MS student Mark Hagge with advisor P. T. Krein
A discounted cash-flow model of solar panel installations was built in Excel to provide a direct, readily understood, and open-cost analysis of photovoltaic (PV) systems. It can be used to approximate the economic merit of a particular technological improvement over a wide range of model assumptions. Sensitivity analysis was performed based on distributions used for Monte Carlo analysis to determine the strongest factors affecting the system break-even installation price. Results are shown in Figure 16.
Further study was performed on two systems: one with differential power processing (DPP) and one without. DPP was modeled as a 5% increase in energy exported to the grid and a 25% decrease in annual maintenance costs. The extra production from DPP is conservative and consistent with experimental tests conducted at the University of Illinois Urbana-Champaign. Reduction in maintenance is expected because DPP’s distributed nature easily enables real-time panel-level system monitoring. The model shows that in an absolute worst-case scenario, DPP technology is worth an additional $24.12 per 250 W panel installed. In the expected case, this technology is worth $44.65. In a best-case scenario DPP adds $121.28 of value per 250 W panel
at installation. Additionally, it was shown that highly reliable systems and/or system warranties are critical in order to financially justify system installation.
This research was supported by Advanced Research Projects-Energy (ARPA-E), U.S. Department of Energy, under Award Number DE-AR0000217.
A Solar Calculator is shown with a table of expected outputs giving break-even prices for best-case, worst-case and expected-case scenarios for various model parameters and display assumptions.