Economic feasibility study of a 16 kWp grid connected PV system at Green Energy Research Centre (GERC), UiTM Shah Alam

Abstract

Photovoltaic systems are currently being considered as competitive sources of power energy around the world including Malaysia. However, the main problem hampering the expansion of solar energy is its high cost per kWh. This research is carried out to study the economic feasibility of a 16kWp grid connected photovoltaic (PV) system at Green Energy Research Center (GERC), UiTM Shah Alam. The PV system comprises of 1) A 6 kWp single phase PV system and 2) A 10kWp three phase PV system. The analysis is carried out considering the system will be sold to power utility and paid at the Feed-in tariff (FiT) set by Sustainable Energy Development Authority Malaysia (SEDA). A financial model is developed to calculate the expected Net Present Value (NPV) and Internal Rate of Return (IRR) of the project over its expected lifetime. The effects of uncertainties i.e. solar irradiance, investment cost, discount rate and inverter failure on the profitability of the PV system are studied using 1) sensitivity analysis and 2) probabilistic analysis. Sensitivity analysis shows that the profitability of the PV project is most affected by solar irradiation followed by FiT, investment cost and discount rate. The probabilistic analysis shows that considering the current FiT and with no inverter failure, the confidence level of getting the IRR greater than Minimum Acceptable Rate of Return (MARR) of 12% is 75%. On the other hand, for the case with inverter failure, the confidence level of getting the IRR greater than 12% is 25%.