Lab: ROI-TCO and renewable energy

Lab: ROI-TCO and renewable energy

Return on investment (ROI) is the time it will take for any investment to break even, or recover the initial investment.

Total cost of ownership (TCO) is the total amount of money spent or earned by an investment

Both of these are really useful for you to be able to plan and evaluate your renewable energy project

Example: if you purchase an electric vehicle that saves you $400 every month in fuel, but costs you $40,000, you could divide the 40,000 by 400 to get 100 months, or about 8.3 years to "pay off" the car.

Note: the error in this problem is that the electric vehicle still has value, so you could still sell it later on.

Total cost of ownership (TCO) is the total amount of money you put into the investment before it breaks or you lose the income from the investment. In the car example, if the car was stolen with no insurance after 100 months, your TCO would be zero, since you just broke even on the car.

If it was stolen before you paid it off, your TCO would be positive (you had to pay more than you got back).

If it lasted 200 months (longer than break even), your TCO would be negative (you made money on the investment).

One error with the car is it assumes no maintenance, and the fuel costs ($400/month) were the same. It also does not include the electric power you could get free from solar panels to charge the car (like at GPAC).

Solar radiation notes:

1. go to http://10.14.8.1
2. click on Elab solar, play with the days and times.
3. find the max power from the solar PV array behind the elab
4. note the shape of the curves for PV production, why is this shaped this way?
5. We use “solar hours” as an expression of how many hours at full power a system could produce if it were a box, not a curve:

• In this example we would have about 6 solar hours at 100 kW or 600 kWh of energy. (100 kW x 6 hours)
• You can see we are taking morning and afternoon power and pasting it into the white bits later on.

PV example:

Your PV panels cost $0.50/Watt, you have 6 solar hours per day where you live.

You want to use 300 Watt solar panels to power your home, which uses 24 kWh of electrical energy every day.

1. How much did you spend on electricity every day before you put in the panels, at $0.40/kWh?
2. How many panels will you need to cover your energy use? (round up, you can't have part of a panel)
3. How much will this cost you?
4. What is the ROI for your system? (days, months, years)
5. If the system lasts 25 years, what is the TCO?
6. Is this a good investment?

Solar Thermal example:

Your hot water heater uses 4.5 kW for 2 hours each day.

1. How much does this cost you per day for electricity? (use the same cost as above)
2. If your solar insolation is 1000 W/m2, for 6 solar hours per day, how many kWh are available to you for every square meter of area?
3. If your solar thermal panel is 1m wide and 2m long, assuming 100% efficiency, how much energy would this panel capture?
4. How much would this panel save you at $0.40/kWh each day?
5. If the system cost you $1500, what is your ROI? (days, months, years)
6. If it lasts for 35 years, what is your TCO?
7. If half of the energy is lost as heat due to poor water tank insulation, how much is this costing you each day?
8. If insulating the hot water heater costs $100, what is the ROI for this?
9. If it lasts for 20 years, what is the TCO for the insulation?
10. What is the difference between storing energy from a PV panel and a hot water tank?
11. Why is radiation, conduction and convection (from your lab) important in this case?

Note: 50% is an exaggeration, but a new insulated tank could make this sort of difference. Look at the heat photos of the water heaters in the cottages, and make a proposal for what you would change.