Table 1: Sensitivity analysis for global PV buydown with output path
optimized to maximize NPV
Optimal path method
base case
[MEB=0, PR=0.80,
r=0.05, ε=2.0, ∆t = 50]
As in base case but
MEB=0.33
As in base case but
MEB=0.33 and PR = 0.83
As in base case but
MEB=0.33 and r = 0.1
As in base case but
MEB=0.33 and ε = 1.5
As in base case, but
MEB=0.33 and assumes
thin-film experience curve
applies with $0.25/Wp
floor
As in base case, but
MEB=0.33 and ∆t = 25
As in base case but
MEB=0.33 and assumes
the buydown duration is
limited to 10 years
A
B
C
A-B-C
present
value of
benefits
under
buydown
present
value of
benefits
under
NSS
present
value of
minimum
possible
subsidy *
(1+MEB)
NPV
$ billions
$ billions
$ billions
$ billions
$235
$144
$37
$220
$144
$180
NPV if
assume
additional
MEB from
maximum
possible
transfer
1
subsidies
buydown
duration
years
$54
$ billions
N/A
$32
$44
$27
45
$136
$21
$24
$8.7
101
$45
$34
$5.3
$5.6
$1.7
50
$271
$250
$15
$18
$5.7
61
$240
$148
$31
$61
$48
26
$320
$204
$47
$69
$47
37
$181
$144
$13
$24
$20
10
43
1 If MEB>0 then the true NPV may be reduced because of the tax distortion cost of any transfer subsidies incurred
beyond the minimum possible buydown subsidy needed to fund the buydown. This column provides a pessimistic
estimate of NPV since it assumes 1) that the buydown program is totally unable to exclude free riders or price
discriminate and 2) the program managers do not re-optimize the buydown path to maximize NPV net of these
additional MEB costs from transfer subsidies.