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Economic Analysis for Residential Solar PV Systems Based on Different Demand Charge Tariffs

Author

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  • Milad Zeraatpisheh

    (Department of Mechanical Engineering, Sharif University of Technology, Tehran 79417, Iran)

  • Reza Arababadi

    (Department of Energy, Institute of Science and High Technology and Environmental Sciences, Graduate University of Advanced Technology, Kerman 76169, Iran)

  • Mohsen Saffari Pour

    (Department of Mechanical Engineering, Sharif University of Technology, Tehran 79417, Iran
    KTH Royal Institute of Technology, 114 28 Stockholm, Sweden)

Abstract

It is well known that the use of photovoltaic (PV) systems helps to preserve the environment, produce lower levels of greenhouse gases (GHGs), and reduce global warming, however, whether it is economically profitable for customers or not is highly debatable. This paper aims to address this issue. To be comprehensive, three different types of buildings are considered as case studies. Then, these three buildings are modeled in EnergyPlus to determine the rate of energy consumption. Afterward, comparisons of various solar system sizes based on economic parameters such as the internal rate of return, the net present value, payback period and profitability indexing for various-sized PV systems are carried out. The results show that by the demand charge tariffs, using PV systems has no economic justification. It has been shown that even with neglecting further costs of the PV system like maintenance, by demand charge tariffs, it is not economically beneficial for customers to use the PV systems. Profitability index of all three buildings with various PV power systems is between 0.2 to 0.8, which are by no means is desirable. Moreover, it was found that bigger solar systems are less cost-effective in the presence of demand charges.

Suggested Citation

  • Milad Zeraatpisheh & Reza Arababadi & Mohsen Saffari Pour, 2018. "Economic Analysis for Residential Solar PV Systems Based on Different Demand Charge Tariffs," Energies, MDPI, vol. 11(12), pages 1-19, November.
    • Handle: RePEc:gam:jeners:v:11:y:2018:i:12:p:3271-:d:185152
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