Solar Feasibility Report

Oakbrooke
Professional Center

3/11/2016
Adrian Wos

Introduction
Oakbrooke Professional Center (OPC) is ideally positioned for solar energy generation. This is a
non-biased overview regarding the feasibility of a solar array installation. Conservative practices
and estimates are used to give a worst-case scenario for electricity generation, installation costs,
and payback period.

Why Solar?
OPC common areas consume approximately 80,000 kWh of
electricity each year. This resulted in a cost of $8,700 in the year
2014. This number will go up as electricity rates increase ~4% each
year. OPCs low shading and generous roof space will allow the
installation of a solar array with a 12kW capacity, if not more. A
12kW system, on average, would generate 17.2% of OPCs common
area electrical demand. Decreasing equipment costs, generous
federal rebates, and increasing electricity costs make 2016 an
excellent year for solar energy installation. Furthermore, the
presence of green energy technology can increase the resale value of
individual OPC suites.

Setup
OPCs roof is clear of any shading, other than that given off
by AC units and the tower on the south side. Placing solar
panels at the North end of the roof at an elevation equal to
knee walls should prevent any shading on the solar panels.
The panels should be mounted at a 35 angle to maximize
productivity throughout the year. A detailed structural
analysis has to be conducted (usually done by solar installer)
to confirm that the roof can support the weight of the panels
and racking. Placing the panels on the North side will also
allow close connection to the electric room. The ~93 m2 of
available space would allow at least 48 250w panels for a
total of 12kW. Use of other parts of the roof could increase
the maximum capacity to approximately 20kW.

Electricity Production
Monthly Electricity
Generation

Analysis of meteorological data provided by the National

Renewable Energy Laboratory (NREL) gives an accurate
estimate of solar energy reaching Chesapeake. The closest
data collection facility is NAS OCEANA, which will
experience very similar conditions to Chesapeake. The lower
margin of solar energy (9% lower than average) was used to
give a conservative estimate.

1400
1200
1000
800
600
400
200
0

January
February
March
April
May
June
July
August
September
October
November
December

In the first year, the solar array will generate a total of

~15,161 kWh, corresponding to $1,705 of savings. Each
subsequent year will produce slightly less energy because the
panels themselves will denature each year (By year 25, they
will produce ~80% of their original energy). On the other
hand, yearly electricity price increases will overcome the
yearly degradation of the solar panels. The below graph
indicates yearly utility bill savings.

1600

kWh

The graph to the right shows monthly energy production

from a 12kW array. This takes into account inefficiencies
associated with the panels, inverter and wiring. Winter
months will produce less energy than summer months
because of the suns intensity and cloud coverage. OPC will
generally use more electricity in the summer because of air
conditioning loads.

1800

Lifetime Yearly Energy Savings

$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Breakdown of Installer
Quote
40000

Profit

35000

$4,560

Overhead

30000

$3,840

Customer
Acquisition

$4,320

Permitting fee +
Labor

25000

$1,320
20000

$3,960
$960
$2,400

15000

10000

5000

$2,400
$1,440
$3,480

Installation Labor
Equipment Sales
Tax
Supply Chain
Costs
Elec. Equip. (Wire,
switches, etc.)
Racking
Inverter

Installation
A certified installer should be contacted if the board of
directors chooses solar energy. They will handle
structural
integrity
analysis,
equipment
sourcing/installation, electrician approval, city and
utility permits, maintenance, and connection to
Dominions electrical grid. By nature, solar arrays are
not in need of maintenance. However, the electric
inverter should be examined every few years to prevent
premature failures. Since the maintenance is very rare
and easy, the installer will either give a warranty or
include future maintenance services in the initial
contract price.
The estimated quote given by an installer is $37,080.
This is based on a 2015 report issued by NREL
regarding average national prices for a comparable
array size.1 The graph to the left shows a breakdown of
the costs associated with the quote. Knowledge of
expenses is valuable when negotiating with installers.

$8,400
Solar Panels

Fed. ITC
Costs
covered

2016 2017 2018 2019 2020

2021

2022

30%

22%

10%

30%

30%

30%

26%

Policy
Solar installers should be familiar with any specific city/state codes for solar construction. There
are also a few state and federal policies which incentivize renewable energy. The Business Energy
Investment Tax Credit (ITC) is the most useful policy as it will cover 30% of all solar energy costs
as long as the construction begins before 2020, as shown in the table above.2 This will bring the
cost down to $25,956. Net Metering policy guarantees that local utilities must purchase any excess
power generated from renewable energy sources at retail prices.3 Finally, Renewable Energy
Certificates will be awarded to OPC for every kWh of energy generated. These can then be
auctioned off to utilities from all over the state. Utility companies purchase these credits in order
to claim that they use renewable energy to meet a percentage of energy demand (in Virginia,
renewable energy portfolio standards are voluntary rather than mandatory). The sale of these
RECs will not be factored into this reports financial analysis.
1. http://www.nrel.gov/docs/fy15osti/64746.pdf
2. http://programs.dsireusa.org/system/program/detail/658
3. http://programs.dsireusa.org/system/program/detail/40

Lifecycle Cumulative Cash Flow

$40,000
$30,000
$20,000
$10,000
$$(10,000)

$(20,000)
$(30,000)

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Financial Bottom Line

Predicted Installer Quote
Cost after Tax Credit
Payback Period
Average Yearly Savings
Profit Over 25 Year Lifetime

$ 37,080
$ 25,956
13 Years
$ 2,468
$ 34,015

Economic Analysis
A 12kW solar array installation has a payback period of just under 13 years. Selection of solar
panels and electronics can have a very positive impact in regards to lowering initial costs and
increasing yearly production. This analysis also assumes that the inverter will break in the 13 th
year. Over the 25 year minimum lifetime of the solar panels, OPC would see a profit of $34,015.
There are several factors which can lower this payback period. This analysis assumed electricity
rate increases of 4%, when the average is closer to 4.5%. If Virginia passes legislature for
mandatory renewable energy generation percentages, as other states have done, then the RECs
will become more valuable and can cut down payback period by approximately one year. REC sale
price was not factored into this analysis at all. The estimate for total installation price was based
on data for residential 5kW arrays. Due to economies of scale, a 12kW+ array should result in a
slightly lower $/kW ratio.

Conclusions
A solar array installation at OPC will have a realistic payback period of 9-13 years and a life
expectancy of at least 25 years. This would result in a total profit of at least $34,000. Most solar
installers will provide a free quote with information regarding yearly generation and payback
period. The extension of the 30% Federal Business Energy Investment Tax Credit into 2019 gives
over 3 years for decision-making. Future years will most likely see a slight decrease in equipment
costs, but labor and other expenses will most likely stay the same. Additional state incentives are
unlikely as the energy committee is mostly staffed by former Dominion employees.

Appendix A
Cumulative Cash Flow
Year

Array Cost

0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

$ (37,080)

(1,740)

ITC

kWh

Elec. Rate

$ 11,124

15161
15040
14919
14800
14682
14564
14448
14332
14218
14104
13991
13879
13768
13658
13549
13440
13333
13226
13120
13015
12911
12808
12705
12604
12503

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

0.11
0.11
0.12
0.12
0.13
0.13
0.14
0.14
0.15
0.16
0.16
0.17
0.17
0.18
0.19
0.20
0.20
0.21
0.22
0.23
0.24
0.25
0.26
0.27
0.28

Bill Savings
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

1,656
1,708
1,762
1,818
1,876
1,935
1,996
2,060
2,125
2,192
2,262
2,333
2,407
2,483
2,562
2,643
2,727
2,813
2,902
2,994
3,089
3,187
3,288
3,392
3,500

Cash Flow
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(24,300)
1,708
1,762
1,818
1,876
1,935
1,996
2,060
2,125
2,192
2,262
2,333
2,407
743
2,562
2,643
2,727
2,813
2,902
2,994
3,089
3,187
3,288
3,392
3,500

Cum. Cash Flow

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(24,300)
(22,592)
(20,830)
(19,012)
(17,137)
(15,202)
(13,205)
(11,146)
(9,021)
(6,829)
(4,567)
(2,234)
173
916
3,478
6,121
8,848
11,662
14,564
17,558
20,648
23,835
27,123
30,515
34,015