Issues with Electric Load and Payback Periods

Good morning, 

We are trying to design a PV system for a data center facility in Miami Beach, FL. At first, for Scenario #1, we included the original building demand in kWh resulting in annual energy usage of 2,897,040 kWh, and computing a simple payback period of 9.8 years and a discounted payback period of 14.0 years. 

As we wanted to further analyze the financial metrics should the data center load decrease substantially due to migration of equipment to other nearby facilities, we developed Scenario #2 and reduced the original building demand to 10% of the original values, resulting in annual energy usage of 289,704 kWh. However, upon running the calculations, the simple payback period rises to 14.1 years, and the discounted payback period yields NaN (Not a Number).

If the building demand is lower, and the system production actually exceeds the demand values in some instances, why are the simple and discounted payback periods affected so abruptly? Both scenarios yield positive net savings with the system, and we cannot find any major discrepancies in the cash flow tab values to explain the financial losses over the payback period resulting in a negative net present value for Scenario #2.

Can you please help?

Thank you, 

JB

Hi Jorge,

Have you compared the cash flow (see the Cash Flow tab on the Results page) for the two scenarios? You can also compare the monthly bill charges using the results available on the Data Tables tab to see how the electricity bill savings are affected by the different load sizes.

If you reduced the size of the load without reducing the size of the system, I would expect the net present value to decrease (and payback period to increase) because there are less savings to offset the same costs.

The billing option you choose on the Electricity Rates page, (net metering, net billing, buy all / sell all) would also affect the comparison.

I would be happy to review the scenarios if you can share the .sam file you used for the analysis.

Best regards,
Paul.

Paul, 

Thank you for your feedback, it is highly appreciated. 

We did compare the cash flow for both scenarios and did not find any inconsistencies. We also compared the monthly bill charges on the data tables tab and found electricity bill reductions for both scenarios. 

I am attaching the .sam files for both scenarios for your review. 

Thank you very much, 

Jorge.

Hi Jorge,

Thank you for sending the files. Attached is a version with both Scenario 1 and Scenario 2 as cases in one file so you can more easily compare them. (You can also use the Inputs Browser from the File menu to quickly compare inputs in different cases.) I also added a scenario called "Scenario with load decrease" that uses the load growth rate input on the Electricity Load page to model a situation where the load decreases in Year 6 to 10% of the Year 1 load on a total annual basis.

On the Electricity Rates page, you chose the  net billing $ option with the energy charge sell rates set to zero, so the project is not compensated for any excess electricity it generates.

The scenario with smaller load results in lower electricity bill savings than the large load scenario, and those savings are not sufficient to make up for the cost of the system, hence the negative NPV.

Best regards,
Paul.

Paul, 

Thank you very much. 

Best regards, 

Jorge