Financial Analysis of Energy Systems
A financial analysis is performed for every installation job to evaluate the life cycle cost of the system. A standard financial analysis for a two panel residential system is valid for most systems. Larger systems or solar systems that provide both space heating and water heating warrant a more refined financial analysis to more clearly understand the return on investment.
We own and use several professional thermal analysis and energy system design programs including proprietary software, F-Chart, SAM from NREL, Hydronic Design Studio, and Retscreen. We can financially compare systems that use natural gas, propane, wood pellets, electicity and solar energy.
The escalation rate of future energy costs is a major uncertainty when estimating long term return on investment. We gathered up our last 25 years of electricity bills and calculated the average annual increase in electricity costs in Huntsville, Alabama. We came up with an escalation rate of 4% per year including costs of electricity and all metering fees. Notice the price instability during the 2008/2009 "Financial Crisis". Will future costs rise smoothly as predicted or could they go down? Our bet is that they will remain unstable and continue to increase at an average rate of at least 4% per year.