Document Type

Closed Project

Publication Date

Spring 2017


William Eisenhauer

Course Title

Advanced Engineering Economics

Course Number

ETM 535/635


This paper aims to analyze the economic benefit of installing a residential solar array in Portland, Oregon. Economic analysis is also performed for the excess energy generated which can be stored in the battery or can be sold back to the utility. On a basic level, solar panels convert the sun’s rays into electricity. Three solar systems with varied sizes were evaluated to identify the system size with maximum benefit. Through the analysis, a system size of less than 5kW was found to have the maximum cost-to-benefit ratio. The benefits of installing solar panel include: federal and state tax credit, along with an incentive from Energy Trust of Oregon (ETO). Five batteries were analyzed namely Tesla, LG Chem Resu 10, RedFlow Zcell, BYD B-Box LV Residential and Sonnen. Real customer data of an already installed solar array in Hillsboro was used for analysis. The electric bills before and after the array installation were analyzed. A 20 year cash flow was developed from the data gathered, and the internal rate of return, net present value and payback period were calculated. Then, sensitivity analysis was also performed by varying the energy consumption, size of the system, electricity rate, the forecasted increase in electricity rate over the next 20 years. We found that energy consumption did not have any impact on the internal rate of return and net present value of a system at this time. However, electricity rate increase and system size had an impact on the internal rate of return and net present value. Sensitivity analysis showed that investing in a solar system is a good economic decision, but that it would take a while to get the money back. Finally, the analysis also showed that smaller solar systems have good internal rates of return, and net present values and that there is no economic benefit in installing battery system in Oregon at this time


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