A small scale wind turbine initially costs $6000. Its 300 kWh per month generati

Question

A small scale wind turbine initially costs $6000. Its 300 kWh per month generation will displace the need to buy utility electricity that now costs $0.12/kWh. If the initial capital cost is to be added to a 4%/year, 30-year mortgage, find the cost of electricity from the wind turbine system (/kWh) and the annual monetary savings. What will be the results with the 30% ITC (investment tax credit)? If the utility electricity price escalates at 3%/year, what will the annual monetary saving be impacted?

Explanation / Answer

The wind tubine generates 300kWh*12 = 3600kWh / year

Usual electricity cost is $0.12/kWh,

So, cost of the total enery generated by the turbine in an year = 0.12*3600 = $432

Initial capital is added to a 4%/year, which means investment/year = 0.04*6000 = $240

Therefore, annual monetary savings = $432 - $240 = $192

Investment tax credit = 0.3*6000 = $1800

monetary savings in 30 mortgaged years = $192*30 =$5760

after tax deductions, the remaining savings = 5760-1800 = $3960

If the utility electricity price escalates at 3%/year, then the cost of the generated electricity will be

300*0.12*12*(100+103+106+...+187)/100 = $18597.6

Total investment 240*30 = $7200

Therefore average annual savings will be (18597.6-7200)/12 = $949

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.