Submitted by: Eric Romich, OSU Extension Field Specialist, Energy Education
Evaluating the financial investment in solar requires careful consideration of system costs, the value of production, and operation and maintenance costs. Unfortunately, some proposals are hard to understand making it difficult to make fully informed investment decisions. To help simplify the key considerations of evaluating a PV solar project, the University of Wyoming and Ohio State University partnered to develop a bulletin series that clarifies the information and assumptions that are essential to the assessment process. The bulletins listed below, are structured as a six-part series arranged to systematically progress the reader through the project evaluation process.
Part 1: Estimating System Production – Site-specific factors such as shading, orientation, tilt, temperature, and panel degradation can influence the amount of electricity produced by a PV solar system.
Part 2: Assessing System Cost – A better understanding of direct system costs, indirect capital costs, operations and maintenance, and standard assumptions provides a more accurate financial analysis, fostering informed investment decisions.
Part 3: Forecasting the Value of Electricity – To calculate energy savings for a project, one must consider important variables, including the details of the individual rate structure and the assumed energy escalation rate that influence the value of electricity a PV system produces.
Part 4: Understanding Incentives – Despite declining costs for PV solar, there are various federal, state, and local incentives which greatly affect the financial viability of a PV installation.
Part 5: Conducting a Financial Analysis – Understanding the solar resource production, system cost, value of electricity, and available incentives enables a robust financial analysis. Accurately evaluating the viability of a solar project requires understanding financial concepts such as simple payback, net present value, and the levelized cost of energy.
Part 6: PV Solar Example – The National Renewable Energy Laboratory developed the System Advisory Model (SAM) to help developers, installers, and potential system owners estimate the system production and financial impacts of renewable energy projects.
These materials are designed to increase participants’ knowledge of PV solar energy development and the financial considerations to guide informed decision-making with future investments. This six-part bulletin series and additional materials are available for download at: energizeohio.osu.edu/farm-solar-energy-development.