Evaluation Template 3.26.xlsx - Texas Solar Power Company

Independent Solar Financial Evaluation
Commissioned by: Texas Solar Power
Property: Mueller
Exclusively for: Mueller Customer
Utility: Austin Energy
Total Cash Flow
$30,000
$25,000
$20,000
$15,000
Inverter Replacement 1
$10,000
$5,000
$0
‐$5,000
‐$10,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Notes
Total Cash Flow equals the up‐front solar‐system cost plus the energy savings and maintenence costs over time.
Solar insolance data is downloaded directly from PVwatts.org. PVWatts, according to their website, "uses hourly typical meteorological year (TMY) weather data and a
photovoltaic performance model to estimate annual energy production and cost savings for a crystalline silicon PV system." PVwatts is part of the National Renewable Energy
Laboratory, a national laboratory of U.S. Department of Energy.
1
Maintenance costs are assumed to be ‐$500 every 5 years (after ten initial years). Maintenance includes inverter replacement, array cleaning, or other potential
unwarrantied repairs. While maintenance on solar arrays is minimal, these costs are built in to be conservative.
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Lifetime Energy Cost: No Solar System vs. Proposed Solar System
Most people who consider purchasing a solar array only have one alternative: Continuing to purchase power from
their local utility. The below graph shows how much money you would save if you choose to invest in a solar system.
While solar systems have a large up‐front cost, they typically result in lower total power costs over their lifetime;
Meaning, in this case, purchasing a solar system makes financial sense.
Break­Even Payback
Years 8.2
$90,000
$80,000
$70,000
$60,000
Lifetime Savings from Solar
$24,360
4
$50,000
$40,000
$30,000
$20,000
Up‐front Solar System
Expense 2
Break‐Even Payback 3
$10,000
$0
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Without Solar System
With Solar System
Notes
2
The "With Solar System" Scenario starts out above zero because there is an up‐front cost to install a solar system.
3
The break‐even is the point at which you would have spent the same amount of money whether you had bought a solar system or if you had not. After this point, your
solar system will have paid for itself and would continue to offset your energy consumption for free.
4
"Lifetime Savings from Solar" equals the total amount of money you would save over the lifetime of the solar system vs. not having a solar system
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Investment Statistics
Net Out‐of
Pocket
$8,199
31%
Sources of System Payment
Return Statistics
5
Net Present Value (NPV) of Array $10,081
Internal Rate of Return (IRR) 6 13.4%
Approximate "taxable bond‐equivalent" Yield 7 18.6%
Tax Credits
$3,514
13%
Rebates
$14,652
56%
Total Production
Energy Production (kWh)
184,292
Energy Savings ($) $34,158
Break­Even Payback
Years 8.2
Notes
5
Net Present Value (NPV) is: the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the
profitability of an investment or project.
6
Internal Rate or Return (IRR or RoR) is: the discount rate used in capital budgeting that makes the net present value of all cash flows from a project equal to zero. Generally
speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project.
7
The "taxable bond‐equivalent" Yield allows a customer to compare a solar installation to a normal taxable bond. Simply comparing the IRR is not fair because individuals
do not pay taxes on money they save, only on money they earn (in the case of a corporate bond).
Salvage Value is assumed to be $0. In reality, the entire solar array will likely still be producing electricity, and would therefore have some value. To be conservative, we
assume they are useless.
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Electricity Bill Savings in First Year
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Annual
kWh Usage 1,211 1,161 1,070 985 925 1,002 1,315 1,870 2,226 2,320 2,225 1,690 18,000
kWh Produced 574 527 580 592 715 680 692 709 756 756 697 709 7,988
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Annual
Old Utility Bill
8
$112 $107 $98 $90 $84 $92 $141 $211 $256 $269 $257 $168 $1,885
Energy Savings $60 $55 $60 $59 $67 $67 $86 $88 $94 $95 $87 $76 $894
New Utility Bill $53 $53 $38 $31 $17 $25 $55 $122 $162 $174 $170 $92 $992
% of Usage Offset 53% 51% 61% 66% 80% 72% 61% 42% 37% 35% 34% 45% 47%
$300
$250
$200
$150
$100
$50
$60 $55 $60 $59
$67 $67
$86 $88
$94 $95
$87
$76
$0
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Old Utility Bill New Utility Bill Monthly Savings
Notes
8
"Old Utility Bill" estimated based on information submitted to SunMath. Additional utility costs including gas consumption, and other fees are not included for the
purpose of this analysis. If we estimated your electricity consumption and were off by >25%, please email us at support@sunmath.com with your correct usage and we'll
resend your evaluation.
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Annual Cash Flow Summary (Years 1­12)
Year 0 1 2 3 4 5 6 7 8 9 10 11 12
System Cost ‐$26,365 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Loan ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total Rebates $14,652 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total Tax Credits $3,514 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Total Cost ­$8,199 ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­
Other Incentives
Feed‐In Tariffs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
9
Ren. Energy Credits ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Energy Savings ‐ $894 $924 $955 $987 $1,020 $1,054 $1,090 $1,126 $1,164 $1,203 $1,244 $1,285
Total Other Incentives ­ $894 $924 $955 $987 $1,020 $1,054 $1,090 $1,126 $1,164 $1,203 $1,244 $1,285
Costs
Loan Service ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐
Maintenance ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$200 ‐
Total Costs ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐$200 ‐
Total Cash Flows ­$8,199 $894 $924 $955 $987 $1,020 $1,054 $1,090 $1,126 $1,164 $1,203 $1,044 $1,285
Annual Rate of Return
10
11% 11% 12% 12% 12% 13% 13% 14% 14% 15% 13% 16%
Notes
9
All solar arrays are eligible for Renewable Energy Credits (RECs), however, many utilities require that all RECs be transferred in exchange for any incentive offered.
Check the fine print of your agreement to determine if you own your RECs.
10
"Annual Rate of Return" divides the nominal annual cash flow in each respective year by the net cost of the system .
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Alternative Investment Analysis 11
Considering other uses for the money needed for a solar installation is
important and often enlightening. Below, you will see the value of your solar
array cost ($8,199) after 25 years if you chose to invest in a
financial asset instead of solar.
If you install a solar array and then invest your energy savings in financial
assets over the next 25 years, you will have the below amounts of money.
Additionally, you will have reduced your total risk by getting
the large portion of your return from energy savings, instead of a financial asset.
Certificate of Deposit
$19,808
Certificate of Deposit
$51,426
RISK
Corporate Bonds
$31,140
Solar Array
Cost
z
Corporate Bonds
$66,424
$8,199
Stocks
$48,956
Stocks
$86,960
Notes
11
Approximate expected returns for different financial assetsbased on historical returns. Return assumptions are on page nine.
= $10,000
= $5,000
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Property Value Increase
Solar panels add value to structures by reducing monthly carrying costs (reducing energy costs). Everyone quotes an Appraiser's Journal Article: Evidence
of Rational Market Valuations for Home Energy Efficiency that says: "the selling price of homes increases by $20.73 for every $1 decrease in annual fuel
bills". Rather than multiplying your expected annual energy savings times 20.73, we have supplied you with a real‐world example of how much more a
Home without Solar Panels
Home with Solar Panels
The Smith family has decided
to buy a house. They believe
they can afford to spend
$1,800 a month.
After deducting all fixed and
variable costs, the Smith's
know how large a mortgage
payment they can afford.
Monthly Budget $1,800 Monthly Budget $1,800
‐ Cable, HOA, Security, Etc. ‐$300 ‐ Cable, HOA, Security, Etc. ‐$300
­ Average Monthly Energy Costs ­$157 ­ Average Monthly Energy Costs ­$83
12
= Available for Mortgage Payment $1,343 = Available for Mortgage Payment $1,417
The Smith's are willing to
spend $13,875 more for a
house with your size solar
array.
If the Smith's have $1,343 a month,
they can afford to spend $250,156
on a house.
If the Smith's have $1,417 a month,
they can afford to spend $264,031
on a house.
The Average Monthly Energy Costs above have been estimated based on your current energy consumption, as well as the size array the contractor has proposed for you.
Therefore, the home value increase calculated above is how much more your house should be worth. If you have a more or less valuable house, it will not affect the
property value difference, i.e. If you own a $100,000 or $1,000,000 house, the value of your house should still increase by $13,875.
Notes
12
The mortgage for both houses is assumed to be a 30 year fixed mortgage at today's prevailing rates (4.50%)
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CO2 Reduction Snapshot 13
In addition to reducing your energy bills, a solar array reduces your carbon footprint.
Below are various actions with equal CO 2 emission reductions.
kWh Produced per Year
Trees Planted
6.1 kW Array
kWh Produced per Year
kWh Produced per Year by
kWh Produced per Year
of CO 2 Offset Annually
kWh Produced per Year
Cars Taken off the Road for One Year
Notes
13
Average of 1.5 pounds of carbon emissions per kilowatt‐hour for US ,based on Department of Energy, for Canada, the Ontario Ministry for Energy; for the UK, UK
Environment Watch and for Australia, various state government environmental departments (averaged)
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Inputs & Assumptions
System Specs
Total Cost
$26,365
Cost / Watt $4.32
Total Watts 6,105
Orientation South (180)
System Life
25 Years
Installation Date
Oct‐2010
Expected Investment Returns
Certificate of Deposit
4%
Corporate Bonds 6%
Stocks 8%
Other Statistics
Panel Efficiency in 25 years
14
85%
Discount Rate 4.5%
Annual Energy Increase 4.0%
Tax Rate 28%
15
Average Electricty Cost (kWh) $0.0940
Notes
14
Photovoltaic panels decline in efficiency due to UV exposure. Sandia National Laboratories published a paper titled: Photovoltaic Module Performance and Durability
Following Long­Term Field Exposure, that states the annual photovoltaic output decline is 0.4% annually.
15
Electricity Cost is estimated based on bills submitted or regional average. Includes applicable taxes.
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