Cost Benefit Analysis of House Top Solar System

Cost Benefit Analysis of House Top Solar System You will conduct a CBA using the Benefit-to-Cost Ratio method for determining if a 5kW solar system is a justifiable investment. For the calculation, you will use costs, benefits and disbenefits that you select to include in the analysis. If you need to monetize indirect costs and/or benefits (converted to $), the conversion must use some documented source, and not some random guess of yours. Any online calculator you use is fine, but you must include it in the report. You will submit your CBA (Excel file) as a short analysis and report (2 pages) that defends the costs, benefits and disbenefits you chose to include in the analysis, as well as: a) methods for converting indirect costs, benefits and disbenefits to dollars, b) discount rate, and c) analysis period. In order to receive full credit: 1. Clearly state all assumptions you make for the project. 2. Make sure to properly cite all of your sources.i attached an example of excel file and word file. do the same work but with different ciet sources and numbers. for both excel and world file write your own word.


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Useful Life
Capital Investment
Oper Cost (elect, still need old source)
Update Cost (elect, update amps)
Intial Capital Investment, I
Operating and Maintenance Costs, O&M
Benefits, B
DisBenefits, DB
Conventional B-C =
Conventional B-C =
Modified B-C =
Modified B-C =
602.52 annually
600.00 annually
$ 1,202.52
5,400.00 $ 435.96
Since “B – C” < 1, the project, putting a 5kW solar system on the ho AW(B) CR+AW(O&M)+AW(DB) 0.48 Since "B - C" < 1, the project, putting a 5kW solar system on the ho Benefits: Electrical Savings Resale value (added to house value) Tax Rebates Environmental Impact Discounts on Capital Investment $ 435.96 annually $ 29,555.00 future $ 1,800.00 $ 133.91 future $ 3,600.00 Future $ 29,688.91 9688.91(A/F,7%,25) , putting a 5kW solar system on the house, is unacceptable , putting a 5kW solar system on the house, is unacceptable DisBenefits Environmental Impact (cutting trees) Environmental Impact (dumpsters) $ 1,600.00 per tree(1) $ 600.00 per 30yd dumpters(2) Oper Costs Need panels average still required $/kW hrs Service Charges Total 700 519 181 0.07 12.67 37.54 50.21 monthly 602.52 annualy Electrical Savings Old $/kWhrs New $/kWhrs Environmental Impact per tree 49 12.67 36.33 monthly 435.96 annually $ 138.00 9400000 kWhrs 236000000 trees 700 17574.47 519 13030 $ 1,798,169.36 $ $ Tax rebates Cap Invest rebate Fed/State Discounts Cap Invest discount 12000 15% 1800 12000 30% 3600 0.0074468% 133.91 24.68 Environmental Impact (cutting trees) labor permits, environmental, etc fuel Environmental Impact (dumpsters) transportation/labor environment, etc 1300 285 15 1600 500 100 600 IE 312 Engineering Economy Homework # 9 (Mini Project) Solutions Cost Benefit Analysis of House Top Solar System This report determines whether purchasing a 5kW solar system is a justifiable public project using Cost-Benefit Analysis. A public project is a project that is authorized, financed, and operated by federal, state, and local governmental agencies. Some aspects of public projects that make them differ from private ones include the sources of capital, taxation, the project life, relatively long (20-60 years), and the purpose, protect health; lives and property; and provide jobs. This case reflects upon the costs it would take for a local government agency to install the solar system in local residency, my family’s home. It is assumed that the house meets the size requirements to accommodate the system and the light requirements to make the system run efficiently. The cost associated with installing the solar system are: the capital investment, multiple operating cost, the yearly maintenance cost, and the installation cost. Some of the benefit with installing the system include: the savings from the electrical bill, the added value to the house, tax rebates, the environmental impact, and the federal or state discounts on the capital investment. Along with the positive, benefits, consequences of the project there is also the negative, disbenefits. Some of the disbenefits include: multiple accounts of environmental impacts such as cutting trees and disposing of waste. So, after performing the Cost-Benefit Analysis, CBA, on the project with the cost, benefits, and disbenefits monetized; we find out that the project is unacceptable. To get to the justification that the project is unacceptable a few pieces of data were needed to determine accurate costs. The three most important pieces of information are: the analysis period or useful life, the discount rate or Minimum Acceptable Rate of Return (MARR), and the methods used for converting indirect costs and benefits to dollars. The useful life for this project was determined by life expectancy of the product. So in most cases the panel manufactures provide a 25-year warranty on the product so that will be the theoretical limit. The MARR was determined using the Federal Energy Managements Program, FEMP, guidelines and outcome and the Power Purchase Agreements, PPA, rates averaged to the nearest whole number. In this case the FEMP states that real discount rate is 7% while the PPA states that is 5.94% so when averaged out you get 6.4% which is rounded up to 7%. The cost, benefits, and disbenefits were determined from internet research and calculating kilowatt hours based off personal bills. These cost vary by state so an average cost is was used. The Capital Investment for just the solar system was $12,000, the installation of that system is $3,000, and if required the electrical system update from 100 amps to 200 amps costs $2,250 (it is for this situation). The solar system needed to have proper maintenance and cleaning once a year at a cost of $600 per visit. Since the average amount of kilowatt hours generated in CT is 519 and the house uses on average 700 there would still be a required 181 needed. Using the electrical bill and the services costs from the electric company it was determined that $50.21 would still need to be paid. The benefits should be universal and should effect anyone who purchases a solar system. The benefits include the savings on the electrical bill because the house is generating its own power. The original cost of power excluding service charges was $49 a month which would now drop down to $12.67 which produce an annual saving of 435.96 a year. It is shown in the state of California that adding solar panels to you house will greatly increase the resale value of your home. However this project is not happening in California but the data will be used as the bases, so a 5kW solar system will increase the property value by $29,555. Other benefits such as tax rebates and Federal/State discounts on the capital investment occur. In his case the tax rebate for installing a solar system is 15% which amounts to $1,800 and the Federal/State discounts are 30% which equals $3,600. Solar systems can have both a positive and negative impact on the environment. The positive benefit it has in respects to the environment is that the powers that being produce currently, 9400MkW, is equivalent to planting 236,000,000 trees. So if you extrapolate how many trees you plant, while saving 519kW of power, you get 13030 trees. If it cost $138 per tree and the usage is only 0.0074% of the whole, you wind up providing $133.91 yearly. The disbenefits, negative, effects on the environment include the possible need to cut trees to make sure the system is receiving enough light and the wastes that happens when the property is renovated to accommodate the system. The disbenefits cost involved with removing trees include labor cost, permits, environment damage, and fuel which are included in the $1,600 per tree, this case involves the removal of one tree. This information comes from a bill that was received a few months ago after a tree needed to be removed on the property. The waste needs to be transported to a landfill which in itself is causes an environmental impact, 1 dumpsters would be required in this case. This includes transportation, labor, and environment issues in the cost of $600 and was determine from a bill of a 30yrd dumpster. Using all this information regarding the analysis period, discount rate, and costs/ benefits/ disbenefits monetized along with the Conventional Cost-Benefit Analysis equation of: ??(?) - ??(??) ?? + ??(?&?) to get a rate of 0.44. Since this is less than 1 it justifies saying the project is unacceptable. Double checking the outcome using the Modified Cost-Benefit Analysis equation of: ??(?) ?? + ??(?&?) + ??(??) produces a rate of 0.48 which leads to the fact that the project should not be undertaken. References 2017 Discount Rates - 2017discountrates.pdf. (n.d.). Retrieved from 2017 Solar Panel Incentives, Rebates & Tax Breaks | EnergySage. (n.d.). Retrieved August 19, 2017, from ARTEMIA. (2013, September 27). The Cost-Benefit Analysis of Switching to Solar Power. Retrieved August 20, 2017, from Ask Angie: What Does it Cost to Upgrade to 200 Amps? (2015, July 31). Retrieved August 20, 2017, from Caldwell, A. (n.d.). How Much Does Planting a Tree Cost? Retrieved August 20, 2017, from Connecticut solar panels | guide to solar incentives, costs and savings in CT !! (n.d.). Retrieved August 20, 2017, from Discount Rate Update_03-31-2017 - Discount-Rate-Update_03-31-2017(clients).pdf. (n.d.). Retrieved from Environmental Impact. (2016, February 10). Retrieved August 19, 2017, from Hidden cost of rooftop solar: Who should pay for maintenance? (2013, August 26). Retrieved August 19, 2017, from should-pay-for-maintenance-99200/ How Installing Solar Panels Can Boost Property Value. (n.d.). Retrieved August 20, 2017, from Labor Costs of Installing Solar Panels. (n.d.). Retrieved August 19, 2017, from Matasci, S. (2016, June 3). How Much Does a 5kW Solar System Cost in 2017? | EnergySage. Retrieved August 19, 2017, from Performance-Based Incentives. (n.d.). Retrieved August 20, 2017, from Prevost, L. (2015, February 20). Solar Panels and Home Values. The New York Times. Retrieved from Solaray. (2017, August 14). 10 Key Benefits of a 5kW Solar System From Solaray. Retrieved August 20, 2017, from Staff, S. C. (n.d.). Solar Power in NSW - Benefits and options - Solar Choice. Retrieved August 19, 2017, from The benefit of a 5kW Solar System. (n.d.). Retrieved August 19, 2017, from Namdari, A. (2017) Engineering Cost Analysis [PowerPoint slides Ch. 1,2 – Ch. 10]. Retrieved from Western New England University Kodiak, August 20th, 2017 ... Purchase answer to see full attachment

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