The area-dependent cost of a solar energy system

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The area-dependent cost of a solar energy system is $175/m2 and the area-independent cost is $3, 350. The down payment of the initial expenditure is 25% and the rest is paid in equal installments over 20 years at an interest rate of 7%. The backup fuel costs $12/GJ and its price inflates at 6% per year. Find the optimum system, if the combination of collector area and load covered is as shown in the following table and the total annual load is 980GJ. The life of the system is considered to be 20 years, and at the end of this period, the system will be sold at 25% of its original value. In the first year, the extra maintenance, insurance and parasitic energy costs are equal to 1% of the initial investment and the extra property tax is 1.5% of the initial investment, both expected to increase by 3% per year. The general market discount rate is 8%. The extra property taxes and interest on mortgage are deducted from the income tax, which is at a fixed rate of 30%.

Reference no: EM13896731

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