Feasibility of Solar Technology
Adoption: A Case Study on
Tennessee’s Poultry Industry
Ernest F. Bazen & Matthew A. Brown
Presented by Yao Yin
Background
• Rising oil prices and instability in Middle
East have led to intense interest in
renewable energy.
• Renewable energy includes solar energy,
wind energy, geothermal energy, biomass
energy, and hydro energy.
Tennessee Valley Authority
• TVA is the nation’s largest utility provider.
• It develops the Green Power Switch (GPS)
program to produce electricity from
renewable sources.
• Renewable supply from GPS includes
wind, methane, and solar.
Poultry Industry
• Electricity plays a crucial role in poultry
production.
• Lighting, ventilation, heating and cooling,
running electric motors for feed lines.
• Rising energy costs have cut into poultry
producers’ profitability.
Primary Issue
• Economic feasibility of solar adoption
(solar photovoltaic system, or solar PV
system) for poultry producers in
Tennessee under current economic cost
conditions
Solar energy’s potential across TN
• Greene County
• Weakley County
• In the east
• In the west
• 4.5-5.0kWh/m2/day
• 5.0-5.5kWh/m2/day
Two Kinds of Solar Systems
• Electricity output was calculated for two
size solar PV systems: 5 and 20 kW.
• Each county is tested using the two
systems.
Current Conditions
Assumptions
• TVA charges 20 cents per
kWh out put for the first
10 years.
• Electricity price increases
2% annually
• State government’s
subsidy: 40% of the
installed cost
• Federal government’s
subsidy: 25% of the
installed cost
• A corporate tax credit of
30%
• Life of solar PV systems is
25 years
• Electricity price increases
2% annually over the life of
the PV systems
• The remaining 35% of the
system costs were
financed using a 10 year,
7.5% fixed interest rate.
• Discount factor rate is
8.25%
What is a NPV?
• Net present value
• The present value of a series of cash flows
generated by an investment, minus the initial
investment.
• NPV is calculated because of the important
concept that "money today is worth more than
the same money tomorrow."
(webuser.bus.umich.edu/Organizations/Finance
Club/resources/glossary.html)
Environmental Aspect
Conclusions
• Under current conditions, it is not economical to
purchase solar PV systems
• If more support were given to renewable energy
technologies, costs of solar power may be able
to decline.
• If external costs of pollution from conventional
electricity production are enforced on utility
providers, the relative cost of solar energy
should become more and more competitive.