Q1. A farmer is planning on installing a 30-kW solar PV system equipped with 10kWh electricity storage (batteries). The cost of installation of the panels with inverter is assumed 1 $/W and the electricity storage costs 750 $/kWh. Given various efficiencies, let us assume that the system with batteries provides a constant 5 kW in average year around (a crude assumption, but OK for our purpose). The batteries need replacement every 5 years and the system has a salvage value of $5,000 at the end of its life (25 years). With this system installed the farmer saves the hydro cost that can be assumed 0.18 $/kWh. Assuming a MARR of 8%, calculate the NPV of this investment using two approaches: a) a simple payback approach, b) discounted cash flow analysis.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.