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from the sun at the low tariff offered by the vendor. [Furthermore, net
power taken from the utility CEB - is reduced and paid for at a lower rate
in countries like Lanka were tariffs are graded to rise with rising usage].
Solar Lease contracts include free maintenance and repair for 20 years.
The small type makes provision for tariff revision after some years but
since the average annual sunlight at a given location is unlikely to vary, US
fair trade regulations will permit tariff revision only if labour or
maintenance costs change by a large amount. I describe below a case
where the monthly bill fell from about $85 to about $60.
How does the vendor/supplier make money? The vendor faces no energy
cost; its free from the sun. What he needs to recover is investment and a
fair return on capital over a time period. If the income stream is spread
over 20 years, present value after discounting is what matters. Or simply,
if money is losing its value at say 5% per year one would need to recover
Rs 105 next year to be worth Rs 100 in todays money (actually 100/(10.05) or Rs 105.26). This has to be repeated for 20 years. Methods of
discounting are not the point the web and tables are there for that the
point is that the vendor will seek recovery of capital and a fair return over
the project lifetime (maintenance and repair costs are small).
If the required annual income flow divided by the number of units
produced is less than the utility tariff, both consumer and vendor can be
winners. Therefore production must be large enough to ensure that the
cost beats the utility tariff. Chart 1 shows the monthly electricity produced
by roof panels covering 250 square feet (22.3 square meters) of a
middleclass Los Angeles home.
The game is a little more complicated because solar production is during
the day when no one is at home and consumption low. The excess energy
(only fridge and the wine-cooler are running) is fed back to the mains and
the vendor is reimbursed at the marginal price of saved utility energy. If
the utilitys marginal generating cost is 13 US cents per unit Rs 17 - by
buying back, say 220 units, the utility saves $28.60 Rs 3,718 of its
costs. By law this must be reimbursed to a green energy vendor. Some
vendors, depending on the marketing plan, may share this with the
householder. The average California tariff is 17 US cents per unit, which is
more than the example avoided cost of 13 cents used above, because of
other factors including fixed capital, transmission, distribution and
establishment charges. (All these numbers are for illustrative purposes
only and change year by year).