Question
A solar power company invests in a 1 MWp PV system at a sunny location, where the system output is expected to be 6 MWhe/day
A solar power company invests in a 1 MWp PV system at a sunny location, where the system output is expected to be 6 MWhe/day on the average for the whole year. The company will minimize the system degradation to less than 0.15%/year by aggressive maintenance and repairs. The company expects that the system will be down for 7 days/year for maintenance or repair. The total initial costs of the system are expected to be $2.5 Million, and the average annual maintenance/repair costs are expected to be 3% of the initial costs. The company plans to invest 30% equity and finance 70% of the capital costs as debt at 6%/year. The company expects to get feed-in tariff of $0.22/kWhe for 20 years. i. What is the Levelized Cost of Energy for this system [7] ii. What is the Internal Rate of Return for the system [4] b) The equipment in a power station costs $1,560,000 and has a salvage value of $60,000 at the end of 25 years. Determine the depreciated value of the equipment at the end of 20 years on the following methods : i. Straight line method [4] ii. Diminishing value method ; [4] iii. Sinking fund method at 5% compound interest annually
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