7 Points to Avoid Mistakes with Prices of Used Solar Power Plants

Table of Contents

• The price of a used solar power plant is the entry point for assessing the plant's condition

• Check the difference between actual generation performance and expected generation output

• Check the power purchase terms and the remaining contract period

• Check equipment degradation and replacement risk

• Check land conditions and disaster risks

• Check maintenance history and operational arrangements

• Check the conditions for title transfer and contract succession

• Determine the reasonableness of the price through on-site inspection and surveying

• The price of a used solar power plant should be judged based on facts on the ground

The price of a used solar power plant is the entry point to assessing the plant's condition

When looking at the price of a used solar power plant, many practitioners first focus on the yield and expected annual income. Indeed, verifying profitability is important for investment decisions. However, the price of a used solar power plant is not merely a sale amount; it is also a starting point for assessing how the plant has been operated to date and what risks it may face going forward. If you judge only by price as cheap or expensive, problems such as equipment replacement, land repairs, contract terms, maintenance costs, and reduced power output may surface after purchase, and as a result you may not obtain the returns you expected.

Used projects, unlike newly developed ones, already have an operational track record. Therefore, you can check not only desk-based power generation simulations but also actual generation output, shutdown history, maintenance records, equipment replacement history, and changes in the surrounding environment. This is a major advantage of used projects.

On the other hand, if past operational records are insufficient or the documentation is disorganized, risks that are not apparent from the surface price can remain. To avoid making a mistake on the price of a used solar power plant, you should not simply accept the materials provided by the seller as-is; you need to take the stance of verifying the on-site conditions behind the numbers.

One important point to note is that even power plants that appear to be the same size can differ greatly in whether their prices are reasonable. The site's sunlight conditions, panel tilt, the effects of shading, the condition of the racking and foundations, drainage, vegetation management, grid connection conditions, and the terms of maintenance contracts all affect future power generation and maintenance costs. In other words, the price of a used solar power plant cannot be compared by installed capacity alone. Even when the apparent scale of the facility is the same, visiting the site can reveal differences such as poor ground conditions, inadequate drainage, weeds casting shadows, surrounding trees having grown, or deterioration in wiring and connection points.

In this article, we outline seven practical perspectives to verify in order to avoid mistakes regarding the price of used solar power plants. Instead of debating the price itself, we focus on what to look at to assess the reasonableness of the price. The content can be used as practical guidance to help prevent oversights by those purchasing plants, those reviewing intermediary materials, those explaining investment decisions within their company, and those responsible for due diligence on existing projects.

Check the difference between actual power generation and expected power generation

When evaluating the price of a used solar power plant, the first thing to check is its generation record. For newly built projects you make judgments based on future forecasts, but for used projects there is already an operating history. Therefore, it is important to verify how past generation has compared to the projected generation. Rather than simply looking at the total annual output, examine monthly, seasonal, and yearly trends to confirm whether generation is stable and not significantly dropping during specific periods.

Even if the annual power generation looks good at first glance, a breakdown may reveal that certain months are abnormally low. Possible causes include snowfall, output curtailment, equipment shutdowns, surrounding shadows, weeds, panel soiling, and missing data from monitoring devices. When valuing a used solar power plant, it is essential to understand why the generation performance is low. If the cause is temporary and can be remedied, there is room to review operations after purchase. However, if it is a persistent problem stemming from the surrounding environment or site conditions, generation declines may continue in the future.

When reviewing power generation performance, you should check not only the amount of electricity sold but also the consistency with the generation measured within the plant and monitoring data. The amount sold is directly linked to actual revenue, but it can be difficult to tell where losses are occurring inside the plant. By checking the output of generation equipment, the operating status of conversion equipment, downtime, and records of anomalies, it becomes easier to distinguish whether a decrease in generation is due to natural conditions or equipment faults.

Also, when comparing with the expected power generation, attention must be paid to the assumptions used in the simulation. If solar irradiance, temperature, tilt angle, azimuth, shading conditions, loss rates, or equipment degradation rates do not match the actual site conditions, the expected power generation itself may be overestimated. If you judge the price without checking whether the expected power generation stated in the sales materials is realistic, there is a risk that actual revenues will fall short of expectations. For used projects, you need to look at both past performance and future forecasts.

In practice, it is especially important to pay attention to trends of declining power generation. Even if performance was good immediately after commissioning, a recent decrease in output may indicate panel degradation, equipment malfunctions, inadequate weed management, growth of surrounding trees, or deterioration of the site environment due to poor drainage. Rather than focusing only on short-term fluctuations, examine multi-year trends to confirm that the plant is being maintained in a healthy condition. The price of a used solar power plant should be evaluated not only on past revenues but also on whether the same level of performance can be maintained going forward.

Confirm the electricity sales terms and remaining period

Checking the power purchase terms and the remaining contract term is extremely important when determining the price of a used solar power plant. Even with the same generation equipment, profitability can vary greatly depending on the contract conditions and the remaining period of power sales. In used projects, since operations have already started, the period remaining at the time the buyer acquires the asset is limited. Therefore, you need to check not only the annual power generation but also how long you can expect to receive income in the future.

The first thing to check is whether the contracts related to electricity sales can be properly transferred. Even if a project looks attractive on paper, if there are conditions attached to name changes or contract succession, you may not be able to obtain the expected revenue after purchase. Verify that information on the connection agreement, the power supply and purchase agreement, and equipment certification is properly organized, that there are no required procedures left uncompleted, and that no changes, subdivisions, or expansions have been carried out in the past. For projects with complex contractual terms, it is risky to determine the price based solely on simple revenue calculations.

Next, attention is also needed in how you assess the remaining term. A longer remaining term means a longer income period, but that alone does not guarantee safety. If equipment replacement timings coincide during the remaining term, substantial maintenance or equipment renewal costs may arise partway through. Conversely, for projects with a short remaining term, you need to consider not only the initial acquisition decision but also what kind of operation will be possible after the term ends. The price of a used solar power plant should be evaluated by combining the remaining electricity sales revenue and the future operational options.

Also, in regions with output curtailment or grid-side constraints, there may be periods during which, despite having the capacity to generate power, you cannot sell electricity. If you judge based solely on generation output without checking past curtailment records and future outlooks, revenue projections can be off. For used projects, since there are historical sales records, you can assess how much revenue is actually realized by checking the difference between generated and sold power and the history of shutdowns and curtailments.

When evaluating power purchase terms, you should check not only the contractual unit price and period but also the stability of payments, past payment history, and the retention status of contract documents. In practice, there are cases where plant equipment documents exist but copies of contracts or change notifications are not sufficiently retained. In such cases, post-acquisition procedures can take time or require additional verification. To avoid mistakes when valuing used solar power plants, you need to view the power purchase terms not merely as assumptions for revenue calculations but also confirm them with regard to rights and procedural risks.

Confirm Equipment Deterioration Status and Replacement Risk

At used solar power plants, because they have already been in operation for a certain period of time, it is essential to inspect the condition of equipment degradation. The equipment that makes up a plant—solar panels, mounting structures, foundations, power conversion equipment, collection equipment, cabling, junction boxes, monitoring systems, etc.—each degrades at a different rate. Even if there appear to be no visible problems, issues such as overheating at connection points, insulation deterioration, corrosion, loosening of fasteners, and damage to cable sheathing may be progressing. When assessing the price of a used solar power plant, it is important to check not only the installed capacity and generation records but also which components face a risk of replacement in the future.

Regarding solar panels, check for dirt, cracks, discoloration, delamination, frame distortion, and the condition of their mounting. Even if power generation has not dropped significantly, leaving localized defects unaddressed can lead to future generation declines and safety risks. Because some degradation is difficult to judge by visual inspection alone, performing electrical measurements and thermal imaging checks as needed makes it easier to detect signs of abnormalities. For used systems, the perceived reasonableness of the price varies depending on how thoroughly they have been inspected.

Conversion equipment is an important asset directly linked to the continued operation of a power plant. Check the outage history, alarm history, repair history, and parts replacement history to assess the potential for future replacements. Even if the price of a power plant appears attractive at first glance, if major equipment will need to be replaced in the near future, the actual acquisition burden will increase. Especially in used projects, it is necessary to confirm the equipment's warranty period, whether maintenance support is available, the availability of replacement parts, the installation environment's temperature and humidity, and the impact of dust and salt damage.

The condition of the racking and foundations cannot be overlooked. Because solar power plant equipment is installed outdoors for long periods, it is exposed to wind and rain, snowfall, ground movement, and corrosion. If the racking is tilted or deformed, the panels’ angles will be disturbed, affecting both power output and safety. If the foundations show settlement or uplift, or if the surrounding ground has been scoured or eroded, the risk during typhoons or heavy rainfall increases. When evaluating the price of a used solar power plant, you need to check not only whether the equipment is operational but also whether it can be safely supported over the long term.

Wiring and connection points are important areas to inspect, even though they are hard to see from the outside. Problems such as cables being insufficiently secured and contacting the ground, protective conduits being damaged, water easily entering around junction boxes, and cables being damaged during mowing can lead to reduced power generation or accidents. When assessing the price of a power plant, it is desirable to check the wiring routes and the condition of connection points on site, not just rely on superficial photos.

The purpose of checking the deterioration of equipment is not just to avoid a purchase. Rather, it is to identify necessary repairs or replacements in advance and factor those costs into investment decisions. The existence of deterioration itself is not necessarily a problem. The problem is judging only by price without understanding the deterioration, which can lead to unexpected expenses after purchase. To avoid getting the price wrong on a used solar power plant, you need to understand the current condition of the equipment as concretely as possible and reflect the replacement risk in future cash flow.

Check land conditions and disaster risks

The price of a solar power plant is greatly influenced not only by the equipment but also by land conditions. In used projects, because the equipment is already installed, land problems may not be apparent. However, drainage during heavy rainfall, slope stability, ground subsidence, slope failures, inflow of sediment from the surroundings, snowfall, strong winds, salt damage, and the proliferation of weeds can have a major impact on long-term operation. When checking the price of a used solar power plant, it is necessary to assess not only the power generation equipment itself but also whether the land can continue to stably support the power plant.

First, we need to check the drainage situation. Since solar power plants have panels spread over a wide area, they can alter the flow of rainwater. If drainage channels are clogged, water tends to pool on the site, or soil has been washed away leaving the area around foundations unstable, repairs may be required in the future. Because inspections conducted only in fine weather can miss drainage issues, it is important to review conditions after past heavy rains, maintenance histories of drainage facilities, topographic maps, and the site's elevation differences.

On sloping terrain or developed/reclaimed sites, the condition of the slope faces and the stability of the ground are important. Small cracks, settlement, drainage traces, and accumulation of sediment can be signs of future collapse or erosion. If the price of a used solar power plant looks relatively low, there may be hidden needs for land development or repairs. Because development and repair costs arise separately from the performance of the generation equipment, failing to check the local land conditions before purchase can lead to mistaken investment decisions.

Changes in the surrounding environment are also important. Even power plants that had little shading impact when operation began may experience effects on current or future power generation due to the growth of nearby trees, changes in the use of adjacent land, or the installation of buildings or other structures. Shadows can affect generation efficiency even if they fall on only some panels. For second-hand projects, in addition to past generation performance, it is necessary to confirm whether the impact of shading may become stronger in the future.

Regarding disaster risk, we assess not only past damage records but also potential risks that may occur in the future. Typhoons, heavy rain, snowfall, lightning strikes, landslides, flooding, strong winds, and other hazards require different precautions depending on the region. Even if there has been no damage in the past, inadequate drainage or insufficient anchoring can lead to damage during future disasters. We also check insurance enrollment and coverage to understand how much can be addressed when equipment is damaged.

Land rights are also points that should be checked. Confirm whether the land is owned or leased, whether the remaining term of the lease agreement is sufficient, whether surface rights and rights of way have been settled, and whether there are any issues with the use of access or maintenance roads. If the road providing access to the power plant runs across private land, ambiguous permission to pass can hinder maintenance work. The price of a used solar power plant should be assessed not only on the generation equipment but also on the stability of land use.

Verify maintenance management history and operational structure

To avoid mistakes when pricing a used solar power plant, it is essential to check its past maintenance history. Solar power plants are often assumed to generate electricity automatically after installation, but in reality they require management such as regular inspections, grass cutting, cleaning, anomaly monitoring, emergency response, equipment replacement, snow removal, and drainage checks. A plant that has been properly maintained and one that has been left with only minimal care can show a large difference in condition even after the same number of years.

When reviewing maintenance management records, check not only whether an inspection report exists but also the specificity of its contents. It is important that the inspection date, inspector, inspection items, locations of abnormalities, actions taken, photos, measurement results, and items for the next action are organized. If it only says "inspected," you cannot judge how thoroughly it was actually checked. When evaluating the price of a used solar power plant, confirm whether maintenance records have been kept continuously and whether appropriate actions were taken when abnormalities were found.

Mowing and weed control also affect power generation and safety. Weeds casting shadows on the panels reduce power output, and dense vegetation around wiring and junction boxes makes inspections difficult. In addition, dry grass can increase fire risk. Even if photos of the power plant are included in sales materials, the impression will vary depending on when they were taken. It is important to assess year-round maintenance—for example, by inspecting the site during seasons of vigorous growth and checking past mowing frequency.

You should also check the monitoring arrangements. Even if remote monitoring has been implemented, if it is not decided who will verify an anomaly and how long it will take to respond on-site, downtime can be prolonged. Checking past outage records and recovery times reveals the effectiveness of the operational arrangements. When assessing the price of a used solar power plant, confirm not only whether monitoring equipment is installed but also whether the response procedures for abnormalities actually functioned.

Also, whether the maintenance contract can be transferred as-is after purchase is important. Check the contract terms with the existing maintenance provider, the scope of coverage, inspection frequency, whether emergency response is included, the content of reports, and the terms for termination or modification. If the maintenance contract is stable, the operational burden after purchase will be lighter, but if the contract is insufficient, the buyer will need to establish a new maintenance arrangement. To determine whether the price is reasonable, you also need to estimate how much management effort will be required after acquisition.

The maintenance history is a record that reflects a plant’s past. A plant that has been properly maintained will have records of responses even when abnormalities occur, making it easier to predict future risks. On the other hand, plants with few records make it difficult to determine whether their condition is good or simply unchecked. To avoid mistakes when pricing used solar power plants, it is important to include the quality of maintenance management in the price evaluation.

Confirm the conditions for changing the contract holder or transferring the contract

When purchasing a used solar power plant, it is important not only to consider the equipment and land, but also whether various contracts and rights can be properly transferred. Even if the plant is operational, the procedures to be checked are wide-ranging: change of ownership name and contract succession due to the sale, permits and notifications, land use rights, maintenance contracts, insurance contracts, and relationships with financial institutions. If these matters are taken lightly and a decision is made based only on price, problems can occur such as procedures stalling after purchase, delayed start of revenue, or the need for additional documentation.

First, confirm that the rights and contracts related to the power generation business are correctly included in the sale. Simply acquiring the equipment does not necessarily mean that the contracts and rights necessary for selling electricity will automatically transfer without issue. Multiple parties may be involved, including the seller, buyer, relevant agencies, landowners, and management companies. It is important to organize in advance the conditions required for contract succession, the documents to be submitted, whether approvals are necessary, and the time required for procedures.

If the land is leased, always check the succession terms of the lease agreement. Confirm whether the lessor’s consent is required, whether the contract period is sufficient relative to the remaining term of the power generation business, whether the renewal conditions are clear, and how the restoration obligations are defined. Even if the price of a used solar power plant appears reasonable, if the land lease’s remaining term is short, the renewal conditions are uncertain, or the removal obligations are heavy, the future risk will be significant.

The handling of insurance contracts also needs to be confirmed. Check whether you can take over the insurance you are currently enrolled in, whether you need to enroll again, and whether there are any gaps in the scope of coverage. Power plants are outdoor installations and carry risks from natural disasters and accidents. Acquiring one with inadequate insurance terms could result in large losses in the event of a disaster. When judging the reasonableness of the price, you need to look not only at whether insurance exists but also at what kinds of damage are covered.

Also, if financing or collateral is involved with the power plant, a lien release or consent at the time of sale may be required. In projects where ownership rights are not properly organized, delivery may be delayed after the contract is signed. The person responsible for the transaction must cross-check not only the sale and purchase agreement but also registration information, land contracts, equipment-related documents, various filings, maintenance contracts, and insurance policies, and verify their consistency.

Confirming title transfers and contract assignments is a different area from the technical evaluation of a power plant, but it is equally important for investment decisions. No matter how good the power output is or how well the equipment is maintained, if there are problems with rights or procedures you will not be able to operate it as expected. To avoid making a mistake on the price of a used solar power plant, you need to check not only the physical plant but also whether it can be operated without contractual issues.

Assess the reasonableness of the price through on-site inspection and surveying

To correctly assess the price of a used solar power plant, an on-site inspection is indispensable, not just a review of documents. Sales materials, generation records, contracts, and inspection reports are important, but there is much you cannot learn without visiting the site. Equipment tilt, drainage flow, weed height, shadows from surrounding trees, corrosion of the racking, the condition of cable fastening, the width of maintenance roads, slope condition, and boundaries with adjacent land, among other factors, cannot be adequately judged from photos and drawings alone.

During on-site inspections, we first assess the overall condition of the site. We check access from the entrance to the equipment, whether vehicles can enter, the ease of maintenance work, surrounding land use, drainage outlets, and the relationship with adjacent properties. Even if the power generation equipment itself is in good condition, conditions such as narrow service roads, unstable slopes, or difficulty mowing grass and replacing equipment can affect operating costs and response times. When evaluating the price of a used solar power plant, it is important to determine whether the site can be kept manageable as a power plant.

Next, verify whether the drawings match the actual conditions. Equipment layouts, boundaries, walkways, drainage facilities, and fence locations shown on the drawings may be shifted from the on-site reality. In used projects, drawings may not have been updated even if repairs or changes were made after operations began. Large discrepancies between the drawings and the site can cause problems for future renovations, maintenance, sales, or equipment replacement. It is important to accurately ascertain the current conditions through on-site verification and surveying.

Shadow inspection should also be performed on site. Confirm which times of day surrounding trees, slopes, utility poles, buildings, fences, and mountain shading cast shadows. Because visiting the site at a single time does not reveal the movement of shadows over a day, record the terrain and the positional relationships of surrounding objects, and assess the impact of shading as necessary. When evaluating the price of a used solar power plant, even if its generation performance has been good, the risk from shading may increase if trees grow in the future. It is important to check while taking future changes into account.

Surveying is effective for objectively confirming site conditions and equipment placement. By identifying boundaries, elevation differences, slopes, drainage directions, and equipment locations, you can organize risks that are not apparent from documents alone. Especially for reclaimed or filled sites, sloped land, properties with drainage concerns, or plots with ambiguous boundaries, accurately obtaining on-site positional information provides practical assurance in operations. If you record the current conditions before purchase, it will also help align understanding with the seller and assist with internal explanations.

To avoid costly mistakes when pricing a used solar power plant, it is important not to rely solely on desk-based yield calculations. On site there are risks and potential improvements that are not reflected in the numbers. Practitioners are expected to conduct on-site inspections and surveys to ascertain the plant’s actual condition and judge the reasonableness of the price.

The price of a used solar power plant should be determined by on-site facts

The price of a used solar power plant should be determined by comprehensively evaluating its generation performance, power purchase terms, equipment condition, land conditions, operation and maintenance, contract transfer, and on-site inspection. If you judge solely by the apparent price or the profitability shown in documents, unexpected repair costs, reduced power generation, procedural delays, maintenance burdens, and land-related risks may surface after purchase. Since used projects already have operating records, they are easier to grasp in reality than newly built projects if properly checked; however, if you proceed without sufficient verification, you will inherit past problems as they are.

What practitioners should prioritize is not a low price or the headline yield, but whether that price reflects the actual on-site conditions. By checking one by one whether the power generation record has been stable, whether the assumed generation output is realistic, whether the risk of replacing major equipment has been anticipated, whether the land can be maintained safely, whether contracts can be transferred without issues, and whether there are any discrepancies between the site and the documentation, the accuracy of judgment will improve significantly.

Also, for used solar power plants, the checks made before purchase directly affect post-acquisition operational plans. If equipment is degraded, a replacement plan must be developed; if there are problems with weeds or drainage, the management frequency needs to be reconsidered. If there are shading impacts, it is necessary to confirm whether felling and ongoing maintenance are feasible. In other words, valuation is not just an activity at the time of sale or purchase, but also an assessment of whether stable operation can be achieved after acquisition.

Especially during on-site inspections, recording location information and current conditions is important. If you can accurately identify boundaries, equipment layout, access routes, drainage, slopes, and nearby objects that cause shading, it becomes easier to share the power plant’s condition among stakeholders. Paper drawings and historical documents alone may not convey the subtle tilts or changes at the site. What helps in such cases is a system that acquires high-precision location information on-site and records the power plant’s condition.

LRTK (iPhone-mounted GNSS high-precision positioning device) can be used during on-site inspections of used solar power plants to highly accurately record equipment locations, areas near boundaries, drainage routes, slopes, access roads, and objects that cause shading. Based on the position information acquired on site, you can check discrepancies between documents and current conditions, making it easier to use for internal explanations and for post-acquisition maintenance planning. To avoid mistakes in pricing used solar power plants, it is important to accurately capture the facts on site, not just the numbers on paper. Having a system that can measure, record, and compare the condition of a power plant will be a major advantage in evaluating used projects going forward.