Feasibility of Solar Technology Adoption: A Case Study on Tennessee’s Poultry Industry Ernest F. Bazen & Matthew A. Brown Presented by Yao Yin

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.

Tennessee Valley Authority TVA is the nation’s 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.

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.

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

Solar energy’s potential across TN Greene County In the east kWh/m 2 /day Weakley County In the west kWh/m 2 /day

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.

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

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/Organizations/Finance Club/resources/glossary.html)webuser.bus.umich.edu/Organizations/Finance Club/resources/glossary.html

Environmental Aspect

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.