This assignment requires an energy analysis and a financial analysis on a grid-connected solar PV plant. You are required to do the analysis using the RETScreen energy analysis software. Solutions to the problems will be assessed on: (1) methodology (2) assumptions (3) clarity of solution presented (4) correct answers (5) use of software. There is no specified word length for this report.
You have been asked to investigate and report on the annual electricity production, cost of electricity and financial viability of a proposed grid connected solar PV power plant. The plant is to have a capacity of 5 MW and will be located near the town of Richmond in Western Queensland, Australia. The nearest weather station is at Richmond and the weather data from that station is applicable to conditions at the proposed site for the solar PV plant.
The site, located near Richmond, Queensland, Australia has an unrestricted solar exposure. All modules can be oriented due north and the land area is sufficient to allow the modules to be positioned so that there are no shading issues to consider. The modules will be installed at a fixed tilt and the array tilt has to be selected to maximise the annual energy generation by the power plant.
High quality mono-crystalline silicon modules have been selected for the project and they feed their output into the grid via inverters and a transformer. The modules are to be supplied by Sunpower. The model number is mono-Si-SPR-230-WHT with an efficiency of 18.5 % (as given in the RETScreen product database). The modules will be connected into strings such that the number of modules per string will comply with the voltage input range of the inverters. Further details on the solar PV modules can be obtained from the manufacturer’s website and from the RETScreen product database.
250 kW capacity inverters will be used and these inverters can accommodate multi-input strings. MPP trackers will be used on all inverters. An inverter efficiency (including the transformer losses) of 92 % can be assumed over a wide operating range.
The cost of the solar PV modules (mono-Si-SPR-230-WHT) is $360 per module for orders of more than 1,000 modules.
Cost of module installation: $6.50 per module.
Cost of mounting rack: $7.00 per module.
Cost of DC wiring: $25.00 per module.
Civil infrastructure for the access road and service roads has been estimated to be $250,000.
The inverter costs (supply and installation) are $630 per kW of inverter capacity.
The transformer cost is $700,000.
Five kilometres of transmission line is required at $30,000 per km.
Other costs, including transportation of the equipment from Brisbane to Richmond, will need to be estimated.
The construction time is 8 months.
The project life is 25 years.
Assume the PV modules will last 25 years (project life) and the inverters will be replaced every 10 years.
Take the inflation rate as 2.8 % and use a discount rate of 9.5 % for your NPV calculations. The project will be financed with 50 % debt paid off over fifteen years and the interest rate on debt is 7.5%.
There is government incentive of $250,000 for the project. The company has been able to negotiate an initial electricity feed-in price of $140 per MWh for the energy supplied to the grid. This price will be increased by 2.5 % per year over the 25 years of the project’s life.
For the tax analysis, assume a tax rate of 30%. Straight line depreciation is applied to the capital equipment over the 25 years of the project’s life.
Prepare a RETScreen study report of the proposed grid-connected power supply system. Complete Steps 1 to 4 of the RETScreen analysis. You are not required to do the risk analysis step.
In your analysis:
Summarise the RETScreen analysis to clearly present:
Include the printouts from RETScreen as part of your report – one printout of each of the relevant worksheets should be included.
The project taken for the analysis is located in the Richmond, Australia. The Town or the area is located near the banks of the river. The project location is having a dry climate and the location has a sunny weather too in the period April till September. There are other time period like the month of October when the location receives a very dry and sunny climate. The coordinate for the project is around 20.7 N latitude and the longitude of the location is 143.1E. The sunny weather and the favourable dry and sunny weather location are some of the favourable location of the project. The use of RETScreen and software which is used for forecasting and getting the viability for the efficiency in the energy and generation for the same analysis was done. The RET screen software is a more than a technology analysis platform which just forecasts the energy producing level but also takes into account certain investment cash flows arising from the same after net of taxes. The financial viability and the output is generated from the same is via the output of financial tools such as Net Present Value, Internal Rate of Return and the Payback Period (Cardona, Chica, and Barragán, 2018).
The main important feature of the project is the type of machinery or the technology used. The location of the project is such which should provide the project which considers many important aspects of the weather. The equipment’s should be set at fixed tilt where the array of the panel should be adjusted accordingly to maximize the annual solar power from the same (Colclough and Griffiths 2016).
Figure1: Annual Amount of Electricity Generated
The use of the better and best silicon modules were selected which is the mono-crystalline silicon module whose technological feature is 230-WHT the same will be used for our project. The power capacity that will be needed for the project plant of 5MW plant and power capacity of around 21740 units will be absorbed to support the same. The nominal operating battery cell temperature is around 45 degree Celsius. The improvement in the efficiency that will be generated from the same will be around 18.5%. The cost for the solar PV module is around $360 per module for order that will be more than (Moya, Paredes and Kaparaju 2018)
Figure 2: Capacity Factor of Plant
The inverter which will be installed in the project will generate an efficiency of around 92% and the capacity that will be generated from the same is around 250 kW are some of the forecasted analysis for the inverters installed.
Figure 3: Inverters Capacity
The cost analysis for the same on the three major parts which is the primary or initial expenses, the annual expenditure and the quarterly or the periodic expenses.
The evaluation for the power system module was based on the fact that the model will include all the estimated costs and the same with all the respective load that will be required for the power equipment and for the transmission lines used. The cost for the photovoltaic equipment and the installation of the same. The cost for the photovoltaic equipment and the charges or the amount of instalment are taken from the base product in the RETScreen (Pan et al. 2017). The capacity for the same will be around 230 watts and the cost incurred for the same will be around $399.50. The total amount of expenditure that will be incurred on the photovoltaic system for the installed 5Megawatt project will be around 8.67 million dollars (Stackhouse 2015). The total amount of expenditure that will be incurred for the power system which will include the photovoltaic equipment, the construction of the roads and use of the transmission lines and components and equipment’s such as the transformers, SCADA and the technology for the monitoring of the overall operations in the plant) as evaluated the investment in the invertor will be around 12.29 million dollars. The model has incorporated all of the above costs and the expenses that will be incurred on the same.
Figure 4: The installed cost of the plant expressed as $ per kWp of installed capacity
The transportation cost and other expenses for the transportation was also included in the project evaluation as the equipment’s needs to be carried from the manufacturing area or the origin to the ultimate use of the asset that is the site of the project. Brisbane will be the place for manufacturing area and Richmond is the final destination and the all over distance between the two places is around 1584km away. Heavy rigid trucks would be hired for the same and the same will cost around $780 plus additional charges up to $70, which will get completed in an total of around 10 days. This will cost the project at $8500.
The breakdown of the components of the sources used for the generation of the electricity has a mix of around 59% will be from Coal, 36% will be from natural gasses and 1 % will be from the biomass production. The efficiency that will be derived from the same will that be off as 80.16% from the coal and natural gasses equally while 100% from hydro fuel and 23.3% from the biomass. Thus the electricity generation efficiency is more from the Hydro fuel. There are certain abnormal costs which may arise while the transformation of the energy from the origin site and the end user. The total transformation and distribution losses were broken down and evaluated to be around 7.3%. The use of traditional coal based system for the generation of electricity had a greenhouse gas emission of around 4988.9 tone of CO2 and the respective factor of emission was around 0.698Tco2/Mwh (Dwivedy et al. 2015). The use of the solar energy to taken as an alternative way of generation of the electricity will reduce both the emission of greenhouse gases and the factor for the same. The model calculated us with the new emission of greenhouse gasses and the use of solar energy actually resulted in a complete reduction of the previous emissions of the greenhouse gasses (Tian et al. 2016).
Figure 5: The avoided GHG emissions compared with the same electricity production from the current electricity supply system
The financial analysis for the project was considered given the fact that the installed project will have an overall life of about 25 years of life and that the inverters used will be replaced every year. The escalation in the proposed a base is assumed to be around 3% and the inflation taken down is 2.8 while the discounting rate and factor was based on 9.5%. The financial analysis and whether the project will create the wealth for the shareholders of the company will be judged with the help of this ratio through the use of the NPV and IRR tools. The incentive from the government was around $250,000 which was the incentive and the primary contribution in the initial year (Vittorini and Cipollone 2016). The debt exposure for the project will be around 50% i.e., the project will be financed with 50%debt to equity ratio and the tenure for the same will be around 15 years of time and the same will be evaluated and carried down at an annual rate of around 7.5%. The annual debt analysis and the effect on the company financials with the exposure if the debt and the tax savings for the company with the debt financing was evaluated using the model. The tax rate taken for the same was around 30% and the interest payment will be around 0.97million annually. The depreciation method taken is the straight line basis for the evaluation of the assets.
Figure 6: Annual Cash Flow
The annual income taken down is comprised of the earnings from the exported units of electricity and rise in income via reduction in the Greenhouse Gasses. The evaluation done helped us evaluate and determine the amount and the rate of the electricity and the exported energy is taken down from the energy model. The annual net reduction in the greenhouse gasses will also result in the creation of the extra additional income. The project will help in the increased capacity of electricity generation and the export for the same at a average rate of around 2.5% will be the rising rate of electricity. The annual reduction in the greenhouse gasses or the CO2 gasses which will be evaluated by the model. The reduction in the credit rate will be assumed at a 30$/tCO2 which will be taken at the initial year before the start of the operations The Reduction in the Greenhouse gasses will be taken as an assumption of around reduction of 304/per tonne of CO2 gas in the initial year before the start of operations. The use of solar energy as the way for generation of electricity will make sure that there is a use of a clean and a safe way of producing energy. The credit duration and that of project is same. The total amount of savings on an annual basis will be around 19.20 MN. While the export income will be around 10 million.
The payback period calculated was around 25 years of time as shown the financial analysis conducted helped us evaluate the payback period and it helped us determine in what amount the project investment will be paid off in the due course of time.
Figure 7: Financial Analysis and Viability of the Project
The project evaluation done and the financial analysis done helped us evaluate the viability of the project. The site analysis along with the benefits of the Richmond dry and sunny weather are some of the key benefits and the major push for the use and creation of an alternate sources of energy which has ultimately led in the reduction of the greenhouse gasses. The cost analysis done had taken into account key factors like the use of the photovoltaic equipment’s, the construction of he road and the transportation cost and inverters were some of the key costs involved in the analysis The financial analysis was also performed which took key factor into analysis like the debt to equity ratio and the benefits of debt and the tax savings from the same.
Cardona, A.J.A., Chica, C.A.P. and Barragán, D.H.O., 2018. Study and Analysis of BIPVS with RETScreen. In Building-Integrated Photovoltaic Systems (BIPVS) (pp. 129-137). Springer, Cham.
Colclough, S. and Griffiths, P., 2016. Financial analysis of an installed small scale seasonal thermal energy store. Renewable energy, 86, pp.422-428.
Dwivedy, D., Singh, S.K., Choudhury, M.K. and Pradhan, S.R., 2015. Study of Cost Analysis and Emission Analysis for Grid Connected PV Systems using RETSCREEN 4 Simulation Software. International Journal of Engineering Research and, 4(04).
Moya, D., Paredes, J. and Kaparaju, P., 2018. Technical, financial, economic and environmental pre-feasibility study of geothermal power plants by RETScreen–Ecuador's case study. Renewable and Sustainable Energy Reviews, 92, pp.628-637.
Pan, Y., Liu, L., Zhu, T., Zhang, T. and Zhang, J., 2017. Feasibility analysis on distributed energy system of Chongming County based on RETScreen software. Energy, 130, pp.298-306.
Stackhouse, P.W., 2015. NASA surface meteorology and solar energy: RETScreen Data (Latitude 27.29/Longitude 52.37). Atmospheric Science Data Center NASA.[cited 2015 June 10]. https://eosweb. larc. nasa. gov/cgi-bin/sse/retscreen. cgi.
Tian, H., Lu, C., Ciais, P., Michalak, A.M., Canadell, J.G., Saikawa, E., Huntzinger, D.N., Gurney, K.R., Sitch, S., Zhang, B. and Yang, J., 2016. The terrestrial biosphere as a net source of greenhouse gases to the atmosphere. Nature, 531(7593), p.225.
Vittorini, D. and Cipollone, R., 2016. Financial analysis of energy saving via compressor replacement in industry. Energy, 113, pp.809-820.
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