> For the complete documentation index, see [llms.txt](https://docs.suno.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.suno.finance/financial-model/assumptions-and-limitations.md). # Assumptions and limitations This page states what the model assumes, what it simplifies, and what is on its roadmap. #### Assumptions * **One central projection.** The model produces a single deterministic path, a central estimate anchored to measured data, with uncertainty carried by the calibrated [sensitivity analysis](/financial-model/sensitivity-analysis.md) rather than by probabilistic simulation. Per-lever quantiles can be checked individually; a joint simulation would rest on correlation assumptions the available data cannot support. * **Scope.** The model values the cash flows that reach the investor through the protocol's structure, net of the protocol fee and of the withholding that applies along the distribution path. * **Certificate prices hold their real USD value.** Certificate markets have their own supply and demand dynamics; the sensitivity set includes a complete collapse of the certificate price. * **Recurring OPEX escalates at CPI by default.** The optional real escalator (industry benchmarks run at CPI +0.5 to 1% for aging assets) is applied per project where justified. Major replacements are modeled separately as [discrete events](/financial-model/equipment-replacement.md), with the boundary drawn so the two cannot double-count. * **The import-tax exemption holds in the base case.** Equipment costs assume the renewable-energy import exemption of the asset's jurisdiction; its loss, at that jurisdiction's full VAT and duty rates, is a standing sensitivity scenario. * **No terminal value.** The asset carries no value beyond its declared useful life, positive or negative, except where a contractual salvage credit is scheduled in the equipment register. End-of-life economics are an active area of refinement as contractual evidence accumulates. * **Expected-value event timing.** A replacement scheduled in the valuation year is prorated by the remaining year fraction, with an engine warning for manual review, since a scheduled event near year-end is closer to a full pending liability than to its prorated fraction. #### Limitations * **Young-portfolio calibration.** Production variability is estimated from about four years of portfolio telemetry: enough for a first empirical quantile, not for full climate-cycle coverage, since an ENSO cycle spans several years and La Niña years cluster low-irradiance outcomes. The OPEX ±20% range is an interim benchmark pending backtesting history. * **Seasonality in short samples.** Coverage weighting bounds the influence of partial-year samples but does not deseasonalize them against a site-specific irradiance profile, so a short sample keeps its seasonal bias within its reduced weight. * **Availability is embedded.** Measured production already contains real downtime and soiling, and projected years inherit whatever availability the history embeds. There is no separate forward-looking availability parameter. * **Annual granularity.** Intra-year working-capital timing, payment lags, and settlement mechanics are below the model's resolution. * **Term-premium stance.** Anchoring the discount rate on the expected policy-rate path puts the term premium near zero, a reading supported by recent empirical estimates but a stance nonetheless. The ±100 bps sensitivity bounds its consequence. #### Roadmap In order of expected impact: 1. **Backtesting**: yearly reconciliation of modeled against realized generation and OPEX per project, with stored forecast errors, progressively replacing interim ranges with measured accuracy. 2. **Site-specific seasonal profiles** for deseasonalizing short telemetry samples. 3. **Explicit terminal-value treatment**, whether salvage, repowering optionality, or decommissioning liability, as contractual evidence accumulates. 4. **Continuous recalibration** of the production and FX quantiles as portfolio history and market data grow. Any published valuation can be placed, through its frozen snapshot and this page's version history, within the exact vintage of the methodology that produced it. --- # Agent Instructions This documentation is published with GitBook. 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