Analyze the expected return of investing in a solar electric system for your residence by calculating the
expected cost, usage rates, the rate of inflation of electric costs, the period of analysis, and the
minimum acceptable rate of return for a unit sized for your needs.
The 20-year return from buying a solar panel system to supply power to your house, which is located in
Rolla Missouri. You will consider a system for 800, 1200, 1600, and 2000 kW-hr per month of electric
usage with the following fixed conditions
Loan interest rate (to finance your solar panels) per annum:
Inflation rate for electricity per annum:
Initial price (year 1) for electricity per kW-hr:
Solar conversion efficiency of the panels
8.00%
5.00%
$0.11
22%
With Rolla receiving an equivalent of 5.0 hrs of peak sunlight (average of 4.9 kWh/m²/day) on a
south facing photovoltaic panel (adjusted for incident solar angles), a sizeable array (more than
25 m² of panels) area must be calculated first.
Using that sizing data and the expected power generation, pricing for the system is given as a function of
two parameters: cost of the inverters and the cost of the panels, where the total cost (C) in dollars is
given by
$$C = \int \left(\frac{A}{11} + 1\right) * 3000 + \$70/m^2 * A$$
where
A = area (in m²) of solar panels
C = Capital cost of the solar panels in $
Create an Excel spreadsheet to calculate the required capital investment (which requires calculating the
total panel area and number of inverters needed), the annual loan payment to finance the loan on the
capital investment, the yearly savings in electrical cost (including the effect of inflation), the annual
"profit" or difference between the savings and the loan payments each year, and the rate of return (IRR)
based on your annual profits compared to the initial capital cost of the solar pv system. You will do this
for each of the estimated monthly power usages (800, 1200, 1600, and 2000 kW-hr)
Plot the "rate of return" results as a function of monthly power usage.
I just need some help getting this started/finished. I am having trouble understanding where to begin.
