Value? Depends on who you are: The CSI Site

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1 How to Determine the Value of a Solar Investment The CSI Site Rob Baron Lakeland College CN Theatre, MacEwan University January 19, 2017 Note: This document contains corrected information that differs from the original presentation Research Studies Solar PV and Micro Wind Performance Verification Solar PV Tracked vs. Fixed Mount vs. Seasonally Adjusted. Solar Thermal Performance for DHW and Building Heat Integration with ground source heat pump (geothermal) Solar Concentrator for High Temp Process Heat Passive Solar Greenhouse Applications NET Zero Building Evaluation (RELC) grid tied GeoExchange bore hole installation techniques Integrated Monitoring and Visualization of Combined Renewable Systems. Product Development. Off-grid demonstration (ecabin) Waste to Energy Using Gasification Combined Heat and Power for Building Heat Economics of solar PV in Alberta Alberta Solar Programs - Examples Indigenous Solar Program First Nations and Metis communities that invest in local renewable projects. Government of Alberta Aims To Become 50% Solar-Powered power 50% of government operations with solar energy. Municipal Solar Program - Additional Incentives Alberta municipalities who install solar photovoltaics (PV) on municipal facilities or land and complete public engagement for the project. Alberta On-Farm Solar Photovoltaics Program This rebate program is for Growing Forward registered Alberta farmers. 60 /W for contractor installed systems include an energy assessment 45 /W for contractor installed systems 30 /W for self-installed systems that include an energy assessment 15 /W for self-installed systems Maximum grant is $50K. Value? Depends on who you are: o Technology Enthusiasts o Environmental Advocate o Visionary o Mainstream Consumer We are moving from early adopters to mainstream consumers Economics of Solar PV Micro-Gen Compare investing in PV to purchasing electricity from the grid Payback? Does your electric bill pay back? Compare the cost of two options over the long term Solar PV Pre-buy 20 to 30 years of electricity Fixed and known price Owner assumes maintenance Insurance costs and concerns Higher financial risk - capital Tangible asset property value Grid Supplied Payments spread out over time Unknown price System maintenance provided N/A No capital investment N/A 1

2 $/kwh Understanding Energy Bills In Alberta Transmission and Distribution is billed separately from energy used Alberta 6.8 /kwh Rate Cap for 4 years T & D Charges Vary EPCOR Serving City Residential Customers Transmission $ Distribution $ Total = $ ATCO Serves Rural Residential Source: AUC Source: AUC Example Small General Service Transmission and Distribution Costs are Increasing Combined Transmission and Distribution Rate ($/kwh) ATCO Rural Residential Year Rate escalator $0.006/kWh per year ~ 6% 2

3 RESIDENTIAL Cost of Electricity $0.0502/kWh Transmission $0.0352/kWh Let s add solar PV to the equation Distribution $0.0660/kWh + Fixed $1.199/day $0.151/kWh Variable = $50.10 Fixed = $51.71 Net Metering Like Alberta Micro-gen Credit At times, we also avoid charges for energy, transmission and distribution! Photo: Ontario Electrical Safety Authority Solar PV Estimates Can use software like PVWatts or RETScreen Adjusted for weather, PV orientation and tilt NRC Data Available as CSV 3

4 Installed Solar Generation 5 kw Fixed Actuals vs. PV Watts Estimate FIXED POLE MOUNT 5400 watts Conergy 225W modules 2 X 12 module strings 5kW Fronius Inverter 2-AXIS TRACKER POLE MOUNT 5400 watts Conergy 225W modules 2 X 12 module strings 5kW Fronius Inverter DEGERenergy 5000 tracker Provides about 90% of Site Generation 5 kw Tracked Actuals vs. PV Watts Estimate Installed Costs Alberta Ag Project 63 installs Average price $3.78/watt Example rates of popular Alberta Installers Roof Mount = $6.00/watt <10kW Roof Mount = $3.00/watt >10kW Fixed Ground Mount = $ $6.00/watt Tracker Systems = $ $9.00/watt Modules represent less than $1.00/watt of the total cost Understanding Installed Cost Our Experiences Module Prices Rob Baron 4

5 Quick Economics of Solar Electricity Cost of Setting up Grid PV Based on 10 kw system Levelized Cost of Electricity Installed $3.00/W $ 30,000 Total $ 30,000 Life Capacity 30 years 10 kw Financial Depreciation $ 1000 per year 5% $ 525 Repair $ 400 $ 1925 per year Financial analysis tool used to aid in comparing two options over time Generation Annual Electricity 11,940 kw-hr/year Cost of Generation $ 0.16 kw-hr Lakeland s Cost Calculator Key Points LCOE = $0.152 LACE = $0.134 Accumulated $/kwh take close to 30 years to be similar Example for Illustration 10 kw Grid-tie system in Edmonton $3.50 per Watt installation cost ($35,000) Ground mount 53 Tilt facing south no shading 13,516 kwh per year as estimated by PVWatts Estimate 50% of electricity can be consumed simultaneous to generation Grid electricity = 7.4 /kwh T & D = /kwh (variable) Insurance $100/year Maintenance $200/year Inflation Rate 1.4% overall; 0.6% electricity and $0.006/kWh T&D NPV discount rate 3.25% Accumulated Cash Flow Net Present Value of Cash Flow Dollars spent or received in the future are less that today Numbers are corrected back to current dollar equivalent Deals with opportunity costs Example Data For the example scenario, an annual loss is predicted for all project lives up to 30 years 5

6 Another Way of Looking at it.. Issues with Traditional Indicators Issues with simple payback o Does not account for time value of money, inflation, salvage value Issues with IRR o IRR compares two investments. o Can calculate for a PV project but, what is the rate of return of your energy bill? Issues with LCOE o Discounts kwh production at a financial dependent discount rate (not physical) o Number used to compare two options under same condition o Can rank several alternatives o Actual value of number may be confusing All benefits may not be included o Carbon tax o Income tax Careful with Analysis Sensitivity What if? What is your term? 10 year, 20 year, 30 year? All calculations are sensitive to inputs Changes in policy Unexpected inflation (or de-inflation) Social costs? Your risk tolerance Our Example: No Rebate PV never lower than Grid Sensitivity What if? Sensitivity What if? Our Example: $1.00/Watt Rebate PV compares to Grid only after 30 years Our Example: $1.00/Watt rebate but use 100% of PV directly for loads Now PV becomes the better option and earns revenue after 19 years T&D included 6

7 Other Useful Tools System Advisor Model SAM Renewable Energy and Conservation Certificate/Diploma Energy Bill without PV System Energy Bill with PV System Thanks! Rob Baron (780)