INTRODUCTION You've been asked to prepare a model to forecast the performance of a Solar PV (photo-voltaic) business. The business buys rooftop solar panels from overseas and installs them on the rooftops of people's houses in Australia. The business then sells the electricity generated at an agreed price schedule to either the owner of the house or the main electrical grid. You will need to calculate forecasts of: kW of installed capacity Generation of electricity (in kWh) iii) Purchasing and installation costs Revenues from generation. iv) Note on Energy Industry Terminology: "W" stands for kilowatt and is a measure of electrical power. "kWh" stands for kilowatt-hour, and is a measure of energy, equal to the work done by a power of 1 kW for one hour. For example, a small electric heater might operate at a power of 2,000 watts or 2kW. In three hours of operation, it would consume 2kW x 3 hours = 6kWh of electricity (energy). As the business is based in Australia, the costs and revenue forecasts need to be prepared in Australian Dollars (AUD). You are to prepare a monthly forecast model that includes the dates from 1 July 2013 to 30 June 2023. To assist you in your task, the assumptions page has already been set out for you in the included workbook, but with the operational assumptions missing. You will need to fill in the assumptions, and then model the necessary calculations. OPERATIONAL DETAILS Purchasing and installation costs The solar panels are purchased in US Dollars (USD) either as small or large systems. The small systems cost US$5,000 and have a rated capacity of 3kW. The large systems cost US$8,000 and have a rated capacity of 5kW. In addition to the purchase cost, each system also costs 500 Australian Dollars (AU$500) to install on a rooftop. Assume that costs do not escalate with time. Performance of panels When they are new, the panels are forecast to generate 4 kWh of electricity per day per kW of rated capacity. So for example, a new 3kW system would, in the month of May, generate 4kWh/kW/day * 3kW * 31 days = 372 kWh of electricity in the month of May. The panels degrade over time. When they are brand new (that is, in the month of installation) they operate at 100% efficiency. They then decline in efficiency on a diminishing value basis by a constant percentage amount every month, so that on any given day, the efficiency in 12 months' time of a panel will be exactly 99% of its current efficiency. Assume that the degradation of each panel occurs monthly, instantaneously on the first day of each month, beginning in the month after installation of that panel. You will need to determine the appropriate monthly degradation rate. Revenues Some of the electricity generated by the panels will be purchased by the house at a price equal to Tariff A. The remainder of the electricity generated will be sold to the main electrical grid at a price equal to Tariff B. Houses with a small system will purchase 10 kWh of electricity per day from the company at a price equal to Tariff A. Houses with a large system will purchase 15 kWh of electricity per day from the company at a price equal to Tariff A. Prices Tariff A: Initial price is AUD $0.2500 per kWh. Each 1 July, beginning on 1 July 2014, the price of Tariff A will escalate by 2% Tariff B: Initial price is AUD $0.08 per kWh. This tariff does not escalate. Installation Details The installation period lasts from July 2013 to June 2015. The number of small and large systems installed each month has been provided for you in the included workbook. Assume that all systems are installed on the first day of the month and begin generation instantly. Assume that the purchasing and installation costs are incurred in the month of installation. Installation Assumptions and Exchange Rate Assumptions Month Number of Small Number of systems Large systems installed installed 1.00 AUD:USD. 1.00 USD: AUD. 1 AUD is equal 1 USD is equal to: to: July 2013 August 2013 September 2013 October 2013 November 2013 December 2013 January 2014 February 2014 March 2014 April 2014 May 2014 June 2014 July 2014 August 2014 September 2014 October 2014 November 2014 December 2014 January 2015 February 2015 March 2015 April 2015 May 2015 June 2015 0.902 USD 0.860 USD 0.831 USD 0.848 USD 0.887 USD 0.866 USD 0.891 USD 0.849 USD 0.847 USD 0.817 USD 0.849 USD 0.906 USD 0.894 USD 0.927 USD 0.989 USD 0.946 USD 1.001 USD 1.050 USD 1.035 USD 1.017 USD 0.986 USD 1.042 USD 1.055 USD 1.052 USD 11.109 AUD 1.163 AUD 1.203 AUD 1.179 AUD 1.127 AUD 1.155 AUD 1.122 AUD 1.178 AUD 1.181 AUD 1.224 AUD 1.178 AUD 1.104 AUD 1.119 AUD 1.079 AUD 1.011 AUD 1.057 AUD 0.999 AUD 0.952 AUD 0.966 AUD 0.983 AUD 1.014 AUD 0.960 AUD 0.948 AUD 0.951 AUD QUESTION 3 What is the total electricity generated (post degradation) by all of the systems in the calendar year 2016? a. 16,154,168 kWh b. 16,155,565 kWh C. 16,153,231 kWh d. 16,156,943 kWh INTRODUCTION You've been asked to prepare a model to forecast the performance of a Solar PV (photo-voltaic) business. The business buys rooftop solar panels from overseas and installs them on the rooftops of people's houses in Australia. The business then sells the electricity generated at an agreed price schedule to either the owner of the house or the main electrical grid. You will need to calculate forecasts of: kW of installed capacity Generation of electricity (in kWh) iii) Purchasing and installation costs Revenues from generation. iv) Note on Energy Industry Terminology: "W" stands for kilowatt and is a measure of electrical power. "kWh" stands for kilowatt-hour, and is a measure of energy, equal to the work done by a power of 1 kW for one hour. For example, a small electric heater might operate at a power of 2,000 watts or 2kW. In three hours of operation, it would consume 2kW x 3 hours = 6kWh of electricity (energy). As the business is based in Australia, the costs and revenue forecasts need to be prepared in Australian Dollars (AUD). You are to prepare a monthly forecast model that includes the dates from 1 July 2013 to 30 June 2023. To assist you in your task, the assumptions page has already been set out for you in the included workbook, but with the operational assumptions missing. You will need to fill in the assumptions, and then model the necessary calculations. OPERATIONAL DETAILS Purchasing and installation costs The solar panels are purchased in US Dollars (USD) either as small or large systems. The small systems cost US$5,000 and have a rated capacity of 3kW. The large systems cost US$8,000 and have a rated capacity of 5kW. In addition to the purchase cost, each system also costs 500 Australian Dollars (AU$500) to install on a rooftop. Assume that costs do not escalate with time. Performance of panels When they are new, the panels are forecast to generate 4 kWh of electricity per day per kW of rated capacity. So for example, a new 3kW system would, in the month of May, generate 4kWh/kW/day * 3kW * 31 days = 372 kWh of electricity in the month of May. The panels degrade over time. When they are brand new (that is, in the month of installation) they operate at 100% efficiency. They then decline in efficiency on a diminishing value basis by a constant percentage amount every month, so that on any given day, the efficiency in 12 months' time of a panel will be exactly 99% of its current efficiency. Assume that the degradation of each panel occurs monthly, instantaneously on the first day of each month, beginning in the month after installation of that panel. You will need to determine the appropriate monthly degradation rate. Revenues Some of the electricity generated by the panels will be purchased by the house at a price equal to Tariff A. The remainder of the electricity generated will be sold to the main electrical grid at a price equal to Tariff B. Houses with a small system will purchase 10 kWh of electricity per day from the company at a price equal to Tariff A. Houses with a large system will purchase 15 kWh of electricity per day from the company at a price equal to Tariff A. Prices Tariff A: Initial price is AUD $0.2500 per kWh. Each 1 July, beginning on 1 July 2014, the price of Tariff A will escalate by 2% Tariff B: Initial price is AUD $0.08 per kWh. This tariff does not escalate. Installation Details The installation period lasts from July 2013 to June 2015. The number of small and large systems installed each month has been provided for you in the included workbook. Assume that all systems are installed on the first day of the month and begin generation instantly. Assume that the purchasing and installation costs are incurred in the month of installation. Installation Assumptions and Exchange Rate Assumptions Month Number of Small Number of systems Large systems installed installed 1.00 AUD:USD. 1.00 USD: AUD. 1 AUD is equal 1 USD is equal to: to: July 2013 August 2013 September 2013 October 2013 November 2013 December 2013 January 2014 February 2014 March 2014 April 2014 May 2014 June 2014 July 2014 August 2014 September 2014 October 2014 November 2014 December 2014 January 2015 February 2015 March 2015 April 2015 May 2015 June 2015 0.902 USD 0.860 USD 0.831 USD 0.848 USD 0.887 USD 0.866 USD 0.891 USD 0.849 USD 0.847 USD 0.817 USD 0.849 USD 0.906 USD 0.894 USD 0.927 USD 0.989 USD 0.946 USD 1.001 USD 1.050 USD 1.035 USD 1.017 USD 0.986 USD 1.042 USD 1.055 USD 1.052 USD 11.109 AUD 1.163 AUD 1.203 AUD 1.179 AUD 1.127 AUD 1.155 AUD 1.122 AUD 1.178 AUD 1.181 AUD 1.224 AUD 1.178 AUD 1.104 AUD 1.119 AUD 1.079 AUD 1.011 AUD 1.057 AUD 0.999 AUD 0.952 AUD 0.966 AUD 0.983 AUD 1.014 AUD 0.960 AUD 0.948 AUD 0.951 AUD QUESTION 3 What is the total electricity generated (post degradation) by all of the systems in the calendar year 2016? a. 16,154,168 kWh b. 16,155,565 kWh C. 16,153,231 kWh d. 16,156,943 kWh
