Caroline Cchneider
Other: Statistical Analysis
Example of a Monte Carlo Simulation Used for a Solar Energy Feasibility Study and my interpretations of the findings.
Based on the base case model both projects are forecasted to have turned a profit in Year 5. After 5 years of operation the total NCF is forecasted to be $17,242, $116,676 after 10 years, and $209,634 after 25 years. Using a discount rate of 25% the NPV through 25 years of operation would then be $17,657.
Total electricity bill savings through 25 years would amount to $215,453 and total sales of SRECs would amount to $242,537. After subjecting the base model to stress tests via the Monte Carlo simulation the financial circumstances look even more favorable. This is due in large part to the fact that conservative figures for items like the growth rate in electricity pricing were used intentionally in the base case scenario. The total NCF after 25 years of operation averaged $321,248 through 10,000 trials.
Electricity bill savings average $286,866. Total revenue from the sale of SRECs actually drops just slightly from $242,537 in the base case scenario to an average of $239,997.
Assuming the Project qualifies and receives all the aforementioned grants and tax deductions, takes all necessary steps in order to Sell SRECs, and the Maryland legislative circumstances remain favorable to solar energy, the project is anticipated to be Financially Feasible.
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