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Well, maybe. Opinions vary.
It's been written (Duffie & Beckman, chap. 11, "Solar Process Economics") that: "Solar processes are generally characterized by high first cost and low operating/fuel costs. This leads to a comparison of an initial known investment (in the PV equipment), with estimated future operating costs/potential fuel cost savings.............
The objective of the economic analysis can be viewed as the determination of the least cost method of meeting the energy need, considering both solar and non solar alternatives. For solar energy processes, the problem is to determine the size of the solar energy system that gives the lowest cost combination of solar and aux. energy. systems."
Reducing an energy bill can be thought of as a way to make a profit, but it's not usually treated that way.
There are any number of sources of information on process economics and life cycle costing. Duffie & Beckman is one. There are lots of others. It ain't rocket science, but it does take some knowledge of the time value of money, and life cycle costing. In any case, before spending perhaps ten's of thousands of dollars on a PV system, and/or DIY labor, a cost analysis that's a bit more sophisticated than the moron method of initial cost/annual savings and calling that "payback" may be warranted. PV systems are costly and can last a long time. It's thought by at least the smart money that spending time to learn and do some economics based on a long view, the time value of money and consideration/estimation of other factors such as discount rates, taxes, etc, can pay big dividends.
SAM uses a method known as the LCOE (Levelized Cost of Energy) method. It's basically process economics on a cost per kWh basis. See the references in SAM for particulars. Or see the NREL website for more information.
Whatever method chosen, if the lowest long term cost of meeting an energy need is one objective of getting solar, as is usually the case, some number crunching that's more than initial cost/initial savings is necessary. Often, such an analysis, if it uses realistic assumptions and time frames will show that solar energy is not the most cost effective way to meet an energy need, and may well be cost ineffective. What often happens then, even when folks understand the concepts (which is rare), is they wind up using unrealistic assumptions, like unrealistic time frames (say 30 yrs)., or impossible discount rates or very high salvage (resale) values, or etc. to justify a foregone decision based on lemming behavior and/or emotion, and back into a B.S. justification and call it sound economics, mostly (it would seem) because they used a lot of fancy formulas.
As for SAM vs. PVWatts, SAM is pretty much PVWatts on steroids and can be useful if you know what you're doing and understand the engineering involved. FWIW, and IMO only, for most folks, using SAM can be like giving a loaded pistol to a 2 yr. old, with more than a few users not knowing as much as the diff. between a kW and a kWh. Maybe your millennial coworker is not one of those people. Anyway, for most initial sizing (and, for better or worse, usually final sizing as well), PVWatts is fit for purpose.
One thing with SAM, if you use it, I'd suggest doing your own POCO tariff rates, or at least confirm the one's SAM uses. I've found SAM's rates for my POCO to be incorrect and incomplete after several years of use. Pass that on to your millennial coworker and tell him it's from a long retired P.E. prick.
It's been written (Duffie & Beckman, chap. 11, "Solar Process Economics") that: "Solar processes are generally characterized by high first cost and low operating/fuel costs. This leads to a comparison of an initial known investment (in the PV equipment), with estimated future operating costs/potential fuel cost savings.............
The objective of the economic analysis can be viewed as the determination of the least cost method of meeting the energy need, considering both solar and non solar alternatives. For solar energy processes, the problem is to determine the size of the solar energy system that gives the lowest cost combination of solar and aux. energy. systems."
Reducing an energy bill can be thought of as a way to make a profit, but it's not usually treated that way.
There are any number of sources of information on process economics and life cycle costing. Duffie & Beckman is one. There are lots of others. It ain't rocket science, but it does take some knowledge of the time value of money, and life cycle costing. In any case, before spending perhaps ten's of thousands of dollars on a PV system, and/or DIY labor, a cost analysis that's a bit more sophisticated than the moron method of initial cost/annual savings and calling that "payback" may be warranted. PV systems are costly and can last a long time. It's thought by at least the smart money that spending time to learn and do some economics based on a long view, the time value of money and consideration/estimation of other factors such as discount rates, taxes, etc, can pay big dividends.
SAM uses a method known as the LCOE (Levelized Cost of Energy) method. It's basically process economics on a cost per kWh basis. See the references in SAM for particulars. Or see the NREL website for more information.
Whatever method chosen, if the lowest long term cost of meeting an energy need is one objective of getting solar, as is usually the case, some number crunching that's more than initial cost/initial savings is necessary. Often, such an analysis, if it uses realistic assumptions and time frames will show that solar energy is not the most cost effective way to meet an energy need, and may well be cost ineffective. What often happens then, even when folks understand the concepts (which is rare), is they wind up using unrealistic assumptions, like unrealistic time frames (say 30 yrs)., or impossible discount rates or very high salvage (resale) values, or etc. to justify a foregone decision based on lemming behavior and/or emotion, and back into a B.S. justification and call it sound economics, mostly (it would seem) because they used a lot of fancy formulas.
As for SAM vs. PVWatts, SAM is pretty much PVWatts on steroids and can be useful if you know what you're doing and understand the engineering involved. FWIW, and IMO only, for most folks, using SAM can be like giving a loaded pistol to a 2 yr. old, with more than a few users not knowing as much as the diff. between a kW and a kWh. Maybe your millennial coworker is not one of those people. Anyway, for most initial sizing (and, for better or worse, usually final sizing as well), PVWatts is fit for purpose.
One thing with SAM, if you use it, I'd suggest doing your own POCO tariff rates, or at least confirm the one's SAM uses. I've found SAM's rates for my POCO to be incorrect and incomplete after several years of use. Pass that on to your millennial coworker and tell him it's from a long retired P.E. prick.
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