Feasibility of Solar Technology Adoption: A Case Study on Tennessee

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Feasibility of Solar Technology Adoption A Case
Study on Tennessees Poultry Industry

• Ernest F. Bazen Matthew A. Brown
• Presented by Yao Yin

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Background

• Rising oil prices and instability in Middle East
  have led to intense interest in renewable energy.
  
• Renewable energy includes solar energy, wind
  energy, geothermal energy, biomass energy, and
  hydro energy.

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Tennessee Valley Authority

• TVA is the nations largest utility provider.
• It develops the Green Power Switch (GPS) program
  to produce electricity from renewable sources.
• Renewable supply from GPS includes wind, methane,
  and solar.

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Poultry Industry

• Electricity plays a crucial role in poultry
  production.
• Lighting, ventilation, heating and cooling,
  running electric motors for feed lines.
• Rising energy costs have cut into poultry
  producers profitability.

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Primary Issue

• Economic feasibility of solar adoption (solar
  photovoltaic system, or solar PV system) for
  poultry producers in Tennessee under current
  economic cost conditions

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Solar energys potential across TN

• Greene County
• In the east
• 4.5-5.0kWh/m2/day

• Weakley County
• In the west
• 5.0-5.5kWh/m2/day

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Two Kinds of Solar Systems

• Electricity output was calculated for two size
  solar PV systems 5 and 20 kW.
• Each county is tested using the two systems.

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• Assumptions
• Life of solar PV systems is 25 years
• Electricity price increases 2 annually over the
  life of the PV systems
• The remaining 35 of the system costs were
  financed using a 10 year, 7.5 fixed interest
  rate.
• Discount factor rate is 8.25

• Current Conditions
• TVA charges 20 cents per kWh out put for the
  first 10 years.
• Electricity price increases 2 annually
• State governments subsidy 40 of the installed
  cost
• Federal governments subsidy 25 of the
  installed cost
• A corporate tax credit of 30

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What is a NPV?

• Net present value
• The present value of a series of cash flows
  generated by an investment, minus the initial
  investment.
• NPV is calculated because of the important
  concept that "money today is worth more than the
  same money tomorrow."(webuser.bus.umich.edu/Organ
  izations/FinanceClub/resources/glossary.html)

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Environmental Aspect
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Conclusions

• Under current conditions, it is not economical to
  purchase solar PV systems
• If more support were given to renewable energy
  technologies, costs of solar power may be able to
  decline.
• If external costs of pollution from conventional
  electricity production are enforced on utility
  providers, the relative cost of solar energy
  should become more and more competitive.