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EXAMPLE OF ENERGY COST INCREASE IN SOLAR POWER FINANCIAL ANALYSIS 243

Example of Energy Cost Increase

in Solar Power Financial Analysis

The following economic analysis is a hypothetical example of a 1-MW (PTC) solar
power installation under the present California Solar Initiative (CSI) rebate program.
The analysis is based upon the following assumptions:

■ The project execution will be completed within the required rebate energy category
schedule using the PBI incentive.
■ The project is classified as a government or nonprofit organization.
■ The rebate amount paid for a period of 5 years will be $0.46/kWh.
■ The prevailing electric energy cost at the end of the 5 years (year 2012) will be
$0.14/kWh.
■ The solar power system will be mounted on single-axis tracking platforms.
■ The CSI EPBB design factor (calculated and derived from the CSI Web page)
is 0.976.
■ The location of the solar power installation is in San Bernardino County, California,
with a latitude of 34.1 and an insolation of 5.84 hours.
■ The life expectancy of the solar power installation is 30 years.
■ The overall solar power system maintenance cost is negligible.

This example serves to indicate the impact of the electric energy cost increase
5 years after expiration of the 5-year rebate period.
Table 8.5 shows the result of annual power production produced by a quantity of
6840 PV modules with 175 dc rating that have a CEC PTC rating of 158.3 W ac and
a quantity of five inverters rated at 225 kW with 94.5 percent efficiency.
Table 8.6 shows monthly insolation hours and kilowatt-hour production of the solar
power system for each day during the month and the respective energy value contri-
bution. Based on an average insolation value of 5.84 hours and an annual production
of 2,128,978 kWh of energy and an energy incentive payment of $0.46/kWh, the total
yearly energy value amounts to $978,329.97. Assuming an installation cost of
$8.00/W per PTC, the total installed cost of the project for 1,082,772 W of energy
amounts to $8,662,176.00.
Table 8.7 is a compounded table that shows energy cost increases from the present
value of $0.12/kWh escalated by 6 and 8 percent. The lower part of the table indicates
the amount of air pollution emission prevention by a 1-MW solar power cogeneration
system.
Table 8.8 represents the energy cost contribution of the solar power system over the
system’s life span of 30 years, taking into account an electric energy cost escalation
(after the 5 years of the guaranteed rebate contribution period) at an energy cost of
$0.15/kWh.