In this second week of our class, with an overview of project planning and our Development Plan exercise behind us, we are now ready to size the PV System and tackle the economic modeling to determine if the project is financially viable. This week's curriculum is divided into two distinct lessons:
1. Distributed Generation Sizing:
We've created a sample Distributed Generation project for you to provide us with a proposal for, on your company letterhead. Take the time to assess the electric bill and bifurcate out the actual energy usage from the demand usage at the facility to come up with a true cost per kWh for electricity for your proposal. With the provided Excel tool, figure out how much solar you can put on the roof of the building and how much energy the system will create.
Use the provided electric bill, Excel calculator, and follow the homework assignment.
2. Economic Modeling:
For modeling, we are going to cover some basic commands, formulas and functions within Excel that will enable us to build a successful financial model of our proposed PV System. We will look at the Naming function, PMT function, If . . . Then constructions (simple and complex), IRR & NPV, LOOKUP, IFERROR, MAX, MIN, Compounding and Data Validation.
Once we are comfortable with these basic commands, formulas and functions, we will graduate to our Demo Solar PV Project model. Using this fully functional model for our guide, we will take a close look at planning and structuring a Solar PV model, including some basic good housekeeping practices and organization.
We will then take an in-depth tour to see how the individual modules and worksheets come together to create a look at the unstructured economics of a project and how a partnership flip works for such a project. We will focus for a close up look at the debt module, depreciation module and calculation of IRR & NPV.
You will then have an opportunity for your homework assignment to build your own solar model. We will provide you with a template that shows all or most of your inputs and the necessary steps to create the unstructured view and the partnership flip view. Your task will be to build the formulas within the model the arrive at useful outputs.