Q1. A farmer is planning on installing a 30-kW solar PV system equipped with 10kWh electricity storage (batteries). The cost of installation of the panels with inverter is assumed 1 $/W and the electricity storage costs 750 $/kWh. Given various efficiencies, let us assume that the system with batteries provides a constant 5 kW in average year around (a crude assumption, but OK for our purpose). The batteries need replacement every 5 years and the system has a salvage value of $5,000 at the end of its life (25 years). With this system installed the farmer saves the hydro cost that can be assumed 0.18 $/kWh. Assuming a MARR of 8%, calculate the NPV of this investment using two approaches: a) a simple payback approach, b) discounted cash flow analysis.
Q1. A farmer is planning on installing a 30-kW solar PV system equipped with 10kWh electricity storage (batteries). The cost of installation of the panels with inverter is assumed 1 $/W and the electricity storage costs 750 $/kWh. Given various efficiencies, let us assume that the system with batteries provides a constant 5 kW in average year around (a crude assumption, but OK for our purpose). The batteries need replacement every 5 years and the system has a salvage value of $5,000 at the end of its life (25 years). With this system installed the farmer saves the hydro cost that can be assumed 0.18 $/kWh. Assuming a MARR of 8%, calculate the NPV of this investment using two approaches: a) a simple payback approach, b) discounted cash flow analysis.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 15E: Gina Ripley, president of Dearing Company, is considering the purchase of a computer-aided...
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Q1. A farmer is planning on installing a 30-kW solar PV system equipped with 10kWh electricity storage (batteries). The cost of installation of the panels with inverter is assumed 1 $/W and the electricity storage costs 750 $/kWh. Given various efficiencies, let us assume that the system with batteries provides a constant 5 kW in average year around (a crude assumption, but OK for our purpose). The batteries need replacement every 5 years and the system has a salvage value of $5,000 at the end of its life (25 years). With this system installed the farmer saves the hydro cost that can be assumed 0.18 $/kWh. Assuming a MARR of 8%, calculate the NPV of this investment using two approaches: a) a simple payback approach, b) discounted cash flow analysis.
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