<html xmlns:v="urn:schemas-microsoft-com:vml" xmlns:o="urn:schemas-microsoft-com:office:office" xmlns:w="urn:schemas-microsoft-com:office:word" xmlns:st1="urn:schemas-microsoft-com:office:smarttags" xmlns="http://www.w3.org/TR/REC-html40">
<head>
<meta http-equiv=Content-Type content="text/html; charset=us-ascii">
<meta name=ProgId content=Word.Document>
<meta name=Generator content="Microsoft Word 11">
<meta name=Originator content="Microsoft Word 11">
<link rel=File-List href="cid:filelist.xml@01CABDE0.2DCC7B20">
<link rel=Edit-Time-Data href="cid:editdata.mso">
<!--[if !mso]>
<style>
v\:* {behavior:url(#default#VML);}
o\:* {behavior:url(#default#VML);}
w\:* {behavior:url(#default#VML);}
.shape {behavior:url(#default#VML);}
</style>
<![endif]--><o:SmartTagType
namespaceuri="urn:schemas-microsoft-com:office:smarttags" name="place"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="address"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="PostalCode"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="State"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="City"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="Street"/>
<o:SmartTagType namespaceuri="urn:schemas-microsoft-com:office:smarttags"
name="PersonName"/>
<!--[if gte mso 9]><xml>
<o:OfficeDocumentSettings>
<o:DoNotRelyOnCSS/>
</o:OfficeDocumentSettings>
</xml><![endif]--><!--[if gte mso 9]><xml>
<w:WordDocument>
<w:Zoom>150</w:Zoom>
<w:DisplayBackgroundShape/>
<w:SpellingState>Clean</w:SpellingState>
<w:GrammarState>Clean</w:GrammarState>
<w:DocumentKind>DocumentEmail</w:DocumentKind>
<w:EnvelopeVis/>
<w:ValidateAgainstSchemas/>
<w:SaveIfXMLInvalid>false</w:SaveIfXMLInvalid>
<w:IgnoreMixedContent>false</w:IgnoreMixedContent>
<w:AlwaysShowPlaceholderText>false</w:AlwaysShowPlaceholderText>
<w:BrowserLevel>MicrosoftInternetExplorer4</w:BrowserLevel>
</w:WordDocument>
</xml><![endif]--><!--[if gte mso 9]><xml>
<w:LatentStyles DefLockedState="false" LatentStyleCount="156">
</w:LatentStyles>
</xml><![endif]--><!--[if !mso]>
<style>
st1\:*{behavior:url(#default#ieooui) }
</style>
<![endif]-->
<style>
<!--
/* Font Definitions */
@font-face
{font-family:Wingdings;
panose-1:5 0 0 0 0 0 0 0 0 0;
mso-font-charset:2;
mso-generic-font-family:auto;
mso-font-pitch:variable;
mso-font-signature:0 268435456 0 0 -2147483648 0;}
@font-face
{font-family:"Arial Narrow";
panose-1:2 11 5 6 2 2 2 3 2 4;
mso-font-charset:0;
mso-generic-font-family:swiss;
mso-font-pitch:variable;
mso-font-signature:647 0 0 0 159 0;}
@font-face
{font-family:"Palatino Linotype";
panose-1:2 4 5 2 5 5 5 3 3 4;
mso-font-charset:0;
mso-generic-font-family:roman;
mso-font-pitch:variable;
mso-font-signature:-536870009 1073741843 0 0 415 0;}
@font-face
{font-family:Tahoma;
panose-1:2 11 6 4 3 5 4 4 2 4;
mso-font-charset:0;
mso-generic-font-family:swiss;
mso-font-pitch:variable;
mso-font-signature:1627421319 -2147483648 8 0 66047 0;}
/* Style Definitions */
p.MsoNormal, li.MsoNormal, div.MsoNormal
{mso-style-parent:"";
margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
h1
{mso-style-next:Normal;
margin-top:12.0pt;
margin-right:0in;
margin-bottom:3.0pt;
margin-left:0in;
mso-pagination:widow-orphan;
page-break-after:avoid;
mso-outline-level:1;
font-size:16.0pt;
font-family:Arial;
color:windowtext;
mso-font-kerning:16.0pt;
font-weight:bold;}
h3
{mso-style-update:auto;
mso-style-next:apara;
margin-top:6.0pt;
margin-right:0in;
margin-bottom:0in;
margin-left:0in;
margin-bottom:.0001pt;
mso-line-height-alt:11.0pt;
mso-pagination:widow-orphan lines-together;
page-break-after:avoid;
mso-outline-level:3;
tab-stops:328.5pt;
font-size:12.0pt;
font-family:Arial;
mso-bidi-font-family:"Times New Roman";
color:windowtext;
letter-spacing:-.5pt;
mso-font-kerning:10.0pt;
font-weight:normal;}
a:link, span.MsoHyperlink
{color:blue;
text-decoration:underline;
text-underline:single;}
a:visited, span.MsoHyperlinkFollowed
{color:blue;
text-decoration:underline;
text-underline:single;}
p
{mso-margin-top-alt:auto;
margin-right:0in;
mso-margin-bottom-alt:auto;
margin-left:0in;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:Arial;
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:navy;}
p.alist, li.alist, div.alist
{mso-style-name:alist;
margin-top:0in;
margin-right:0in;
margin-bottom:0in;
margin-left:.5in;
margin-bottom:.0001pt;
text-indent:-.15in;
mso-pagination:widow-orphan;
mso-list:l1 level1 lfo1;
tab-stops:list .5in;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.ahead3, li.ahead3, div.ahead3
{mso-style-name:ahead3;
mso-style-update:auto;
mso-style-parent:"Heading 3";
mso-style-next:Normal;
margin-top:6.0pt;
margin-right:0in;
margin-bottom:0in;
margin-left:0in;
margin-bottom:.0001pt;
mso-line-height-alt:11.0pt;
mso-pagination:widow-orphan lines-together;
page-break-after:avoid;
mso-outline-level:3;
tab-stops:328.5pt;
font-size:12.0pt;
font-family:Arial;
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:windowtext;
letter-spacing:-.5pt;
mso-font-kerning:10.0pt;}
p.StyleaparaJustifiedAfter0pt, li.StyleaparaJustifiedAfter0pt, div.StyleaparaJustifiedAfter0pt
{mso-style-name:"Style apara + Justified After\: 0 pt";
mso-style-update:auto;
margin:0in;
margin-bottom:.0001pt;
text-align:justify;
mso-pagination:widow-orphan;
font-size:12.0pt;
mso-bidi-font-size:10.0pt;
font-family:"Arial Narrow";
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:windowtext;}
p.alistnead, li.alistnead, div.alistnead
{mso-style-name:alist_nead;
mso-style-parent:alist;
margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:Arial;
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:windowtext;}
p.anumlist, li.anumlist, div.anumlist
{mso-style-name:anumlist;
mso-style-update:auto;
margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.aHead1, li.aHead1, div.aHead1
{mso-style-name:aHead1;
mso-style-update:auto;
mso-style-parent:"Heading 1";
margin-top:0in;
margin-right:0in;
margin-bottom:6.0pt;
margin-left:0in;
text-align:center;
mso-pagination:widow-orphan;
page-break-after:avoid;
mso-outline-level:1;
font-size:16.0pt;
font-family:Arial;
mso-fareast-font-family:"Times New Roman";
color:windowtext;
mso-font-kerning:16.0pt;
font-weight:bold;}
p.StyleHeading3Left0Firstline0, li.StyleHeading3Left0Firstline0, div.StyleHeading3Left0Firstline0
{mso-style-name:"Style Heading 3 + Left\: 0\0022 First line\: 0\0022";
mso-style-update:auto;
mso-style-parent:"Heading 3";
margin-top:6.0pt;
margin-right:0in;
margin-bottom:0in;
margin-left:0in;
margin-bottom:.0001pt;
mso-line-height-alt:11.0pt;
mso-pagination:widow-orphan lines-together;
page-break-after:avoid;
mso-outline-level:3;
tab-stops:328.5pt;
font-size:12.0pt;
mso-bidi-font-size:10.0pt;
font-family:Arial;
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:windowtext;
letter-spacing:-.5pt;
mso-font-kerning:10.0pt;}
p.a-text, li.a-text, div.a-text
{mso-style-name:a-text;
mso-style-update:auto;
margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
mso-bidi-font-size:10.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.apara, li.apara, div.apara
{mso-style-name:apara;
mso-style-update:auto;
margin-top:0in;
margin-right:0in;
margin-bottom:6.0pt;
margin-left:0in;
text-indent:.35in;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Palatino Linotype";
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:windowtext;}
p.StyleHeading1Centered, li.StyleHeading1Centered, div.StyleHeading1Centered
{mso-style-name:"Style Heading 1 + Centered";
mso-style-update:auto;
mso-style-parent:"Heading 1";
margin-top:0in;
margin-right:0in;
margin-bottom:6.0pt;
margin-left:.5in;
text-align:center;
mso-pagination:widow-orphan;
page-break-after:avoid;
mso-outline-level:1;
font-size:16.0pt;
mso-bidi-font-size:10.0pt;
font-family:Arial;
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:windowtext;
mso-font-kerning:16.0pt;
font-weight:bold;}
p.Styleapara1TimesNewRomanFirstline025, li.Styleapara1TimesNewRomanFirstline025, div.Styleapara1TimesNewRomanFirstline025
{mso-style-name:"Style apara1 + Times New Roman First line\: 0\.25\0022";
mso-style-update:auto;
margin:0in;
margin-bottom:.0001pt;
text-align:justify;
text-indent:.25in;
mso-pagination:widow-orphan;
tab-stops:328.5pt;
font-size:12.0pt;
mso-bidi-font-size:10.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;
letter-spacing:-.25pt;}
p.PPAhead, li.PPAhead, div.PPAhead
{mso-style-name:PPAhead;
margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:16.0pt;
font-family:Arial;
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.aparabullet, li.aparabullet, div.aparabullet
{mso-style-name:aparabullet;
mso-style-update:auto;
mso-style-parent:apara;
margin-top:0in;
margin-right:0in;
margin-bottom:0in;
margin-left:.5in;
margin-bottom:.0001pt;
text-align:justify;
text-indent:-.25in;
mso-pagination:widow-orphan;
mso-list:l3 level1 lfo2;
tab-stops:list .5in;
font-size:12.0pt;
font-family:"Palatino Linotype";
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:"Times New Roman";
color:windowtext;
letter-spacing:-.25pt;}
p.AAbulllist1, li.AAbulllist1, div.AAbulllist1
{mso-style-name:AA_bull_list_1;
margin:0in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.AAbulllist2, li.AAbulllist2, div.AAbulllist2
{mso-style-name:AA_bull_list_2;
margin-top:0in;
margin-right:0in;
margin-bottom:0in;
margin-left:1.0in;
margin-bottom:.0001pt;
text-indent:-.25in;
mso-pagination:widow-orphan;
mso-list:l2 level2 lfo3;
tab-stops:list 1.0in;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.Equation, li.Equation, div.Equation
{mso-style-name:Equation;
mso-style-update:auto;
margin-top:0in;
margin-right:0in;
margin-bottom:6.0pt;
margin-left:0in;
text-align:center;
mso-pagination:widow-orphan;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.WrightPara, li.WrightPara, div.WrightPara
{mso-style-name:"Wright Para";
margin-top:0in;
margin-right:0in;
margin-bottom:0in;
margin-left:.25in;
margin-bottom:.0001pt;
mso-pagination:widow-orphan;
tab-stops:.25in;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:windowtext;}
p.ABULL, li.ABULL, div.ABULL
{mso-style-name:ABULL;
mso-style-update:auto;
margin-top:0in;
margin-right:0in;
margin-bottom:0in;
margin-left:.5in;
margin-bottom:.0001pt;
text-indent:-.25in;
mso-pagination:widow-orphan;
mso-list:l0 level1 lfo4;
mso-hyphenate:none;
tab-stops:list .5in;
font-size:12.0pt;
font-family:"Times New Roman";
mso-fareast-font-family:"Times New Roman";
color:black;
mso-fareast-language:AR-SA;}
span.EmailStyle35
{mso-style-type:personal;
mso-style-noshow:yes;
font-family:Arial;
mso-ascii-font-family:Arial;
mso-hansi-font-family:Arial;
mso-bidi-font-family:Arial;
color:navy;}
span.EmailStyle36
{mso-style-type:personal-reply;
mso-style-noshow:yes;
mso-ansi-font-size:10.0pt;
mso-bidi-font-size:10.0pt;
font-family:Arial;
mso-ascii-font-family:Arial;
mso-hansi-font-family:Arial;
mso-bidi-font-family:Arial;
color:navy;}
span.SpellE
{mso-style-name:"";
mso-spl-e:yes;}
@page Section1
{size:8.5in 11.0in;
margin:1.0in 1.25in 1.0in 1.25in;
mso-header-margin:.5in;
mso-footer-margin:.5in;
mso-paper-source:0;}
div.Section1
{page:Section1;}
/* List Definitions */
@list l0
{mso-list-id:1153447148;
mso-list-type:hybrid;
mso-list-template-ids:-493563092 -568027952 67698713 67698715 67698703 67698713 67698715 67698703 67698713 67698715;}
@list l0:level1
{mso-level-number-format:none;
mso-level-style-link:ABULL;
mso-level-suffix:none;
mso-level-text:\00B7;
mso-level-tab-stop:.5in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ascii-font-family:Symbol;
mso-hansi-font-family:Symbol;}
@list l1
{mso-list-id:1374502153;
mso-list-type:hybrid;
mso-list-template-ids:-1037953930 923842848 67698691 67698693 67698689 67698691 67698693 67698689 67698691 67698693;}
@list l1:level1
{mso-level-start-at:0;
mso-level-number-format:bullet;
mso-level-style-link:alist;
mso-level-text:\F0B7;
mso-level-tab-stop:.5in;
mso-level-number-position:left;
text-indent:-.15in;
font-family:Symbol;
mso-fareast-font-family:"Times New Roman";
mso-bidi-font-family:Arial;
color:windowtext;}
@list l1:level2
{mso-level-number-format:bullet;
mso-level-text:o;
mso-level-tab-stop:1.35in;
mso-level-number-position:left;
margin-left:1.35in;
text-indent:-.25in;
font-family:"Courier New";}
@list l2
{mso-list-id:1415589764;
mso-list-type:hybrid;
mso-list-template-ids:1586279428 2093282660 67698713 67698713 67698703 67698713 67698715 67698703 67698713 67698715;}
@list l2:level1
{mso-level-tab-stop:.5in;
mso-level-number-position:left;
text-indent:-.25in;}
@list l2:level2
{mso-level-number-format:alpha-lower;
mso-level-style-link:AA_bull_list_2;
mso-level-tab-stop:1.0in;
mso-level-number-position:left;
text-indent:-.25in;}
@list l2:level3
{mso-level-number-format:alpha-lower;
mso-level-tab-stop:117.0pt;
mso-level-number-position:left;
margin-left:117.0pt;
text-indent:-.25in;}
@list l2:level4
{mso-level-tab-stop:2.0in;
mso-level-number-position:left;
text-indent:-.25in;}
@list l3
{mso-list-id:1937596687;
mso-list-type:hybrid;
mso-list-template-ids:-89214982 1080878598 67698691 67698693 67698689 67698691 67698693 67698689 67698691 67698693;}
@list l3:level1
{mso-level-number-format:bullet;
mso-level-style-link:aparabullet;
mso-level-text:\F0B7;
mso-level-tab-stop:.5in;
mso-level-number-position:left;
text-indent:-.25in;
mso-ansi-font-size:10.0pt;
mso-bidi-font-size:10.0pt;
font-family:Symbol;}
ol
{margin-bottom:0in;}
ul
{margin-bottom:0in;}
-->
</style>
<!--[if gte mso 10]>
<style>
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin:0in;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:"Times New Roman";
mso-ansi-language:#0400;
mso-fareast-language:#0400;
mso-bidi-language:#0400;}
</style>
<![endif]--><!--[if gte mso 9]><xml>
<o:shapedefaults v:ext="edit" spidmax="1028" />
</xml><![endif]--><!--[if gte mso 9]><xml>
<o:shapelayout v:ext="edit">
<o:idmap v:ext="edit" data="1" />
</o:shapelayout></xml><![endif]-->
</head>
<body bgcolor=white lang=EN-US link=blue vlink=blue style='tab-interval:.5in'>
<div class=Section1>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>I pretty much agree with what Matt is
saying. Here is my take. One can do the calculation with varying levels of
sophistication, and each of us can draw the line where we want. Matt includes
net purchase price (including finance charges), O&M and increase in
property value, and a term of 25 years. However, I would think the increase in
property value is not revenue, unless you actually sell the property, which you
might do at the end of the term, and one should account for its residual value
only (e.g. if you take depreciation). I think Matt’s approach gives an
approximate number, good for an initial calculation.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>At the other end of the spectrum (the
full-up calculation if you wish) is called <span class=SpellE>Levelized</span>
Cost of Energy (Electricity) <span class=SpellE>LCoE</span>, and it includes
everything (trust me). There is a fairly good paper written by Matt Campbell of
SunPower, titled “The drivers of the <span class=SpellE>Levelized</span>
Cost of <span class=SpellE>Electricty</span> for Utility-Scale Photovoltaics”.
Also the Solar Advisory Model (SAM) offered by NREL has <span class=SpellE>LCoE</span>
built in. Finally if you are doing a PPA or working on a large commercial
project, you have to use <span class=SpellE>LCoE</span>.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>One of the interesting aspects of <span
class=SpellE>LCoE</span> is the time-rate-of-change of three important factors:
(1) Cost of Money, (2) Utility Rates, and (3) PV production. This is the aspect
that Matt doesn’t include in the first-order calculation.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>The first just says that a dollar today is
worth more than a dollar you might receive tomorrow; because you could put it
into the bank and earn interest. Conversely if you have to pay for something, defer
making the payment as long as you can because you will be using cheaper money. To
arrive at this rate you should look at your return on an investment of similar
risk. In the case of PV, I use the 20-year T-bill, which has historically been
under 5%. So if you are calculating future revenues, you need to discount the
revenue in order to bring it back to the present.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>The second says that utility rates will go
up over time and the energy produced by a plant is of greater value as time
goes on. I use 7% for southern <st1:State w:st="on"><st1:place w:st="on">California</st1:place></st1:State>
(I know it varies with utility, and fluctuates a lot).<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>The third says that PV production goes
down over time. There is a lot of controversy on this point as to the value of
the degradation. NREL (or a related party) published data to show that the
number was close to 0.5%/yr. This is old data and covered PV modules
manufactured in the 60’s. More recent data (based on newer PV modules) suggest
that the number is much less than 0.5%/yr (maybe less than 0.1%/yr).<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><span class=SpellE><font size=2 color=navy face=Arial><span
style='font-size:10.0pt;font-family:Arial;color:navy'>LCoE</span></font></span><font
size=2 color=navy face=Arial><span style='font-size:10.0pt;font-family:Arial;
color:navy'> should also include depreciation and any repairs not captured
under O&M (e.g. inverter).<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>The reason I have taken the time this
Sunday morning to send this out is to hook up with other folks who want to
develop a working knowledge of <span class=SpellE>LCoE</span>. I have just
downloaded SAM, and it will take me some time to understand how it works. Maybe
an Excel spreadsheet would be a simpler approach. In any event I am willing to
share what I begin to understand with like minded souls (off-line I guess is
the best approach).<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>And Matt, keep up the good work! Your
approach should work for the vast majority of clients who want to look at the
long term economic value of PV.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'>- Peter<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<div>
<p class=MsoNormal><font size=2 color=navy face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:navy;mso-no-proof:yes'><!--[if gte vml 1]><v:shape
id="_x0000_s1026" style='position:absolute;margin-left:0;margin-top:0;width:50pt;
height:50pt;z-index:1;visibility:hidden' coordsize="21600,21600" o:spt="100"
o:preferrelative="t" adj="0,,0" path="" filled="f">
<v:stroke joinstyle="miter" />
<v:formulas/>
<v:path o:extrusionok="f" gradientshapeok="t" o:connecttype="rect" />
<o:lock v:ext="edit" aspectratio="t" selection="t" />
</v:shape><![endif]-->Peter T. Parrish, Ph.D., President<br>
<st1:State w:st="on"><st1:place w:st="on">California</st1:place></st1:State>
Solar Engineering, Inc.<br>
<st1:address w:st="on"><st1:Street w:st="on">820 Cynthia Ave.</st1:Street>, <st1:City
w:st="on">Los Angeles</st1:City>, <st1:State w:st="on">CA</st1:State> <st1:PostalCode
w:st="on">90065</st1:PostalCode></st1:address><br>
CA Lic. 854779, NABCEP Cert. 031806-26<br>
<a href="mailto:peter.parrish@calsolareng.com">peter.parrish@calsolareng.com</a><span
style='mso-spacerun:yes'> </span><br>
Ph 323-258-8883, <st1:City w:st="on"><st1:place w:st="on">Mobile</st1:place></st1:City>
323-839-6108, Fax 323-258-8885<span
style='mso-spacerun:yes'>
</span><span
style='mso-spacerun:yes'> </span><o:p></o:p></span></font></p>
<p><font size=2 color=navy face=Arial><span style='font-size:10.0pt;mso-no-proof:
yes'> </span></font><font size=3 color=black face="Times New Roman"><span
style='font-size:12.0pt;font-family:"Times New Roman";color:windowtext'><o:p></o:p></span></font></p>
</div>
<div>
<div class=MsoNormal align=center style='text-align:center'><font size=3
face="Times New Roman"><span style='font-size:12.0pt'>
<hr size=2 width="100%" align=center tabindex=-1>
</span></font></div>
<p class=MsoNormal><b><font size=2 face=Tahoma><span style='font-size:10.0pt;
font-family:Tahoma;font-weight:bold'>From:</span></font></b><font size=2
face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma'> <st1:PersonName
w:st="on">re-wrenches-bounces@lists.re-wrenches.org</st1:PersonName> [mailto:<st1:PersonName
w:st="on">re-wrenches-bounces@lists.re-wrenches.org</st1:PersonName>] <b><span
style='font-weight:bold'>On Behalf Of </span></b>Matt Lafferty<br>
<b><span style='font-weight:bold'>Sent:</span></b> Saturday, March 06, 2010
4:28 PM<br>
<b><span style='font-weight:bold'>To:</span></b> '<st1:PersonName w:st="on">RE-wrenches</st1:PersonName>'<br>
<b><span style='font-weight:bold'>Subject:</span></b> Re: [<st1:PersonName
w:st="on">RE-wrenches</st1:PersonName>] Cost per kWh</span></font><o:p></o:p></p>
</div>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Holt says: </span></font><font
color=black><span style='color:black'>Can't put my hands on the equation for
determining cost per kWh of a system</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Holt,</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Are you looking to calculate Cost or Value
of the system? Both calculations are important.</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>The simple $/kWh COST for a
residential PV System is calculated as follows:</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Lifetime $/kWh Cost = (Purchase $
after incentives + Finance Charge $ + Lifetime O&M $) / Lifetime
kWh Generated</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>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.</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>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 <span class=SpellE>NPVs</span>
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
<span class=SpellE>ain't</span> that good. It is what it is. </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Calculate the VALUE of the PV System in
$/kWh as follows:</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Net $/kWh Value = ((Offset
Utility Energy $ + Net Change Property Value $) - Total Cost) / Lifetime
kWh Generated</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>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 <span class=SpellE>The</span> Net $/kWh Value =
$12,000 / 150,000 kWh = $0.08/kWh.</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>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 <span class=SpellE>ain't</span>
that good. I can share that </span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Hope this is helpful,</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=2 color=blue face=Arial><span style='font-size:
10.0pt;font-family:Arial;color:blue'>Matt Lafferty</span></font><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> <o:p></o:p></span></font></p>
</div>
</body>
</html>