Future electricity price and the value of the solar PV system | Searching for Green

One of the things my previous analysis revealed was that the monetary potential of the solar PV system will sharply decrease once the microFIT contract ends in 20 years from now. The generated electricity value is so low that the income barely covers the expenses and the profit is a few thousand dollars over the following 20 years. That’s why I tend to totally discount this period and consider the solar system as a business with a limited lifetime of 20 years. I prefer to be conservative in my estimates. If it will be profitable for longer than that, even better! But even then, the profit is peanuts.

Of course this prediction depends on the future price of electricity. Which is open to debate, and my guess is as good as the next person’s. But I’ve always wondered if the 3% yearly increase rate used in the Switch Ontario spreadsheet is based on a real study, and whether it is too aggressive or too conservative. Mind you, they are using 2% for the inflation rate, which means the electricity will increase in price more than the rest of the things included in CPI.

Today I had the confirmation that this number was not far off. According to some news stories quoting the Energy Minister Brad Duguid, the electricity price is going to double in 20 years, which is equivalent to a 3.5% yearly increase.  Now almost everybody is unhappy with that, but at least I can find something positive in it: it confirms one of the variables in the model. Call it a weird scientist satisfaction :-). And I hope this will put the emphasis on conservation, as I consider would be normal.

Certainly, given the government’s track record of spending more that the original plans, the percent can be higher. But as for now, I’ll run with it.


Leave a Reply

Google Adsense