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Niall McMahon
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Solar Energy Works: More Numbers ...

2017-01-11

Here are some more numbers that I put together about a year ago around solar energy in Ireland, following on from my 2015 post. The usual cautions apply. The conclusions were: (i) that it seems possible to build a solar plant selling wholesale electricity in Ireland though the margin is slim; (ii) it seems that there may be an immediate business opportunity for private use, i.e. offsetting grid power; (iii) if panel installed prices can be pushed down further, if a feed-in tariff is introduced or if power prices increase, a further opportunity opens up.

Set-up and Assumptions

Numbers were estimated for the following set-up and with assumptions:

Case 1

Case 2

Case 3

Internal Rate of Return (IRR)

Below, internal rate of return contours (ratio), energy price (y), panel price (x). Panel price x is assumed to be the total installed cost per watt. Internal rate of return includes solar panel installation capital and annual income less modest land costs. It does not include salaries. A detailed study is required.

Case 1 (10%)

Case 2 (8.5%)

Case 3 (13%)

Interpretation

IRR - Alternative Visualisation

Below, the internal rate of return against the panel price (x). Each curved line respresents a different value of power produced (euro / kWh). The left-most curved line is 0.05 euro / kWh. The value of power increments by 0.01 euro / kWh, moving to the right.

Case 1 (10%)

Case 2 (8.5%)

Case 3 (13%)

Simple Pay-back Period of Capital

Below, capital simple pay-back period countours (years), energy price (y), panel price (x).

Case 1 (10%)

Case 2 (8.5%)

Case 3 (13%)

Summary and Conclusions

So:

References

Appendix

Rate of Return - Specific Examples

Taking a specific pricing:




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