Preliminary Economic Analysis

MIT Solar7 Preliminary Economic Analysis June 13, 2006

Introduction

Arguably the biggest stumbling block environmentalists have encountered during the movement’s protracted fight against waste, ecological destruction, decrease in global biodiversity, and general civic irresponsibility is the perceived economic sacrifices associated with conservationist behavior. Historically, these financial concerns have been valid, at least if one disregards externality costs of environmentally destructive practices. In line with the umbrella Solar Decathlon 2007 goal of producing house design schemes that help reduce the levelized cost of solar energy (LCoE), the MIT Solar7 team has taken a forward-looking yet pragmatic approach to the problem.

From the outset we knew this iteration of our design would not meet the goal of $0.10/kWh as built; prototyping costs combined with competition irregularities such as stringent indoor conditioning, size, and transportability requirements led us to put more design weight on other guiding principles than current economic feasibility. In addition, steeply ascending costs of the highly purified silicon needed to construct the PV modules integral to our design discouraged some team members from believing the 2015 goal can be achieved using current available technology.

This preliminary analysis gives an incomplete picture of our design. The MIT Solar7 house, optimized for both the competition and a mid-Atlantic / New England climate, has crucial elements of standard green design missing, such as a foundation. In the energy model used to calculate the EEM values, our energy balance team has put forth considerable effort to accurately model a marketable prototype of our design and a benchmark but due to the constantly developing nature of our project, such values are best taken as rough approximations. A more complete economic picture will be provided in the Final Economic Analysis report.

Results

We used the LCOE calculator spreadsheet provided by the organizers to determine the LCoE achieved by our current design in Phoenix, Washington DC, and Boston. The results are as follows:

Phoenix, AZ NPV (PV system) $40,773.82 NPV (Energy Efficiency Measures) $11,987.80 NPV (UTILity purchased power) ($11,525.96) NPV (Whole-House) $41,235.66 Marketable LCoEPV $0.18 per kWh Prototype LCoEEEM $0.06 per kWh

LCoEUTIL $0.08 per kWh

LCoEWH $0.16 per kWh

Benchmark NPVbenchmark $20,435.60 Washington, DC NPV (PV system) $39,984.48 NPV (Energy Efficiency Measures) $11,880.83 NPV (UTILity purchased power) ($3,573.92) NPV (Whole-House) $48,291.39 Marketable Prototype LCoEPV $0.33 per kWh

LCoEEEM $0.06 per kWh

Benchmark NPVbenchmark $18,971.91

Boston, MA NPV (PV system) $40,393.98 NPV (Energy Efficiency Measures) $11,936.32 NPV (UTILity purchased power) ($8,058.49) NPV (Whole-House) $44,271.82 Marketable Prototype LCoEPV $0.30 per kWh

LCoEEEM $0.06 per kWh

Benchmark NPVbenchmark $34,113.81

BIPV Analysis

Unsurprisingly, our model performs the best in Phoenix. High insolation leads to a very high annual PV production; this value is almost twice what is experienced in the east coast models.

The PV system data used in this model are based on a 6 kW system as per our preliminary design requirements. We overestimated the costs slightly ($30,000 for the modules including “balance of system” and $5,000 for the inverters) as to anticipate the rising cost of BIPV technology due to a combined supply shortage and a glut of demand.

Our PV system, as likely explained in the energy analysis, design deliverable, cost report, and other documents accompanying this one, is currently purely theoretical. We have been unwilling to commit to any major sponsors while our team’s contract with NREL is in flux. As such, we have approximated the data for our potential system from comparisons of systems we have been investigating. There are limited options available today for high-yield BIPV systems; while aesthetically integration may vary, mono- or poly-crystalline silicon bulk solar cells are overwhelmingly the most popular main power generation method utilized. This is due to silicon having the most appropriate balance of cost and efficiency when compared with alternatives (cheaper and less efficient thin film options; more expensive yet more efficient – and potentially hazardous – III-V semiconductor alloys). Economic and energy analyses point to the possible circumstance of bulk silicon PV never being able to cheaply meet the energy demands of the middle-class American (our target market). Competing prognoses pit an economies of scale argument (as supply infrastructure grows to meet expanding demand, costs will decrease according to a traditional supply-demand curve) against the view that current market constraints will continue into the future, and the only relief to prohibitively expensive PV cells will be achieved through technological advancement.

The MIT Solar7 team, partially influenced by Prof. Emmanuel Sachs, founder of Evergreen Solar, holds the latter situation to be more likely, and therefore is investigating alternative PV solutions that minimize bulk silicon volume in parallel with traditional solutions. Unfortunately we have as yet been unable to develop a design strategy that will allow us to produce enough energy as is necessary to vie in the competition with thin films or organics, two fields with great prospective development. Rationalizing our ideal design with current market realities, the MIT Solar7 PV module system will most likely be a bulk silicon construction, with supplementary power provided by cutting edge solutions that we believe will be able to easily and substantially decrease the LCoE of our house design in the future.

EEM Analysis

The three LCoEWH values returned from the simulation spreadsheet are all close to each other: Phoenix again unsurprisingly takes top honors due to elevated PV production. Boston edges out similar-climate Washington, DC due likely to site-specific optimization. The average value of 17.5 cents per kWh seen here reinforces the possibility of meeting the goal of 10 cents per kWh by 2015.

Both the benchmark design as well as the prototype design were modeled and analyzed by the energy group – for more information about the energy characteristics of the MIT Solar7 design see the energy analysis accompanying this deliverable. The main difference in energy consumption between our prototype design and the benchmark is the contribution of solar-heated hot water to meeting the water and air heating requirements of the former. The electricity required to provide equivalent heating in the benchmark design causes annual loads to be more than three times as much as the prototype design. This relationship stays essentially consistent irrespective of analysis location.

The benchmark house was found to have higher loads in Boston and Phoenix due to high heating and cooling loads, respectively, than in more temperate Washington, DC. The prototype house performed similarly in all three locations.

The EEMs that were quantitatively analyzed are an energy recovery ventilator, heat pump, extra insulation, solar water heaters, translucent panels, CF light bulbs, and efficient appliances. There are many other elements of our design that contribute to energy efficiency, but were estimated to not contribute to extra building costs. The listed components aggregated an additional capital investment of $7150 and annual operation and maintenance costs of $525. Other energy efficient measures utilized include design that promotes natural ventilation and daylighting and the use of thermally massive building materials that spread temperature fluctuations out over an entire day and night. These measures were not included in our analysis because they emerged from a design strategy that reassigned portions of the house to serve different functions, thus simply reassigning costs rather than increasing them (i.e. windows which traditionally may have been open to the high-gain setting sun were reoriented as clerestory daylighting sites.)

One important element that is not covered by the provided spreadsheet (and is not described quantitatively here either) is the life-cycle embodied energy of the house. One of the fundamental design philosophies of the MIT Solar7 team is industrial ecology. We put forth great effort to select building materials that fit into renewable resource flows, e.g. recycled plastic decking, or that utilize the waste flow of a crucial industrial process, e.g. finishing made from agricultural residue. A flaw in the way the general public views most things, including commercial products and personal behaviors, is the limited scope investigated during decision making. The use of recycled-content materials in construction promotes multiple uses of the same raw materials; also energy used in reprocessing is often miniscule when compared to the energy input in secondary production. The substantial material and energy waste involved with the construction industry could be reduced by the widespread adoption of reuse and recycling standards – a house made of primarily recycled materials would go much farther towards a lower levelized life-cycle cost of energy than a house made of all primary materials. We do not know if we will be successful in our push to construct the house out of a majority recycled and waste-stream materials, but the life-cycle costs and embodied energy of the house will be a major focus of the marketing campaign as well as the final economic analysis.

Conclusions

The primary way that economics influenced our design strategy was through the development of an appropriate balance between power generated (more PV panels require more money) and power demanded (higher efficiency products are often more expensive). Models that we have developed currently demonstrate our design’s optimal relationship of BIPV and EEM; it is almost guaranteed that as the design evolves with changing team members and business partners, the optimal relationship between power generating and consuming bodies will change as well.

The similarities among the results from all three site models is heartening; it shows our preliminary design, with little modification, can be successfully adopted in many different climates. However, that is not our goal. From an economic standpoint, we seek to investigate the feasibility of widely deployed green construction, community-based informed decision-making, and decentralized BIPV power generation as opposed to an initially marketable product. The ideas we seek to disseminate are similar to those tested in a laboratory setting; extending the metaphor, characteristics of large scale adoption and production of the tested hypothesis are difficult to predict with any certainty. Through various tests (this analysis included), we will be trying to first prove to ourselves the viability of our hypotheses, and then extend the results and arguments to the general public. The LCoE values calculated during the course of this analysis present a strong first argument for the near-term possibility of financial gains to be achieved through the adoption of the principles of MIT Solar7, providing the first eraser stroke to the stigma of economic penalty associated with sustainable, positive design choices.