Question

3. Dominion Virginia Power, the state’s primary utility, now has a Solar Purchase Program that allows residents to sell solar-generated electricity back to the grid at a premium rate. Suppose a farmer installs solar panels on their property that generate 900 kWh of electricity per month. The farmer only consumes 600 kWh per month, which they would otherwise need to purchase from the utility at $0.11 per kWh, so the excess energy can be sold back to the grid at a premium rate of $0.15 per kWh. Shipping and installation of the panels costs $16,000 and emits 9.7 tonnes of CO2. Assume the grid has an emission intensity of 0.3 kgCO2 per kWh and the solar panels emit no CO2 during operation. a. What is the simple economic payback period on the solar panel investment? Calculate how many years it would take for the energy savings from the solar panels to match the upfront investment. b. What is the simple emissions payback period on the solar panel investment? In other words, calculate the number of years the farmer must operate the solar panels in order to “offset” the initial amount of CO2 emitted in transporting and installing the panels on the farm. c. Considering the farmer has no plans of moving in the foreseeable future, are the solar panels a worthwhile investment? Explain why or why not based on your answers to (a) and (b).

Answer 1