Solar Economic Analysis Introduction Although 1 is Tree, the equipment requi resource of a solar energy system, that is, the solar irradiation, ed to collect it and convert it to useful form (heal ‘Orelectriciiy) has a cost, Therefore, solar energy systems are generally char- aT cost and low operating costs. To d The cost of collectors, other required equipment, and con ‘eterized by high ini ie to employ a volar energy ventional fuel required ax backup must be lower than the cost of other conven- tional energy sources to perform the same task. Thus, the economic problem is to compare an initial known investment with estimated future operating cost including both the cost to run and maintain the solar energy system and auxil- iary energy used as backup. Other factors that need to be considered include the interest paid on money borrowed, taxes if any, insurance cost if any, and resale of equipment at the end of its life,Since the availability of solar energy is intermittent and unpredictable. it is erally nt cost effective to provide 100% of the energy requirements ofa the imal system with solar energy year roune, This because, when the system s Tes Tilly the requirements under the wort operating conditions, it willbe greatly oversized during the rest of the year, requiring the dumping of thermal ener whichis not cost effective, Usual the ether way around is effective size ‘operating conditions, usually during sumn and use auxiliary energy for The rest of the year (0 back up the solar enengy system. The actual size is usually decided by Following an economic analysis, as described in this chapter. The best use of sol gy IS in conjunction wth the type and cost of the conventional fuel used as backup, The target is to de time, jgn a solar energy system that operates. at full or nearly full capacity most of the time and uses auxiliary energy for the rest of the year, although the total percentage of annual demand covered is Tess than 100%, It can easily be proved that such a system is much more economical than a larger system satistying tully the thermal load year round. The auxthary system can also cover the load in extreme weather conditions, thus increasing the reliability of the solar energy system. The annual load factor covered by solar energy compared to the total annual thermal load is ealled the solar fraction, F Iti defined as the ratio of the useful sclar energy supplied to the system to the cenergy needed to heat the water or the Fuilding space if no solar energy is use In other words, F is a measure of the fractional energy savings relative to that used fora conventional energy system. This is expressed in percentage, given by an equation similar to Eq. (11.1): a2) where L_ = annual energy required by the load (GI), Laux = annual energy required by the auxiliary (GI).Power, kW Fower, kW Once LPG consumption LPGconsumation, gs LPG censumption, 08 building Items Initial expenses Operational aad ruining cost per Components| Heating system Collector units Hot water storage tank Beckup heating unit Cooling system Absorption chiller Cooling towe neo units Control and monitering Computer hardwvere Control software Measurement probe Installation and commissioning Total LPG. “Overview of expenses Tor the SVAC system insalled at SERTs testing Value (8) 28.500) 4,600 8500 30.00 114,900 240You are about to receive €500 over three years and there are (wo options. The first is to receive €100 during year |, €150 in year two, and €250 in year thre The second is to receive nothing in year 1, €200 in year two, and €300 in year three, Ifthe interest rate is 8%, which option is more beneficial? Solution Fro Tat 12.1 ur By, (12.12) the present wonth for the vasiuus yous ae Year 1 = 0.9259 Year 2 Year 3 = 0.7938 p.8573 ‘The present worth of each option is obtained by multiplying PW,, by the annual amount received, as shown in Table 2.2. pw, =—-— (12.12) a+a" Tablei2.a Present Worth Year [Marker dicount ate ” 2% 4% 6% 8% 10% 12% | 15% | 20% | 25% 1 _[o9wo4 Joos | ansss [fr9279] 1.90 | 0.8029 | osean | xsas | sao 9612 | 09246 [08000 ffossts | 0826s | 7072 06944 | 06400 3 [09123 | os90 [03396 floss] o.7s13 [oss | o6s75 fos7s7 | osi20 1 [os2as fossis [0.7021 [07350 [o.ess0 | o6sss | ovis | 0.823 | 0.96 3 foses7 [oszry fo.7473 | eave [oa [0307 | 04972 | van | 0327 6 [os880 | 07903 [0.7050 | os202 [seas | 03066 | 0.4223 [osu | 02821 7 [os [0.7399 [osast | ossas [05132 [0.823 | 02759 |n270 | 0.207 s fossss [oza07 fos2v | osans [oses [02029 | 2240 fv22s | oasis 9 [ossss [o-7026 [05019 [03002 fo.zat [osu 0.1938 [0.1m 10 [0x20 | 16756 fossst | o.si2 [0 s895 [osc oasis | o.t07sTable12.2 Present Worth of Each Option in Example 1 Year) | PW, ‘Annual benett (€) Preseat worth (€) Option 1] Option Option 1] Option 2 1 09259 100) 0 92.59 0 2 oss73 200 128.60 in46 07938 300) 198.45 238.14 Toa 500 300 fs19.69] | [ro9.00] Therefore, it is better to receive more money sooner than more me later. Calculate the cost of fuel of a conventional (non-solar) e rey system for 15 years if the total annual load is 114.9GI and the fuel rate is $17.2/GI, the m: ket discount rate is 7%, and the fuel infation rate is 4% per yeat. Solution The first-year fuel cost is obtained from Ge fn f le = 172% 1149 = 81,975.30 (because the total ann The 1 al Load is given, the integral is equal to 114.9GI). 1 costs in various years are shown in Table 12.4‘Table12 Fuel Costsin Various Vewrsfor Example > Year Fact cout) | PW ot fielcost (8) 1976.30 701 2 aossas | LPS es 3 aus7s7 | 1.74889 ual 4 amso7 | 1.60897 5 3119 Lots.a2 6 2aosa7 | 1,602.20 F=ca+y 1 2soss | 158728 8 aeooss | 1813.62 ’ rouro | tara 0 81289 | 142993 u 292841 1380.84 2 somaz | 13308 1B s6LI2 | 1313.00 4 s2m06s | 1276.8 Is 42231 1240.40 ‘Tol PW of fuel ast S22876 An altemative method is to estimate PWF(, i, ) from Eq, (12.18) From Eq, (12.18), PWFUn. id) = a L PWF(5, 0.04, 0.07) = ————_| 0.07 — 0.04) 1.5752 (sy ro Present worth of fuel cost = 1,976.3 X 11.5752 = $22,876 As can be seen, this is a much quicker method, especially if the caleula- fand the same result is obtained but the intermediate tious are done values cannot be seenFind the undiscounted payback time of a solar energy sysiem that covers 63% of an annual load of I85GI and costs €15,100. The first-year fuel cost rate is €9,00/GI and inflates at 9% per year Solution Using Eq. (12.26), Gig 5.100 neecrirme (2 100x009 FLC 063 x 185 x9) Ind +) inl + 0.09) = 96 years. Example 4 A flat plate solar collector is used as a solar hot water heater. The collector area equals 20 square meters. The collector is located in a location with annual average daily solar insolation equal to 5.0 kWh/square meter/day.1. Calculate the amount of solar energy incident on this collector each day. + Solar Energy = * =5.0kWh/ sq m/ day + 20 sqm + = 100 kWh/ day 2. Assuming that the efficiency of the solar collector and the rest of the system equals 50%, calculate the average daily energy produced (as hot water) by this system. Express your answer in kWh/day. + Average Produced Energy/day = + = 100 kWh/ day + 0.50 + =50kWh/ day3. Calculate the amount of energy produced by this system each year. Express your answer in kWh. * Annual Energy Production = + = 50 kWh/day - 365 day/ycar + = 18,000 kWh / year 4. Assuming that the solar energy replaces the heating of hot water by electric energy and that electric energy cost 10¢/kWh, calculate the yearly savings in electricity costs as a result of using the solar hot water system. Express your answer in $/year. * Money Saved = * = 18,000 kWh « $0.10/kWh + =$1,800/ year5. Suppose this solar hot water system were to cost $5,400 (installed). Calculate the payback period for this system + Payback — Cost / Savings 2 = $5,400 / $1,800 /year =3 years