Students in Professor Chris Girand’s Master of Finance 418 class used satellite imagery of beach houses in Encinitas, California to design the most optimal grids for producing energy.
Sixty houses were selected based on size, roof direction and lack of shading. Each student was assigned one house. The student measured the south-facing portion of the roof using satellite imagery from Google’s Earth Viewer. Various panel layouts were configured to get the maximum number of panels on the south-facing surface.
The students employed a simple, grid-tie photovoltaic system and priced the system based on market prices for the individual components. Each house ended up with a slightly different solar array to make optimal use of the particular roof.
The students made assumptions about the typical electrical consumption of an Encinitas household (10,000 kWh per year) and future prices of electricity. The students calculated what each system would produce to offset that consumption. The savings created by the solar system was treated as a future positive cashflow. The present value of these cashflows was netted against the initial cost of the system. Cumulatively, the net present value of the 60 systems was $1.5 million.
The assumptions are dynamic variables. Interested readers may log on to the Google Sheet to adjust variables as they see fit and see the actual houses that were selected (all from publicly available sources). Over the last decade, the price of residential electricity in San Diego has gone up 3.5% per year. The students modeled 3% annual increase for the next 25 years. If a user thinks future electrical costs will increase at 4% per year the net present value of the 60 systems is $1.9 million.
Since it is Earth Day, it is nice to know that the 60 systems would generate enough excess electricity (482k kWh/year, beyond what is needed for the houses) to power 120 Teslas – 2 for each household. Each Tesla could drive 12,000 miles per year off the excess power – saving a total of 552 metric tons of carbon dioxide.
Disclosure: These houses were the low-hanging fruit of solar candidates with south-facing, unshaded roofs – not all residents of Encinitas are so lucky! Some houses may require expensive things like a new roof or an upgraded electrical panel before a solar installation can be performed. Students did not actually visit the houses in-person, climb up on any ladders or speak to the residents. A 30% Federal tax credit to help offset purchase price of system was not included.