counsel@ utility lawyer wit& experience.
Management Structure & Sta/ng
Pricing Strategy
Prices
'0ordaility
(&e revenues for t&e solar energy plant come from t&e supply of
material and t&e e*orts made "y t&e sta* in completing t&e pro,ect.
5&ereas in case of car manufacturing t&e revenue arises from t&e
Operation
Committee
'inance
Committee
Sales Committee
sale of t&e product3 i.e. car.
6ust lie t&e cars are leased and 0nanced same way t&e solar
electric system companies s&ould opt for suc& inds of 0nancing
dimensions to "e economical in a way.
Prices
(&e prices of installation are going down day "y day as t&e people are
"ecoming aware of t&e solar electric systems and 0nding it as a
"ene0cial product. (&e government is also &elping t&e companies
coming forward suc& solar electric system plans.
(&e price value is "ased on t&e cost "ene0t analysis. (&e customers?
satisfaction level determines t&e price value. (&e prices are
determined wit& t&e &elp of t&e analysis of
(&e price of t&e product determines t&e return t&e investors will get.
So it is a "ig 4uestion of concern. As t&e maret prices are declining
t&e investors are 0nding not muc& pro0t in t&e industry. 8ut "ecause of
t&e lower price of t&e elements3 t&e installation cost of t&e product &as
reduced to a satisfactory level.
Costs
In t&e starting t&e pro,ect team is a"le to manage in small cost w&ic&
is needed for supervision "ut later on t&eses cost turn out to "e
overload on t&e company. As per t&e survey details in t&e $ermany3
cost in t&ese countries turn out to "e uncontrolla"le.
)aor costs
(&e study related to la"or class suggests t&at cost of la"or is &ig&er in
9nited Ara" Emirates "ut practically it depends upon t&e classi0cation
format. (&e cost depends upon t&e operating issues.
So(t costs
's t#e awareness o( t#e solar system is rising t#ere #as come
a oom in t#e so(t cost1 So(t Cost includes t&e arc&itectural fees
and t&e pre and post construction fees. (&e soft cost is attac&ed wit&
t&e si1e of t&e pro,ect.
(&e more t&e si1e t&e &ig&er t&e cost. 7ig&er costs does not reOect
e+ciency in t&e solar electric system "usiness.
'ollowing are some of t&e soft costs involved@
Customer Ac4uisition mareting
Advertisement cost
Customer ac4uisition cost
System design cost
Permitting fee
Installation la"or
Sales tax
Over&ead pro0t
Ot&er residual costs
(&e soft costs can "e mitigated to certain levels if t&e company is
managed at e+cient level.
If t&e la"or employed wors at t&e re4uired rate and gives excellent
output.
If t&e 0nance team is a"le to manage t&e sourcing of funds.
If t&e promotion is more of all "ased on t&e word of mout&.
(&e elements of soft cost in t&e mareting function.
System !esign Cost
)onMpro,ect speci0c mareting and advertising
Speci0c customer ac4uisition.
$ncentives% Pro2t and Bene2t
Government incentives
(&e government gives incentives "ut t&ese are of not muc& concern
for t&e company. (&oug& t&e facts say t&at t&e government is t&ining
of rising t&e incentives for t&e pro,ects related wit& t&e solar energy
system3 t&e "asic facts lies wit&in t&e glo"al economics.
(&e company will try &ard to tae advantage of t&ese incentives
o*ered "y t&e government.
One mem"er of t&e company will "e &eld responsi"le for taing care
of t&ese transactions. 7e will &ave t&e responsi"ility of eeping an eye
on t&e upcoming policies and sc&eme of t&e government.
Pro2t and Bene2ts
(&e "ene0ts w&ic& t&e people ac4uire from t&e solar energy system is
muc& more important t&e pro0ts w&ic& are actually in &and. (&e
potential of pro0t is very muc& su"stantial in nature. (ec&nology is one
factor w&ic& &as reduced cost to least level. La"or costs are negotia"le
and depends upon te trends in t&e maret.
Soft costs can "e minimi1ed "y &aving good management sta* and
controlling power.
Low prices are a gift for t&e owner or user of solar electric system On
t&e ot&er &and low price is a curse for t&e pro,ect installer. (o "uild
e4uili"rium is t&e ey to success.
Once t&e prices of su"stitutes go up3 t&e "ene0t of &aving a solar
system also goes up. Solar electric system is a money saving
instrument and t&is instrument &as a great future and liely to rise in
t&e coming times.
Social Concerns:
(&e solar energy plant does not omit car"on. (&e plant o*ers
employment to many. Every ,o" is associated wit& a family and
satis0es t&eir needs.
In t&e 9nited Ara" Emirates3 &ig& costs exist "ecause of t&e poor
management of t&e organi1ation. 5&ic& can "e mitigated to a greater
extent wit& &elp of proper management sillsN
In addition t&e replacement of t&e pro,ect wit& car"on items is
"ene0cial for t&e society as t&is will not a*ect t&e &ealt&s of t&e
concerns. (&e motive of t&e company is not ,ust to o*er t&e product.
(&ey &ave a concern attac&ed wit& t&e product t&at it does not &arm
t&e society of t&e people.
It can "e concluded t&at t&e solar power system?s foundation are
economically sound. And can "e termed as e+cient from t&e point of
view of t&e investors. As per t&e cost "ene0t analysis3 t&e customers
will "e "ene0ted "y t&e product to a greater extent so t&e product can
"e termed as a potential one from t&e point of view of t&e pro0t terms.
Capital Budget
(&ere is always uncertainty a"out from w&ere t&e funds will come.
(&e company tries &ard to identify t&e various sources of funds3 to
secure t&e prosperity of t&e pro,ect. In t&e initial time p&ase t&e
company can go for loans from t&e "ans or 0nancial institutions 3 "ut
t&ere is a possi"ility t&at "ecause of low level of pay "ac t&ese
sources may not s&ow a positive sign "ut on t&e ot&er &and t&ere
mig&t "e a possi"ility t&at venture capitalist get attracted "y t&e
"ene0ts involved in t&e pro,ect. )ow days energy pro,ects are gaining
attention in t&e maret3 especially t&e solar electricity plants so t&ere
is a indication t&at t&e venture capitalist mig&t 0nd t&e pro,ect
pro0ta"le. (&e company mig&t opt for partners&ip wit& t&e solar panel
manufacturers w&ic& can "e a way of winning t&e supplier 0nancing.
(&ere are suppliers in t&e maret w&o wis& to increase t&eir maret
area and for t&at t&e fund t&e pro,ects supply on installation "asis.
(&e company people can loo forward angel funding too. $overnment
funding sc&emes s&ould also "e countered in order to gain pro0t out
of t&e policies and sc&emes launc&ed "y t&e central or state
government.
(&e "usiness owners mig&t t&in of diluting t&e owners&ip in t&e
current stage "ut after two or t&ree years w&en t&e company starts
earning su"stantial amount of pro0t t&e owners mig&t not "e in mode
of dilution of owners&ip or t&ere is a possi"ility t&at after looing at
t&e growing stage of t&e product3 t&ere mig&t "e a case t&at ot&er
venture capitalists mig&t get interested in t&e "usiness and may lie
to fund t&e "usiness in t&e long run. (&e grants and t&e tax credits
given "y t&e government are very useful in terms of costing. Suc&
o*ers can turn down t&e pro,ect cost too muc& level.
Financial -is*s
Currency Translation: the company will have suppliers from various
countries and they will have diferent currencies. So the payments will
be made in various currency modes. (&ere is a possi"ility t&at t&e
currency value of country mig&t fall in value at t&e time of transaction.
(&is way t&e company will always "e in a pendulum state w&ere t&ere
mig&t &ave pro0ts from translation or t&ey mig&t occur losses. In order
to reduce t&e translation e*ect t&e company can open a forex account
t&roug& w&ic& all currency will "e automatically converted to domestic
currency. (&is forex account will &elp t&e company in translation. (&e
currency exc&ange rate will "e set as per t&e competitive maret rate
at t&at time. (&e company will "e a"le to wire transfer t&e funds into
corporate accounts of t&e "ans of country. 8y diversifying t&e
&oldings t&e company will a"le to mitigate t&e currency translation
e*ect in t&e long run.
!olitical and "conomic Sta#ility @ (&e countries surrounding t&e
middle east countries &ave experienced a great amount of ups and
downs in terms of economic sta"ility in t&e past years. InOation &as
retarded t&e economic systems of most of t&e surrounding countries.
As a ma,or e*ect t&e country &as a large unemployment state. 9nited
Ara" Emirates &as a good political sta"ility structure w&ic& &as "een
o"served in past decades. (&e government &as adopted various
ma,ors to "ring "ac t&e economical prosperity. 8ecause of t&ese
measures it &as "ecome favora"le for t&e companies to initiate
"usiness ideas in t&e countries. (&is way t&e companies are &iring sta*
mem"ers in t&eir companies for vacant positions w&ic& a great step
towards 0g&ting wit& t&e unemployment stage.

$rrigation: (&e people in 9nited Ara" Emirates depend upon t&e
agriculture in t&e country. Agriculture is dependent in may terms on
t&e climate and many times on t&e maret prices3 t&is can "e a ma,or
t&reat for t&e company. 7owever t&e presence of t&e company will
en&ance t&e structure of t&e economy. (&e farmers will "e a"le to get
electricity in areas w&ere t&ere are no grids. (&e promise of value
return will mitigate t&is ris to muc& extent.
Cross3Cultural@ CrossM cultural ris is involved in every "usiness
w&ic& &as no country "oundaries. (&e distance "etween t&e two
companies "rings lots of cultural di*renecs as ris. (&e company can
&ire a person to loo after t&e daily overseas transactions so t&at t&e
company is a"le to manage t&e dayMtoMday operations wit&out t&e fear
of t&e cultural riss.
Exit Strategies
(&e founders of t&e company are completely dedicated towards t&e
o",ective of earning maximum pro0ts3 to mae t&e investors satis0ed
wit& t&eir capital investors.
If a company taes long time to "e in a pro0ta"le situation3 t&en IPO?s
are launc&ed in t&e very initial p&ase only. (&e maret environment
c&anges drastically w&ic& is necessary in order to attract t&e investors
to s&ow rapid returns on t&e investments made "y t&em in t&e
company for t&e product.
Option One@ Option : is to "ecome a Curtailment Service Provider to
improve t&e competitive position of a "usiness concern In t&e energy
maret. (&is option is currently t&e ma,or opted one in t&e maret as
t&e companies are dying &ard to improve t&eir green image in t&e
solar energy maret.
Option (wo@ option two suggest for a partners&ip wit& a manufacturer.
A manufacturer w&o is willing to capture t&e dominance mig&t 0nd t&e
company attractive.
Financial 'nalysis
' ase case scenario
8elow is t&e 0nancial summary of t&ree years. (&is s&ows a "ase for
t&e product implementation future. (&e stae&olders will get an idea
a"out t&e future prospects of t&e product. (&is is a case w&ic&
s&ows t&e woring calculation of &ow t&e pro,ect will wor.
Pro0t And Loss Account@ pro0t and loss statements reveals t&at t&e
company will earning ::.-...; after tax in t&e 0rst year after t&e
installation of t&e solar energy plant. (&is is indeed a good 0gure. (&e
company will "e earning :2<=>=.; in t&e second year after
installation. (&ere is a sign t&at t&ere mig&t "e possi"ilities t&at
venture capitalist get attracted "y t&e "ene0ts involved in t&e pro,ect.
As t&e company is s&owing a good pro0t range t&e venture capitalists
mig&t feel to get associated wit& suc& green revolution pro,ect to mae
t&eir image green.
Cas& 'low Statement@ Cas& Oow is a statement w&ic& tells a"out t&e
Oow of cas& of t&e "usiness concern of t&e solar energy plant..
Company will decide t&e diversi0cation of t&e cas& or funds "ased on
t&e analysis of t&e cas& Oow statement. (&e company mig&t opt for
continuation even if t&e company is not occurring wit& su+cient
amount of cas& "alance. (&e statement of t&e company s&ows t&at t&e
solar energy system pro,ect &as incurred a cas& "alance of :D-....;
in t&e 0rst year3 <><....; in t&e second year and <J2.... in t&e t&ird
year. (&is s&ows t&at company is running on t&e rig&t trac and t&ere
mig&t not occur any stage in t&e future w&en t&e company will "e in a
state of scarcity of funds.
8alance s&eet@ (&e company professionals &ave t&e ,o" to loo after
t&e smoot& running of t&e "usiness "ecause t&e investors loo forward
for t&e company "alance s&eet "efore investing in t&e company. (&e
o",ective of a good investor is to identify t&e company w&ic& &as good
0nancial state so t&at t&e investor is a"le to avoid t&e disastrous
stage. (&e fund managers of t&e company select t&e portfolio on t&e
"asis of analy1ing t&e "alance s&eets of t&e di*erent companies. So
t&at t&ey are a"le to avoid a ma,or portion of t&e losses. (&e analy1ers
loo forward w&et&er t&e company &as a good or "ad "alance s&eet3
good or "ad "usiness model and strong or poor management. Out of
t&e t&ree t&e "alance s&eet concern is t&e 0rst w&ic& is analy1ed at
priority "y t&e fund managers of t&e company.
(&e "alance s&eet of t&e company s&ows t&at t&e s&are&older?s e4uity
for t&e company in t&e second year after installation is =.>...; and in
t&e t&ird year after installation is >-<J>=.;
Pro2t 'nd )oss 'ccount
Cas# Flow
Cas& 'low

Pear : Pear> Pear2

Pro0t After (ax M
D.>...
::.-... :2<=>=.
!epriciation ->... JD... :--Q=.
Cas& 'rom
Operation
M
=D....
:>..... :=2....

Cas& 'rom Loan
Instruments
=3...3.
..
:.3...3.
..
:.3...3.
..
(otal Sources Of
Cas&
-3--.3.
..
::3>..3.
..
::3=2.3.
..

C&anges in 5O#ing
Capital

Inventory . . .
Pro0t And Loss Account
Pear : Pear > Pear 2
#evenues
outrig&t sale of solar
installations
:3=..3.
..
>3=..3.
..
>3=..3.
..
income from solar
installations
>..3..
.
:3=..3.
..
>3D..3.
..

(otal #evenue
:3Q..3.
..
-3...3.
..
=3:..3.
..

Cost Of Sales
Cost of Installation Sold
:3:D.3.
..
:3:<.3.
..
:3:<.3.
..
expenses . . .
(otal Cost O' sales
:3:D.3.
..
:3:<.3.
..
:3:<.3.
..

$ross Margin
Sales of solar
installations
>..3..
.
2D.3..
. 2D.3...

(otal
>..3..
.
2D.3..
. 2D.3...

$eneral Expenses
>..3..
.
>2.3..
. >-.3...
Mareting Entity
Q..3..
.
Q:.3..
. Q=.3...
total
J..3..
.
J-.3..
. JJ.3...

'inancing Cost
>..3..
.
D..3..
.
:3...3.
..

E8I(!A
M
=D.3..
.
:3><.3.
..
:3J2.3.
..

!epriciation ->... JD... :--Q=.

M
D.>3..
Accounts
#eceiva"les . . .
Construction In
progress
:3.D.3.
.. . .
Prepayments D.... . .
Accounts paya"les . . .
(axes . M<.... M-.....
(otal
:3...3.
.. M<.... M-.....

Ac4uisition Of 'unds
'ixed Assets
:3<..3.
..
23...3..
.
23...3..
.
(otal
:3<..3.
..
23...3..
.
23...3..
.

(otal 9se of 'unds
>3<..3.
..
>3J>.3..
.
>3D..3..
.

)et C&ange in cas&
:3D-.3.
..
<3><.3..
.
<3J2.3..
.

Cas& at t&e end
:3D-.3.
..
J3J>.3..
.
:<3<=.3.
..
Balance S#eet

Openi
ng year: year> year2
ASSE(S
C9##E)( ASSE(S
Cas& .
:D-...
. JJ>....
:<<=...
.
Inventory . . . .
Accounts #ecciva"les . . . .
Construction in progress .
:3.D.3.
..
:3.D.3..
.
:3.D.3..
.
Prepayment . D.... D.... D....
(otal Current Assets .
>3QD.3.
..
::3.-.3.
..
:J3JQ.3.
..

'ixed Assets
At Cost .
:3<..3.
..
23...3..
.
23...3..
.
!ep . =<.=. JDQ=. JDQ=.
)et .
:3Q-:3J
=.
>3J.23>=
.
>3J.23>=
.

S&ort term Investments . . . .

(otal Assets .
-3=.:3J
=.
:23J-23>
=.
>>3<Q23>
=.

Lia"ilities And
Stoc&olderRs E4uity
Current Lia"ilities
Accounts Paya"le . . . .
Corporate (ax . . <.... -.....
(otal . . <.... -.....

Long (erm
'inancing loan .
=3:.23J
=.
:23--:3>
=.
>.32<-3.
..
(otal .
=3:.23J
=.
:23--:3>
=.
>.32<-3.
..

Stoc&olders E4uity
Su"scri"ed Cap. . . . .
Loan Cap. . . . .
Retained Earnings 0 MD.>... ::.-...
et !ncome
M
D.>... ::.-... :2<=>=.
Stae&olderRs E4uity .
M
D.>... =.>... >-<J>=.
(otal Staoc&olderRs
E4uity .
-3=.:3J
=.
:23J-23>
=.
>>3<Q23>
=.
Biliograp#y
7arder3 E. S. F>..<G. (7E COS(S A)! 8E)E'I(S O'LA#$E SCALE SOLA#
P7O(OEOL(AIC PO5E#P#O!9C(IO) I) A89 !7A8I3 9AE. "hesis . 9niversity
of )ort& Carolina.
6im Arane. F>.:-G. # E$%ES!&E '!&ERS!(: #B) '*#B!+S REE,#B-E
EER./ !&ES"0E"S #0!' # C("E$" (1 C*#--E.!. 'E0#'. 6AMES
A. 8AAE# III I)S(I(9(E 'O# P98LIC POLICP #ICE 9)IEE#SI(P.
#egulation and Service 8ureau. Fn.d.G. Electricity tarifs for large users in the
emirate of abu dhabi. #etrieved from
&ttp@SSwww.rs".gov.aeSuploadsSInfoElec(ari*sLarge9sers.pdf .
S.8orenstein. F>..<G. (&e maret value and cost of solar
p&otovoltaic3electricity production. CSE0wor2ingpaper . 9niversity of
Californeia Energy Institute.