PowerPoint ® Presentation Chapter 15 Economic Analysis Incentives Rebates Grants Loans Tax Incentives Production Incentives Renewable Energy Certificates Cost Analysis Life-Cycle Costs Value of Money Life-Cycle Cost Analysis Annualized Costs Financial Payback Incentive Adjustments

Chapter 15 — Economic Analysis Several types of incentives are available for PV and other renewable-energy systems.

Chapter 15 — Economic Analysis Tax incentives reduce the amount of tax that must be paid, whether they are tax exemptions or tax credits.

Chapter 15 — Economic Analysis Renewable energy certificates (RECs) allow a utility or its customers to claim renewable energy while providing a financial incentive for renewable-energy producers.

Chapter 15 — Economic Analysis A life-cycle cost analysis compares the life-cycle costs of various electricity- supply options.

Chapter 15 — Economic Analysis Each system option must meet the same requirements, including the length of time used to calculate life-cycle cost.

Chapter 15 — Economic Analysis The various types of life-cycle costs occur at different points in the life cycle of a power-generating system.

Chapter 15 — Economic Analysis A certain amount of present money is equal to a greater face-value amount of future money. The difference in face value depends on the difference in time.

Chapter 15 — Economic Analysis The present value of future money falls more quickly with higher discount rates.

Chapter 15 — Economic Analysis The single present value factor is used to quickly calculate the present value of a single future value.

Chapter 15 — Economic Analysis Related costs that occur every year are calculated and added together for each year to determine the total present value.

Chapter 15 — Economic Analysis The recurring present value factor is used to quickly calculate the present value of a future value recurring for a number of years.

Chapter 15 — Economic Analysis A life-cycle cost analysis totals the present values of all the life-cycle costs over the length of the analysis period.

Chapter 15 — Economic Analysis The life-cycle cost analysis of a utility connection includes the initial connection costs and annual energy costs.

Chapter 15 — Economic Analysis The life-cycle cost analysis of an engine- generator system includes each type of cost.

Chapter 15 — Economic Analysis The most significant costs in the life cycle of a PV system are the initial costs.

Chapter 15 — Economic Analysis Annualizing costs spreads costs evenly over the operating period, but results in the same total life-cycle cost for a system.

Chapter 15 — Economic Analysis The payback point occurs when the cumulative avoided cost of one system matches the total life-cycle cost of another system.

Chapter 15 — Economic Analysis The payback point can be determined by comparing the actual life- cycle costs of the various system options.

Chapter 15 — Economic Analysis The annualized-cost method of determining the payback period is relatively simple, though it may be less accurate than the actual-cost method.

Chapter 15 — Economic Analysis Incentives affect the total life-cycle cost differently, depending on how and when they are applied.