A small city is improving a municipal building and would like to include installation of a 200 kW photovoltaic array (net AC output) and a Battery that can store 40,000 kWh energy, with an initial cost of $600,000. The facility will produce 250,000 kWh of usable energy each year, which will save the city $20,000 annually by reducing the amount of electricity purchased from the local utility. The city is also planning to install several energy efficiency upgrades at City Hall. The efficiency upgrades will cost $2,000,000 up front (capital or investment cost) and will save $300,000 annually.

(1) Determine the simple payback, in years, for the solar PV project. (10 points)

(2) What is the Capacity Factor, CF, of the photovoltaic system, in percent? (10 points)

(3) Determine the net annual savings of both the solar PV and energy efficiency upgrades combined. Account for the annual cost of financing the combined capital cost by issuing a bond at 3% per year. Neglect repayment of the capital (principal or loan value) cost. (10 points)

(4) Determine the annualized combined capital investment for both the solar PV and the efficiency upgrades assuming financing bond has a term of 20 years (i.e. N=20). The bond has an interest rate of 3% per year. (20 points)