Question
Your municipality charges households 180c per kWh. You consider installing a photovoltaic system that will save your household 11 000 kWh of electrical energy per
Your municipality charges households 180c per kWh. You consider installing a photovoltaic system that will save your household 11 000 kWh of electrical energy per year. Some of the energy must be stored for use between sunset and sunrise. The initial investment to buy the components of such a system that consists of batteries, an inverter, charge regulator and photo voltaic modules and to install it is R160 000. The whole system except the batteries will last 24 years. The batteries will have to be replaced every 6 years at a cost of R60 000. Do a net present value (NPV) calculation and determine whether such a project (to install the photovoltaic system) is economically viable or not. Use a discount rate of 4% per year. Ignore inflation. Hints: Calculate electricity savings per year. Calculate present value savings (An annuity formula can be used because of equal, periodical amounts). Calculate present value of investment required NPV of the project Evaluate the impact on the NPV and decide on the viability of the project You can use the calculator or excel spreadshee
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