# A Case-study

In South Korea, the financial performance of a 1 MW solar power plant is influenced by factors such as installation costs, operational expenses, electricity generation, and revenue from energy sales.

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**Capital Expenditure (CapEx)**

The initial investment for a 1 MW solar PV system in South Korea is approximately ₩1.5 billion to ₩2 billion (about USD 1.25 million to USD 1.67 million). Amortizing this over a 25-year lifespan at a 6% discount rate results in an annualized cost of roughly ₩117 million to ₩156 million (USD 97,500 to USD 130,000). Most of the costs are associated with the engineering and construction stages of a utility-scale PV site, but rarely is prone to cost fluctuations since the construction process is relatively unsophisticated compared to, for example, construction of commercial buildings.  Leasing land suitable for a 1 MW installation can cost between ₩10 million and ₩30 million (USD 8,300 to USD 25,000) annually, depending on whether the solar panels are installed on rooftops or on leased-land.

**Annual costs for Operation and Maintenance (O\&M)**

Annual O\&M costs, covering cleaning, inspections, and minor repairs, are estimated at ₩15 million to ₩25 million (USD 12,500 to USD 20,800). Insurance premiums and other incidental expenses may total ₩5 million to ₩10 million (USD 4,200 to USD 8,300) per year. With insurance and other auxiliary costs, annual costs can be expected to be around ₩221 million. 

**Annual Revenue from electricity generations**

A 1 MW solar plant in South Korea typically produces around 1,460 MWh annually, considering average solar irradiance of around 3 to 3.5 generative hours. Assuming a feed-in tariff (FiT) rate of ₩223 per kWh (USD 0.19 per kWh), the annual revenue would be close to  ₩325,780,000 (approximately USD 271,500). This excludes additional revenue from REC sales, which can drastically vary between suppliers depending on the type of contracts (long-term or market trading).  

**Net Annual Profit**

Subtracting total annual costs from revenue: ₩325,780,000 − ₩221,000,000 = ₩104,780,000 (approximately USD 87,400).While its expected for a PV site of an installation capacity of 1MW can earn more than ₩100 million won, It's important to note that actual costs and revenues can vary based on specific site conditions, financing terms, and changes in government policies or market rates.

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