Electrical Design 2 & Financial Analysis · PAYBACK = Payback period required for avoided costs of...
Transcript of Electrical Design 2 & Financial Analysis · PAYBACK = Payback period required for avoided costs of...
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ESS 034Advanced Photovoltaic Systems
Energy 142 NABCEP (North American Board of Certified Energy Practitioners) Entry Level Test Review
Electrical Design 2 & Financial Analysis
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Lesson Plan
• NABCEP Learning Objectives: Electric Design (part 2)
• Financial Analysis
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• Larger conductors have lower resistance for a given length.
Electrical DesignElectrical Design
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• Understanding PV module specifications and electrical
design limits
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• There are two acceptable methods of grounding both the AC and DC sides of a PV system.
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Electrical DesignElectrical Design
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• A ground-fault circuit interrupter (GFCI) senses differences between the current in the grounded and ungrounded conductors, indicating a ground fault, and opens the circuit in response.
Electrical DesignElectrical Design
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• Many articles in the NEC® are applicable to the electrical integration of a PV system, particularly Article 690.
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PV Financial AnalysisPV Financial Analysis
• What do we mean by PV financial analysis?
• Why do we care?
• How do we measure?
• Important terms
• PNL NOPAT
• GM% OPEx
• ROI PAYBACK
• Lifecycle Cost Analysis IRR
• Time Value of Money Discount rate
• NPV
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PV Financial AnalysisPV Financial Analysis
PNL NOPAT = Profit & Loss, Net Operating Profit After Tax
GM% = Gross Margin Percentage
OPEx = Operating Expenses
ROI = Return on Investment
PAYBACK = Payback period required for avoided costs of alternate energy system to match the cost of chosen system
Lifecycle Cost Analysis = Total cost of all expenses incurred over the life of a system
IRR = Internal Rate of Return
Time Value of Money = Value of money figuring in a given amount of
interest earned over a given amount of time
Discount rate = Rate at which future value of money is reduced to its present value
NPV = Net Present Value
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• The payback point occurs when the cumulative avoided cost equal the initial investment.
OriginalInvestment
• What’s the problem with payback method of analysis?
• Timing of Cash• Cash after payback• Arbitrary standard
Financial AnalysisFinancial Analysis
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• A life-cycle cost analysis compares the life- cycle costs of various electricity-supply options.
Financial AnalysisFinancial Analysis
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• Each system option must meet the same requirements, including the length of time used to calculate life-cycle cost.
Financial AnalysisFinancial Analysis
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• The various types of life-cycle costs occur at different points in the life cycle of a system.
Financial AnalysisFinancial Analysis
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• The life-cycle cost analysis of an engine- generator system includes each type of cost.
Financial AnalysisFinancial Analysis
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• The most significant costs in the life cycle of a PV system are the initial costs.
Financial AnalysisFinancial Analysis
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• Annualizing costs spreads costs evenly over the operating period, but results in the same total life-cycle cost for a system.
Financial AnalysisFinancial Analysis
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• The payback point occurs when the cumulative avoided cost of one system matches the total life-cycle cost of another system.
Financial AnalysisFinancial Analysis
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• The payback point can be determined by comparing the actual life-cycle costs of the various system options.
Financial AnalysisFinancial Analysis
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• The annualized-cost method of determining the payback period is relatively simple, though it may be less accurate than the actual-cost method.
Financial AnalysisFinancial Analysis
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• Incentives affect the total life-cycle cost differently, depending on how and when they are applied.
Financial AnalysisFinancial Analysis
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• A certain amount of present money is equal to a greater face-value amount of future money. The difference in face value depends on the difference in time.
Financial AnalysisFinancial Analysis
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• The present value of future money falls more quickly with higher discount rates.
Financial AnalysisFinancial Analysis
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• The various types of life-cycle costs occur at different points in the life cycle of a system.
• NPV requires more math…NPV = -C0 + C1/(1+r) + C2/(1+r)2 +C3/(1+r)3 +
C4/(1+r)4 + … CT/(1+r)T
Financial AnalysisFinancial Analysis
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• Related costs that occur every year are calculated and added together for each year to determine the total present value.
Financial AnalysisFinancial Analysis
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• The life-cycle cost analysis of an engine- generator system includes each type of cost.
Financial AnalysisFinancial Analysis
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• The most significant costs in the life cycle of a PV system are the initial costs.
Financial AnalysisFinancial Analysis
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• Internal rate of Return is the resulting r if NPV = 0
NPV = -C0 + C1/(1+r) + C2/(1+r)2 +C3/(1+r)3 + C4/(1+r)4 + … CT/(1+r)T
0 = -C0 + C1/(1+r) + C2/(1+r)2 +C3/(1+r)3 + C4/(1+r)4 + … CT/(1+r)T
Does not require discount rate to solve Scale problemTiming problem
Sometimes referred to as ‘hurdle rate’
Financial AnalysisFinancial Analysis