Economic Analysis and Current Projects

133

Chapter 11

ECONOMIC ANALYSIS AND CURRENT PROJECTS

11.1 Introduction
The applications of small-scale photovoltaic systems have been a very recent phenomenon in rural areas of Bangladesh. Although systems of 17Wp to 250Wp sizes have been installed but more than 90% of the application are between 30Wp to 80Wp. The installation of photovoltaics systems has been happening in the backdrop of bleak possibility of connecting every household to grid power within the next decade. Bangladesh has made very little progress in rural electrification efforts. Back in 1990, only 12% of total population in Bangladesh had access to electricity (Ramani, 1999). That proportion has move up to only 16% of total population having access to electricity (25% in urban areas and 10% in rural areas) 1999.The grid power supply of is most unreliable causing disruption production, irrigation and creating all kinds of hardship in household, who were lucky enough to get a connection in the first place. The most common fuel for lightning in rural areas in Bangladesh is kerosene. The monthly consumption of kerosene by rural household varies between 2 to 9 litters costing Tk. 40 to 180 per month. Dry cell batteries are used for radio and gradually wet batteries are becoming popular for running TV near grid areas where the charging facilities are available. Over the years significant technological advances have been made in developing renewable energy technologies, especially in the field of solar photovoltaic and wind energy. In addition, for remote rural areas where the conventional grid system may not be viable, these forms of decentralize alternative energy system may be far more adaptable and well suited. Most of the small application in rural areas is in the households to meet the basic purpose of lightning and entertainment. The emerging field is to use photovoltaic technology for generating incomes.

11.2 Installation of solar system and field performance in Bangladesh

Any renewable energy solution has to provide satisfaction to the end users to become commercially successful in the practical world. A major factor affecting customer satisfaction is the technical and functional quality of the system. Rural electrification through solar home systems (SHS) has been a successful venture in Bangladesh, where large portions of rural habitations are not connected by grid electricity. The rural

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

op y

Economic Analysis and Current Projects electrification project under study started in 2003, and has since then seen an amazing average annual growth of 104% [26] till date. Till June, 2009 the SHS project has installed over 334,000[27] SHS units all over Bangladesh.[28]

134

Technical Standard Committee

IDCOL

Credit & Grants

Donors

Approval

Loans & Grants Down payments and Installments

NGOs/ POs

Payment
Suppliers

& Supply

Consumers / Households

Sales and Services

Fig 73: Operational flow diagram of IDCOLs Solar Home Systems Project. The Solar Home Systems project is run by Infrastructure Development Company Limited (IDCOL), a financial institution established by the government of Bangladesh. IDCOL receives soft term loans and grants from donor agencies like the World Bank, Global Environment Facility, GTZ and KFW to fund the project. IDCOL then uses these funds to distribute SHS units to rural households through intermediaries like NGOs and Partner organizations (PO). The partner organizations then sell the SHS units to the rural households who buy the units over a period of three to four years by paying a down payment and monthly instalments. After the installation of the SHS units partner organizations claim the grants and loans from IDCOL to pay for the SHS units purchased from approved suppliers and manufacturers of SHS equipments and components. The cost to the end user is reduced by the grants from donor agencies. Up to July, 2009 the number of installed SHS units by partner organizations (PO) are given in table 10. Grameen Shakti is the largest PO by number of SHS installed.

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

op y

Economic Analysis and Current Projects Table 10: PO wise installed SHS units under IDCOLs RREDP till July, 2009.
Name the PO of Total installation of SHS Total Small SHS Installed March10 Total in Installed in February10 Total Small SHS Refinance and Grants applications Submitted Approved Refinance & Grant applications pending Installation Mar Average 2010 (6 months)

135

Small SHS

Though there is an amazing success of the project, in recent years complains were coming from customers regarding the SHS units. Some of the SHS units were not functioning properly, there was an increase of faulty SHS packages in the market, the component parts were below standard and there was an increase in customer dissatisfaction with the after sales services. Some of the components parts standard deviated from the technical specifications [27] of SHSs in Bangladesh. Consequently, an audit was necessary to address these issues for the sustainable growth of the project. The scale of the audit was small and was carried out at the level of individual households in representative villages of Bangladesh. The purpose of the audit was to test the components supplied by the manufacturers in operating condition. Some components were also sampled from the manufacturers production line. The service quality of the
Study of Solar Module & Its Efficient Use in Bangladesh

Grameen Shakti BRAC Foundation RSF SRIZONY UBOMUS BRIDGE HFSKS COAST IDF CMES Shubashati TMSS PDBF PMUK NUSRA AFAUS AVA DESHA RIMSO REDI INGEN Others Total

310,992 24746 56,444 59,216 15,174 10,097 7,562 8,539 3,869 5,137 3,547 2,950 2,870 2,664 900 205 43 259 261 477 642 568 389 492,805 976 9343 1146 1032 352 796 320 198 56 95 215 105 108 26 3 0 10 94 75 71 1 39,768

12590 925 3625 1401 545 455 439 129 284 85 56 233 103 32 105 26 115 124 166 110 240 0 21,788

2460 14 1071 304 176 0 109 22 27 2 7 34 10 9 0 3 0 0 39 6 27 0 4,320

9751 924 2773 910 477 357 341 96 212 86 55 137 83 32 50 12 100 71 106 106 162 0 16,841

2020 39 800 199 131 104 79 13 14 5 6 21 12 9 13 0 0 0 28 10 27 0 3,530

292,561 54,494 54,562 13,715 9,427 7,423 7,802 3,611 4,574 3,440 2,760 2,853 2,540 868 204 43 144 261 477 524 328 363 462,974

281,625 51,508 50,597 12,551 8,864 6,931 7,244 3,431 4,236 3,126 2,725 2,548 2,390 787 50 0 0 66 311 423 166 352 439,931

11007 903 2980 769 397 280 338 94 203 83 53 146 93 37 17,383

2 2 2 2 2 1 2 3 3 1 4 1 1 1 -

ot C

op y

Economic Analysis and Current Projects POs was assessed by examining the proper installation and maintenance of the SHS systems in households. 60 SHS units randomly picked from four geographically distributed locations in Bangladesh were thoroughly checked. The component parts that could not be examined with the field equipment were brought to the laboratory for testing. The performance of the charge controllers, lamp circuits, batteries and panels were observed and tested. Load calculations were conducted and the switching device and wiring were also tested.

136

Fig 74: Four different geographically distributed locations (flagged) of Bangladesh, where the field visits for SHS inspection were conducted (Map courtesy: Google maps) Out of 15 partner organizations of IDCOL, the SHSs of eight partner organizations were inspected by the audit team. The inspected partner organizations and the number of their inspected SHS are given in table 10.

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

op y

Economic Analysis and Current Projects

137

Table 11 Partner Organization wise investigated SHS. Partner Organization Grameen Shakti RSF Hilful Fuzul S.K.S. Srijani Bangladesh BRAC Foundation UBOMUS TMSS BRIDGE Total No. of Inspected SHS 22 15 7 5

The audit work was done in a span of eight months starting from July, 2009. The number of visited systems according to panel capacity is given in table 9. Table 12 Panel capacity wise inspected systems Panel Capacity of the System (Wp)

N
21 30 40 50 60 65 85 Total

ot C

The majority of the SHS systems used in Rural Bangladesh have capacities of 40 and 50 Wp.

Study of Solar Module & Its Efficient Use in Bangladesh

op y
4 2 1 60 Number of system 1 3 24 22 2 7 1 60

Economic Analysis and Current Projects

138

11.3 Major PV Programs in Bangladesh

PV Technology in Bangladesh The photovoltaic modules have been in used by various institutions for several years. Recently Rural Electrification Board (REB) of Government of Bangladesh (Prokoushali Sangsad, 1998) and Grameen Shakti have installed photovoltaic systems in rural areas for household applications. Photovoltaic modules are imposed from outside Bangladesh. Local manufactures produce batteries. Other component like charge controllers and ballast are made available from local entrepreneurs, which is very positive sign for development of renewable energy technologies. The imported accessories have been found to be very expensive compared to locally fabricated items. Small entrepreneurs fabricate charge regulator and ballast for the lamp. IDCOL Solar Energy Program [26]

IDCOLs Solar Energy Program is one of the fastest growing renewable energy programs in the world. It has brought in positive changes in the livelihood of remote rural areas of Bangladesh by providing access to electricity. Chairman of the Senate Foreign Relation Committee of the United States, John Kerry in his speech at the World Bank Head office on 19 November 2009 mentioned IDCOL Solar Home System (SHS) project as a good example of literally life-altering project of the World Bank. IDCOL implements the program through 23 partner organizations (POs) including Grameen Shakti, BRAC etc. Rural Electrification Using Photovoltaic Technology Two Organization REB of the government of Bangladesh and Grameen Shakti, are implementing projects to popularize PV systems as an alternative approach to rural electrification. However these two organizations are following two different approaches.REB through its rural electricity cooperative society is selling the power & Grameen Shakti is selling the PV systems.

Study of Solar Module & Its Efficient Use in Bangladesh

IDCOL promotes dissemination of solar home system (SHS) in the remote rural areas of Bangladesh through its Solar Energy Program with the financial support from the World Bank, Global Environment Facility (GEF), KfW, GTZ, Asian Development Bank and Islamic Development Bank. IDCOL started the program in January 2003 and its initial target was to finance 50,000 SHSs by the end of June 2008. The target was achieved in September 2005, 3 years ahead of schedule and US $ 2.0 million below estimated project cost. IDCOL then revised its target and decided to finance 200,000 SHSs by the end of 2009. This was also achieved by May 2009. Now IDCOLs target is to finance 1 million SHSs by the end of year 2012. Up to December 2009, a total of 438,000 SHSs have already been installed under the program.

ot C

op y

Economic Analysis and Current Projects Solar PV Program of REB REB has implemented two different types to the household: Battery charging facility through central charged station s for a fee;Standalone PV systems have been installed in the houses of the houses of the customers. Customers pay a monthly fee for the service depending on the capacity of the system. Presently, more than 700 customers are receiving power from the REB project. The project has been financed by the French Government grant and has used all imported hardware from France. The main feature of REB project is that the systems are owned by the society and customers pay a service fee. Systems are mainly used for lighting and operating TV. The experience of REB project can be summarized as follows: Customers prefer standalone system mainly due to higher quantity of energy available from the system and for convenience; batteries need not to be brought to the charging station. Customers prefer relatively larger systems (46W p and above) Charging stations may be considered as a failure. Customers do not like to frequently charge batteries from charging stations. It is very inconvenient to bring batteries from far-flung areas. Many batteries have been damaged due to excess discharge (Prokoushali Sangsad, 1998).

139

Branch offices of GS install systems, provide after-sale service and collect installments. Solar photovoltaic system is still very expensive in Bangladesh compared to the average income of rural population. To make the system affordable and accessible by rural people, GS provide medium term financing to its customers. It has followed a gradual and learning approach in devising its financial scheme. At the beginning, GS used to take 50% of the system price as down payment and the remaining 50% was recovered within 6 month, in 6 equal monthly installments. Later, the down payment was reduced to 25% of the price and repayment period was extended to 2 years. Currently, the financing scheme has been further relaxed. The present financing scheme is as follows:

Study of Solar Module & Its Efficient Use in Bangladesh

Solar photovoltaic system is highly decentralized and particularly suitable and economically viable for remote and inaccessible areas. Grameen Shakti (GS) selects those areas where there is no source of conventional electricity, or areas with low coverage by Rural Electrification Board (REB) or areas where there is no chance of REB expanding within the next 5-10 years. That automatically forces GS to select remote and under developed areas.

Solar PV program of Grameen Shakti

ot C

op y

Economic Analysis and Current Projects Customers pay 15% of PV system price as down payment. Outstanding 85% is paid in monthly installment within a period of 3 years. Customers pay 12% per annum as service charge on outstanding amount of finance. GS has been marketing in different district 1996.Up to November 2000, GS has installed 3380 systems having installed capacity of 167.6KW p .Although in absolute term this figure is small but for a new organization like GS, it is quite encouraging. The most common size is the 50Wpsystem that can power three lamps and a Black White TV for 4 hours per day. GS has installed systems in the range of 13W to 225W for different application like lighting, operating fan, TV, computer, cellular phone, repairing radio TV etc. In some places solar systems are also used for emergency lighting purpose even within grid areas. The applications of PV systems are overwhelmingly for household purpose lighting and entertainment. Business and institution are also trying PV system to extend their working hour at the evening and for operating computer system. Examples of institution are Grameen Bangladesh Office, some college and nongovernmental organization (NGO).The buyers of the system remain mainly from the high income households in the rural areas. GS is yet to reach the poor with the renewable energy service. The average monthly income may vary be between Tk 40008000.Some of the customers use photovoltaic systems for income generation. Examples of such applications in the village are follows: cellular phone service, micro utility and radio/TV repairing shop etc.

140

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

op y

Economic Analysis and Current Projects Grameen Shakti District: Gazipur Total Unit: 1000
Table 13 Data of solar panel at Gazipur district[29] Over all Performance of Solar panel at Gazipur district Sub -district Mawna Amrail Solar (Total)
10000

141

Damage Battery 100

Damage panel 30 2

Active Solar

Performance 98.7% 99.2% 99.5% 85% 98.30% 100%

9870
496

500 400 60 59 9

2
1

Kandipara
Trisal Valoka Gazipur

ot C
1. Battery 2. Panel 3. Inverter 4.Short ckt. 5.Indicator 6.Burn by short ckt 7.Rated vol

TOTAL=11028

ACTIVE=10882

OVERALL PERFORMANCE: 98.68%

Less Damage

N
Often Damage

Table 14 Performance of solar at Gazipur Performance depend on

Study of Solar Module & Its Efficient Use in Bangladesh

op y
1

398 51

58 ~<F

1.Lightening 2.Human

Economic Analysis and Current Projects

142

Mawna 98.7% Gazipur 100% Volaka 98.3%

Sokhipur 99.25 Amrail 99.2%

Kandipur 99.5%

Trisal 85%

Figure 75: Overall scenery at Gazipur (Based on data 31 January 2010) Grameen Shakti District: Savar

Table 15 Data of solar at Savar Over all Performance of Solar panel at Savar district Sub -district Damrai Singaer Saturia Caliakoer Savar Solar (Total) 4500 1500 800 150 Damage Battery 25 10 2 x 3 Damage Panel 10 2 1 x 2 Active Solar 4465 1488 797 150 1495 Perpormance (%) 99.2 99.2 99.6 100 99.6

Study of Solar Module & Its Efficient Use in Bangladesh

o
1500

ot C

op y

Economic Analysis and Current Projects

143

Damrai 99.2% Saturia 99.6% Savar 99.6%

Singaer 99.2% Geor 99.4%

Kaligon 97.5%

Caliakoer 85%

Figure 76: Overall scenery at Savar (Based on data 31 January 2010) Solar Photo Voltaic System By RAHIMAFROOZ

Progress Review and Inference: Solar panel is the vital item of solar system. R.A has constant lobby with government over the years have enabled us to reduce duly on the item from 100% to 45% and then with Grameen lobby to currently 2.5%. This has played a great role in making solar system more affordable to rural mass. R.A has spent millions of Tk. in advertisements and special events to create awareness among target customers, individuals and development agencies. Solar energy no longer is unknown in our country at least among the policy and decision makers. Some of the development agencies have already come forward and installed solar power systems for rural home lighting, cyclone shelters, schools, hospitals and other applications. Our first sales were to an individual in Faridpur district. EDM was the first to use solar energy among few other development agencies that also came forward gradually Now Grameen Shakti has also undertaken. Solar PV home lighting systems in the remote
Study of Solar Module & Its Efficient Use in Bangladesh

Activity Details: Thus we pioneered supply of solar photo voltaic systems and have so far installed systems generating approximately 95.0 kW. [30].

All of we are aware, only 15% of the country gets power from national grid electric supply and it reaches mostly urban cities and townships. And that too, is not consistent but irregular due to old any worn out power generation equipment and systems. Keeping in mind our acute scarcity of conventional energy sources, Rahimafrooz ventured into solar photo voltaic systems in 1985 main behind solar mission was to provide electricity for the rural mass, by utilization of our battery manufacturing facilities. [30].

ot C

op y

Economic Analysis and Current Projects village of Bhaluka in the district of Mymensingh where in Gremeen Shakti is expected to utilize the expertise of Rahimafrooz for providing lights for 100 homes through solar PV systems. To Gremeen also Rahimafrooz is subsidizing the cost to make their venture initially successful. Our national experts must also induce government to provide solar lights in all government establishments outside grid supply areas for greater involvement in solar awareness build up. It is a matter of great hope that our government has recently put due attention on the issue and appreciating the need of solar PV application in the country. Rahimafrooz is committed to sustain its efforts of solarization in Bangladesh and do everything realizable in this respect in the days to come to eradicate darkness and alleviate poverty from rural Bangladesh. [30] Solar System By SIEMENS

144

In our country, solar PV application primary concentrates on rural home lighting. As per statistic about 85% of total population in Bangladesh is deprived of electricity. Palli Bidyut Samity (PBS), a Govt. rural electrification project has almost covered the whole Bangladesh in its drive for rural electrification. Yet we should understand that PBSs are running under heavy govt. subsidy and it will not be also economically viable for PBS to expand electricity to every end-user of remote & isolated places. As a result, stand alone solar PV home-lighting system can be a viable solution to this huge electricity demand. As an introduction SIEMENS activities in Bangladesh it has already made a good investments in solar PV system e.g. constancy research and experiments, solar laboratory, practical installation works, after-sales service employing skilled personnel's engineers & sincere endure. Providing the most reliable, robust & competitive priced products and well designed system, the company has already surpassed its initial target and installed more than 50 PV units around the country and the rate installation and sale is increasing in superlative manner day by day. SBL in collaboration with our worldwide partners can anyone with the best products, good service, technical

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

Though it is quite recent SIEMENS Bangladesh Ltd. (SBL) has stepped into solar business in Bangladesh, it is like year 1996, last year, when SIEMENS solar worldwide has completed its installation of 100 MW cumulative solar energy system. This proves its pioneering role in the advance of solar power utilization for the benefit of mankind, from small solar home lighting system to huge grid connected one; SIEMNES is the world's leader solar PV system having 24% market share in the world. SIEMENS solar products hold international high standard in ISO 9001 verification & SIEMENS has 150 years of reputation for its quality product, after sales service & technical support all around the world.

op y

Economic Analysis and Current Projects assistance and offer solar training manuals program in view to enable customers use and understand solar sound & effectively.[31] SBL has all the technical back-up & installation support providing solar application for the following fields of application. Solar home lighting Water delivery Telecommunications Rural health clinics Utility grid support Navigational aids SIEMENS has a variety if standard solar modules of different sizes & electrical output designed to meet most requirements. SIEMENS modules use single crystalline silicon solar cells, processed using state-of-the-art technology, which assures high efficiency in converting light into electricity. SIEMENS solar modules are designed & tested to provide continuous reliable power even under extreme environmental conditions (In very dry weather & in as low as 5% sunlight condition) ensuring high standards for performance, safety, and durability. SIEMENS has the best quality module having maximum AH/watt/day i.e. gives total AH in a day is higher than modules of other companies. SIEMENS solar modules guarantees 20 year expected life with 10 years of under graded output power, which is not warranted by many other solar module manufacturers. Good solar services mean supplying reliable & lasting solar system assuring less cost on the side of our customers. The components of simple solar home lighting are: Solar module Charge regulator Lamp Battery etc.

145

SIEMENS Bangladesh Ltd. has all its preparation i.e. technical support skilled personnel, back up service and international good will as well as to meet up the challenges for solar revolution up coming in Bangladesh. [31] Program of Other Organizations The Local Government Engineering Department (LGED), a governmental entity, has renewable energy program under which it has installed photovoltaic systems in several cyclone shelters in coastal areas. This is mainly for the purpose of disaster preparedness

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

op y

Economic Analysis and Current Projects and to face emergency situation.A local small NGO has installed several systems in Thakurgaon district. The system configurations are as follows. Very recently Bangladesh Rural Advancement Committee (BRAC), the largest non-governmental organization (NGO) in Bangladesh, has launched its photovoltaic program after completion of pilot program. The program is somewhat similar to the Grameens program. However, BRAC depends on a local supplier for supplying the full system including balance of systems and installation. BRAC provides customer financing for 2 years. Besides, the Center for mass education in science (CMES) [32] has been trying various mode of financing PV systems on pilot basis. It has targeted both household and shops in rural bazaar. It has sold PV system on credit to households as well as rented/leased the systems on the basis of annual rent. In Markey places it has established micro-utilities where it sells power to the shop owners for daily payment basis. Besides for mass education in science (CMES) [32] has been trying various modes in financing PV systems on pilot basis. It has targeted both households and shops in rural bazaar. It has sold PV systems on credit to households as well as rented/leased the systems on the basis of annual rent. In market places it has established micro utilities where it sells power to shop owner for daily payment basis. There have been reports that Bangladesh Power Development Board (PDB) will also initiate photovoltaic program in Chittagong Hill Tracts where grid power system may not be viable due to hilly terrain. Other small private organization and NGO are contemplating introduction of PV program as supplier, fabricator, of balance and installer.

146

11.4 Investment Analysis

This section illustrates the method of analyzing photovoltaic application from customers/ investors point of view, especially those from the rural areas. We have already mentioned the type of customers buying the photovoltaic system and applications of those systems. It is important to note that rural customers obviously neither go for formal investment analysis before buying the systems nor have the skills to do so. They normally take buying decision based on the perceived benefits of the system, experience of other users of the systems and their ability to pay the installments for the system when they buy on credit. Some of the customers who invest to earn money do some intelligent guess, especially regarding annual income that the system can generate. But they in no way go for sophisticated analysis like Net present Value

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

op y

Economic Analysis and Current Projects (NPV) method as described in this paper making investment decision. Currently NGO and government a agencies are mainly promoting photovoltaic application in rural areas. Private companies are not directly taking them to the rural customers; instead they concentrate on supplying hardware to the NGO and other installers only. In this context the promoters must know what they are promoting to the relatively low income household. Rural people cannot afford the luxury of wasting resources on inappropriate investment which may not meet their needs or for which they must pay premium price. Besides, if photovoltaic system is an appropriate investment it would definitely help the promoters to market systems by indicating not only the social benefits. The financial benefits make photovoltaic systems more attractive, which can be promoted as a way of generating income and reducing poverty. It is also important to note that only financial appraisal is not adequate to fully appreciate energy investments, not to mention the renewable energy source like photovoltaic systems. The appraisal should take into account the social, environmental and technological aspects as well. For example, the financial analysis takes into account neither the long term impact on child education due to good light nor the impact of having a TV in the house using photovoltaic power which was not otherwise possible. That is, the long term impact of promoting renewable energy technology is not fully accounted for in micro financial analysis. Governments of various countries provide subside for photovoltaic programs where the financial return is not the only consideration subsidies are provided for social and environmental consideration. Methods of Investment analysis A household and/or of a micro-entrepreneur who buys a small photovoltaic system normally of the order of 30W p to 75W p for household purpose or for micro investment for income generation. Therefore, the investment decisions do not rally warrant for very rigorous financial analysis. Nevertheless the principle of financial analysis remains the same. The first step of financial appraisal is to determine all benefits and costs in monetary terms. We shall excludes the benefits like environmental impacts, long term benefits of child education due to having good quality of light at home, social benefits of having trained technical in rural areas or creation of new business opportunities due to introduction of new technology in an area. These are difficult to estimate and need not to be considered to appraise individual investment. But this factor may be taken into account when a whole program of an organization is evaluated. The cost of photovoltaic systems are obviously the initial investment to purchase the system, repair and maintenance expenses, replacement of component like batteries charge regulator, lamps etc, in future within the life time of modules. On the other hand the financial benefits are the revenue from the photovoltaic

147

Study of Solar Module & Its Efficient Use in Bangladesh

ot C

op y

Economic Analysis and Current Projects system. The revenue will depend on the nature of application. If a micro-utility is setup, the annual energy bills will b the revenue. On the other hand if the system is used for household purpose our approach would be to estimate the present expenditure for energy, for example expenditure for using kerosene lamps and compare that figure as reference for opting for photovoltaic systems.Also we will argue that customers/households are willing to pay a premium price for better light, convenience etc, the estimate for premium price could be used a cost saving and therefore, could be used as revenue for computation of various indicators using different method. The fundamental principle of appraisal method is to compare costs against benefits. Although the principle sounds simple but the analysis may become somewhat difficult because of the fact that costs and benefits are spread over a very long period of time for photovoltaic systems, over a period 25 years. For photovoltaic systems costs are easy to estimate. The cost of system has to be made up front. But the cost of replacement will be made some time in distant future, which makes the estimation difficult. But the more controversial issue is to estimate benefit/revenue/cost saving over a period of 25 years because scenarios may radically change over the long period of time. For example, photovoltaic application is found viable in remote areas where grid power may not reach soon. But within 5-10 years grid power may reach many parts of the country. Then the assumption about revenue earned by selling power may not be at all valid. The point is that the appraisal methods are based on some implicit & explicit assumption about income and expenditure stream, which may change dramatically over the life of system or a project.

148

Study of Solar Module & Its Efficient Use in Bangladesh

Simple Payback Period Discounted Pay-back Period Net Present Value (NPV) method Internal Rate of Return Method

Different types of investment techniques are:

ot C

op y