Download the solar panel project spreadsheet given in the table on the bottom of this html page:http://www.solarchoice.net.au/blog/solar-power-system-payback-calculator
In the bottom right corner of the table there is a small button that allows you to download the table as an MS Excel file. Answer the following questions in this MS Word file. The page numbers given in brackets are just suggestions, you can write more or less so long as your assignment in within the total 10 page limit.
Question 5 (2 marks, half page):Calculate the ‘discounted payback period’ of the project. Give the number and describe how you calculated it.
Question 6 (2 marks, half page):Calculate the ‘modified annual internal rate of return’ of the project. Give the number and describe how you calculated it.
Question7 (2 marks, one page):What is the most that you would pay for a battery to store the solar power? Assume that the battery can store a day’s harvest of solar power for 24 hours. Explain how you calculated the maximum amount that you would be willing to pay for the battery.
For the following 6 questions, save 6 separate copies of the original Solar Choice spreadsheet model. This model will be referred to as the default model. None of the following questions build on each other except for the last question which combines them all.
It is hoped that this makes it easier for students to work on the problems independently and reduces carry-through errors.
Question 8 (2 marks total):On 31 December 2016, the NSW government’sFeed in Tariff (FiT) will end, so solar panel owners will no longer be paid for exporting their electricity to the grid.Solar Choice’s spreadsheet does not reflect this change in the regulation. Adjust the spreadsheet to reflect this impending change. Assume that the current date is 1 January 2016.
Question 8a (1 mark, half page):Insert the table with your new figures.
Question 8b (1 mark, half page):Describe the changes you made to the default model.
Question 9 (2 marks total):The spreadsheet model made by Solar Choice assumes that a constant proportion of the photo-voltaic (PV) solar panel electricity that’s generated by the household is consumed by the household. They call this the ‘self-consumption ratio’ and it is 70% by default. Self-consumption saves costly electricity that would have been sourced from the grid, provided by utilities companies. This is where the bulk of the savings from solar panels come from in Solar Choice’s model.
Arguably, this is an over-estimate of the cost savings because the residential house is likely to be empty during the day while the inhabitants are at work. Therefore the electricity generated by the solar panels while the sun is shiningis not likely to be used.
Rename the ‘self consumption ratio’ cell to ‘fixed self-consumption amount’ and set it equal to the ‘average daily sun hours’ divided by 24 hours multiplied by ‘average daily household energy usage (kWh)’. Remodel the spreadsheet to reflect this new fixed amount of solar electricity self-consumption that’s used during the day.
Question 9a (1 mark, half page):Insert the table with your new figures.
Question 9b (1 mark, half page):Describe the changes you made to the default model.
Question 10 (1 mark, quarter page) The model appears to ignore any interest tax shields from the solar panels where they are financed by debt. State what type of solar-panel owners this mode is suitable for since they canNOTuse interest tax shields.
Question11 (2 marks total): Modify the spreadsheet to include the benefit of interest tax shields when the solar panels are financed 100% using debt.
Question 11a (1 mark, half page):Insert the table with your new figures.
Question 11b (1 mark, half page):Describe the changes you made to the default model. State all of your assumptions, including what type of solar-panel owners can use interest tax shields and why.
Question 12 (2 marks total):Modify the spreadsheet to include the benefit of depreciation tax shields.
Question 12a (1 mark, half page):Insert the table with your new figures.
Question 12b (1 mark, half page):Describe the changes you made to the default model. State all of your assumptions, including what type of solar-panel owners can use depreciation tax shields and why.
Question13 (4 marks total):Make a spreadsheet model combining all of the above features in a consistent way. The model should have the sensitivity analysis, the discounted payback period, the modified IRR. the Feed in Tariff (FiT) expiry, the interest tax shields and the depreciation tax shields.
Question13a (1 mark, half page):Insert your professionally formatted table below.
Question13b (2 marks, one page):Explain any additional factors that you had to consider when making the model with all of the different things that were included. There is no need to double-up explaining things that you’ve already explained above.

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