[RE-wrenches] Cost per kWh

[Matt Lafferty]

Holt says: Can't put my hands on the equation for determining cost per kWh
of a system
 
Holt,
 
Are you looking to calculate Cost or Value of the system? Both calculations
are important.
 
The simple $/kWh COST for a residential PV System is calculated as follows:
Lifetime $/kWh Cost = (Purchase $ after incentives + Finance Charge $ +
Lifetime O&M $) / Lifetime kWh Generated
Example: A system that has a capital cost of $20,000 including finance
charges generates 150,000 kWh over its 25 year life. The O&M costs over the
same period total $5,000, for a Total Cost of $25,000. The Lifetime Cost of
the electricity generated = $25,000/150,000 kWh = $0.1667/kWh.
 
The Net $/kWh VALUE for a PV System includes some other factors, which will
vary on a system-by-system basis. The driving element here is the $/kWh of
the Offset Utility Energy. This is, after all, the comparative value of the
energy in the first place. I also believe that the net-change in value of
the property is valid to consider. I don't like all the BS mumbo jumbo about
NPVs and wild-ass guesstimates about the cost of money at arbitrary points
in the future and whether or not the inflation rates of electric rates will
be higher or lower than $ deflation rates in a given time period and only if
the customer turns 65 during the life of the system and due to divorce in
Year 11 the customer's effective tax rate changes and...... Screw that. My
crystal ball ain't that good. It is what it is. 
 
Calculate the VALUE of the PV System in $/kWh as follows:
Net $/kWh Value = ((Offset Utility Energy $ + Net Change Property Value $) -
Total Cost) / Lifetime kWh Generated
Example: A system generates 150,000 kWh over its 25 year life. The Offset
Utility Energy $ is $27,000 and the Net Change in Property Value is $10,000.
The system has a Total Cost of $25,000. The Net Value of the electricity
generated = (($27,000 + $10,000) - $25,000) = $12,000. The The Net $/kWh
Value = $12,000 / 150,000 kWh = $0.08/kWh.
 
Two of the biggest underlying factors are the assumed Service Life of the
System in Years and the O&M costs during that period. Like I said, my
crystal ball ain't that good. I can share that 
 
Hope this is helpful,
 
Matt Lafferty
 
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