Lesson 3: The Necessary Investment

Below the information boxes, you will find the text version of the video and further downloads. You will also see the title of the next lesson and when it will be available:

The next lesson will be available in about 3 days. You will receive an automated email from our system with a link to the video.

In addition to the video, we have prepared a PDF version of the board in this video, which can be viewed and downloaded.

We already offered some figures for the costs of the machines in Llesson 01.

Here's a quick recap:

20 MW: approximately €560.000
100 MW: approximately €3.800.000
800 MW: approximately €23.600.000

As mentioned before, these prices are only rough estimates. You could set up a production line for half of this amount or double, depending on your level of automation and the details of your production line!

Installation:

Most installation costs should be included in the prices of machines. If not, you must add these costs to your investment total.

Packing:

Sometimes offers do not include packing. In that case, you must take care of the packing by yourself. We suggest budgeting 3-5% of the total costs of machines for packing.

Transportation:

Normally transportation costs are not included in machinery offers. The reason is simple: every country will have a different price. If you want to calculate this cost, ask your delivery company for the total price of 40-foot containers and ask a transportation company to make an offer.

The factory costs include not only the buildings but also:

- The land for the building
- Media supply

The media supply in particular must be calculated very carefully! Some things to keep in mind are:

- Fire protection
- Compressed air
- Exhaust

Our suggestion is to make a complete plan for the factory that includes all this information before making the investment plan.

Our tip: it’s better to rent rather than buy a building in the beginning! You will save money and have more flexibility if you want to expand your building later.

Cost estimates:

Below we give some ideas about the costs of a completely new building. You will have to pay for these costs if you want to buy the land and make a completely new building, including all the media supply.

Attention: Of course, you must do the calculations by yourself to get a reliable answer. The following costs are based on German prices for land and construction:

20 MW: about €560.000
100 MW: about €3.800.000
800 MW: about €23.600.000

At the beginning of production, you must take care of financing for the following things:

- Initial materials
- Losses from ramp up

Initial materials:

Before starting production, you need a stock of materials to produce. First you must buy these materials and make the panels with them, and only then will you be able to sell the panels to your customers. The time gap between these steps must be financed. Depending on your payment conditions (your down payment, or the credit you give to your customers) this can time gap can equal 1-3 months of your production capacity.

Ramp up losses:

You will not be able to start your production with 100% of your production capacity. The ramp up phase until you reach 90% of your capacity or more can last half a year or longer.

Typical production capacities are:

2 % in the first month
7 % in the second month
17 % in the third month

and so on.

You can imagine that in the first 3 months you will not make any profit. You will incur losses because of all the operating costs.

Cost estimates:

The costs for the beginning of your production line are not 100% linear with your production capacity. With a very small line, you can ramp up faster (due to having fewer people to train) and you can keep fewer materials in stock much because smaller companies produce mostly for valid orders.

The bigger your production capacity, the more people you must train and the longer the ramp up phase will be.

Also, you will require more stock because there will be times when you produce for stock and sell the panels later.

To get an idea about the costs of financing, consider the following estimations:

20 MW: about €560.000
100 MW: about €3.800.000
800 MW: about €23.600.000

Total investment for a solar module production line: