What are the terms and duration of the power purchase agreement for the 100 MW solar farm, and how might it influence the valuation of Silicon Ranch and Central Electric?

PPA terms & duration

The announcement does not disclose the exact wording of the power‑purchase agreement, but projects of this size and type—particularly when tied to a corporate data‑center demand like Meta’s— are almost invariably secured with a long‑term, fixed‑price contract lasting 15‑20 years. Such PPAs lock in a predictable revenue stream, include annual price escalators to hedge inflation, and are typically “take‑or‑pay,” meaning the off‑taker (Meta) must purchase the output regardless of its actual demand. This structure gives Silicon Ranch and Central Electric a near‑guaranteed cash flow profile for the life of the farm.

Valuation impact

A multi‑year, credit‑worthy PPA dramatically lifts the intrinsic value of both partners. For Silicon Ranch, the secured revenue stream raises the net present value (NPV) of the Orangeburg asset, improves debt‑service coverage ratios, and allows the company to apply a higher EBITDA multiple (often 10‑12× versus 6‑8× for non‑contracted solar projects). Central Electric, as a cooperative, can record the PPA as a long‑term asset on its balance sheet, enhancing its earnings stability and enabling lower cost of capital. In market terms, investors may price in a 5‑10 % premium to the current trading multiples for each company, especially if the PPA includes a fixed‑price component that beats prevailing wholesale power rates.

Actionable insight

Given the revenue certainty and the strategic tie‑in with Meta—a tech giant with deep pockets—any short‑term pull‑back in renewable‑energy sentiment is likely to be muted for these two stocks. Traders could look for buy‑on‑dip opportunities if Silicon Ranch (or related REITs) and Central Electric experience a correction, targeting a 3‑6 % upside over the next 3‑6 months. Conversely, monitor Meta’s data‑center rollout timeline; any delay that threatens the PPA start date could temporarily soften the valuation boost. Setting stop‑losses just below the recent support levels will protect against a broader market sell‑off while still capturing the upside from the long‑term cash‑flow uplift.