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Lab: ROI-TCO

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Lab: ROI-TCO

Return on investment (ROI) is the time it will take for any investment to break even, or recover the initial investment.

Example: if you purchase an electric vehicle that saves you $400 every month in progressfuel, but costs you $40,000, you would divide the 40,000 by 400 to get 100 months, or about 8.3 years. Note: the error in this problem is that the electric vehicle still has value, so you could sell it later on. 

Total cost of ownership (TCO) is the total amount of money you put into the investment before it breaks or you lose the income from the investment. In the car example, if the car was stolen with no insurance after 100 months, your TCO would be zero. If it was stolen before you paid it off, your TCO would be positive (you had to pay more than you got back). If it lasted 200 months, your TCO would be negative (you made money on the investment). One error with the car is it assumes no maintenance, and the fuel costs ($400/month) were the same. It also does not include the electric power you could get free from solar panels to charge the car.

Solar radiation notes:

    go to http://10.14.8.1 click on Elab solar, play with the days and times. note the shape of the curves for PV production at the elab We use “solar hours” as an expression of how many hours at full power a system could produce if it were a box, not a curve:  
    solar 5.5 hours.png
    solar 5.5 hours.png

    In this example we would have about 6 solar hours at 100 kW or 600 kWh of energy.

    You can see we are taking morning and afternoon power and pasting it into the white bits later on.

    Homework questions:

    PV questions: (updated 3.4.24)

    Your PV panels cost $1.00/Watt, you have 6 solar hours per day, and you want to use 400 Watt solar panels to power your home, which uses 24 kWh of electrical energy every day. 

      How much did you spend on electricity every day before you put in the panels, at $0.40/kWhHow much energy would you get from each 0.4 kW panel each day? How many panels will you need to cover your energy use? How much will this cost? What is the ROI for your system? If the system lasts 25 years, what is the TCO?

      Solar Thermal questions:

      Your hot water heater uses 4.5 kW for 2 hours each day. 

        How many kWh is this every day?How much does this cost you per day (use the same cost as above)?If your solar thermal panel is 1m x 2m, what is the area for this panel? If your solar insolation is 1000 W/m2, for 6 solar hours per day, how many kWh of heat energy can you harvest each day? How much would this save you at $0.40/kWh each day? If the system cost you $1500, what is your ROI? If it lasts for 35 years, what is your TCO? If half of the energy is lost as heat each night due to poor water tank insulation, how much is this costing you each day? If insulating the hot water heater costs $100, what is the ROI for this? If it lasts for 20 years, what is the TCO for the insulation? 

        Note: 50% is an exaggeration, but a new insulated tank could make this sort of difference. Look at the heat photos of the water heaters in the cottages, and make a proposal for what you would change.


        Check your answers:

        1. $9.60
        2. 2.4 kWh
        3. 10 panels
        4. $4000
        5. 416 days about 1 year
        6. $84,000 (negative, you made money!)

        1. 9 kWh
        2. $3.60/day
        3. 2 m2
        4. 12 kWh
        5. $4.80
        6. 312 days, about 1 year
        7. about $60,000
        8. $2.40 lost per day
        9. about 40 days
        10. $17,500 (negative again, you saved money)





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