Tesla has recently announced a new version of solar shingles. These shingles are becoming increasingly competitive due to larger size (and therefore less labor for installation) and continuously increasing efficiency. You need to replace a 3,000 square foot roof in Grand Rapids, MI and are considering the solar shingle approach. To fully maximize the solar shingle roof you also desire installation of two Tesla powerwalls, which will store energy generated by your solar shingles to provide "off grid" power. The cost breakdown of Tesla's solar shingle estimate (including tax rebates/incentives) is below: -Solar shingles with installation: $91,000 -Powerwalls with installation: $17,000 The new system will generate on average 40kWh per day and your home consumes 30kWh per day. Net metering is in place requiring the utility to buy back any excess power that you generate. The average rate per kWh purchased in Michigan is $.137 and the net metering rebate is assumed to be the same at this time. Energy rate is estimated to increase at a rate of 3.5% annually. You plan to pay for your new roof with a home equity loan you can get at a rate of 4% (use this as your hurdle rate). Should you choose to go forward with a traditional roof, this would cost you approximately $22,500 including materials and installation. 1.) Based on the information above, how long will it take you to pay off your investment based on the provided costs and energy savings? 2.) What is the impact on your payback timing if the State of Michigan removes net metering from the equation, meaning that the utility will not be compelled to buy back your excess power generated? 3.) If this roof is estimated to last 30 years, without including net metering what is the present value of the investment? 4.) If you chose to purchase the standard roof and put the balance of your money into US Treasury Bills yielding 1.96% annual growth what is the difference in present value compared to the solar roof option? 5.) Based on your answers to #3 and #4, would you proceed with the solar roof looking exclusively at financials provided above? 6.) As an alternative, you can also choose a metal roof. The metal roof will last for 60 years and will cost $37,500. Using the repeatability assumption please compare this roof to the traditional roof; which one is the better investment? 7.) Perform a sensitivity analysis utilizing any two variables (Tesla cost, traditional roof cost, electricity rate change, net metering rebate percentage, Tesla has recently announced a new version of solar shingles. These shingles are becoming increasingly competitive due to larger size (and therefore less labor for installation) and continuously increasing efficiency. You need to replace a 3,000 square foot roof in Grand Rapids, MI and are considering the solar shingle approach. To fully maximize the solar shingle roof you also desire installation of two Tesla powerwalls, which will store energy generated by your solar shingles to provide "off grid" power. The cost breakdown of Tesla's solar shingle estimate (including tax rebates/incentives) is below: -Solar shingles with installation: $91,000 -Powerwalls with installation: $17,000 The new system will generate on average 40kWh per day and your home consumes 30kWh per day. Net metering is in place requiring the utility to buy back any excess power that you generate. The average rate per kWh purchased in Michigan is $.137 and the net metering rebate is assumed to be the same at this time. Energy rate is estimated to increase at a rate of 3.5% annually. You plan to pay for your new roof with a home equity loan you can get at a rate of 4% (use this as your hurdle rate). Should you choose to go forward with a traditional roof, this would cost you approximately $22,500 including materials and installation. 1.) Based on the information above, how long will it take you to pay off your investment based on the provided costs and energy savings? 2.) What is the impact on your payback timing if the State of Michigan removes net metering from the equation, meaning that the utility will not be compelled to buy back your excess power generated? 3.) If this roof is estimated to last 30 years, without including net metering what is the present value of the investment? 4.) If you chose to purchase the standard roof and put the balance of your money into US Treasury Bills yielding 1.96% annual growth what is the difference in present value compared to the solar roof option? 5.) Based on your answers to #3 and #4, would you proceed with the solar roof looking exclusively at financials provided above? 6.) As an alternative, you can also choose a metal roof. The metal roof will last for 60 years and will cost $37,500. Using the repeatability assumption please compare this roof to the traditional roof; which one is the better investment? 7.) Perform a sensitivity analysis utilizing any two variables (Tesla cost, traditional roof cost, electricity rate change, net metering rebate percentage
