CEP Engineering Economy

Name:
Saddam Hussain
Reg#
2021-P-2020-EE-511
Submitted to:
Sir Waqas Ali
Problem:
The electricity short fall in the Pakistan’s power sector is the main cause
of severe load-shedding in the country specifically in summer. Activities of all
the sectors including domestic households get badly affected by such power
outages which could be minimized by adopting modern technologies such as
solar PV. The use of solar PV system in many countries has become a
promising solution to meet energy needs due to number of reasons including:
1. Households/homeowners can power their appliances for routine activities
with cheap fuel free
electricity.
2. Households/homeowners with solar PV systems installed can feed their
surplus electricity back into the grid. In exchange, the electricity distributor will
provide them with a reduction in their utility bill. The reduction is based on the
number of units that the homeowner feeds into the grid.
3. Electricity generation by the use of solar power contributes to no greenhouse
gas effects, or carbon emissions.
Pakistan is also blessed with abundant solar energy resource, which is extremely
useful for generation of electricity. But in Pakistan, its usage at household level
still remains largely untapped despite huge potential because of large
investment cost. However, The State Bank of Pakistan and the Alternative
Energy Development Board have recently allowed the bank to provide loans for
people who can’t afford rooftop solar installation.
Thus, as a homeowner of a Pakistani house, you want to install/purchase a solar
PV system on/for your house by/through availing bank loan facility. As an
engineering economy expert, you are required to:
a. Calculate the breakeven point in years for the installation of solar panels on
your house rooftop?
b. Plot your energy savings against investment to show breakeven situation.
c. Further explore the sensitivity of the proposed solar PV installation based on
investment cost and annual savings by determining its
acceptability/unacceptability conditions.
Solution:
1 year Avg units =
= 1756.6

1 year unit =
= 103.3

Per unit price =

= 17.04
Savings = 21129.6
Investment= 813173.7
Subsidy= 0%
1 Solar panel= 250W
Total load = 1000W
Solar Panels total= 5
Interest = 6%
Total solar watts = 1250W
Unit price of solar panels = 12000

Units per year =

= 2880
Each sq. feet produces = 33.82 KWh per year
Cost of installation per sq feet = 705.82Rs per year
Total area = 1152 × 705.88
Now

813173.76 = 664220.6(P/A,6%,X)
1.22 = (P/A,6%,X)
And
The value of X varies from 2 to 3 so that’s the tenure for this.
Graph:

Chart Title
90000

80000

70000

60000

50000
Savings

40000

30000

20000

10000

0
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5
No of Years