NB Power Wants to Assess the Opportunity to Install and Use

question 42

Essay

NB Power wants to assess the opportunity to install and use a photovoltaic system to produce electricity from solar energy. The unit cost of electricity currently produced by the thermal power plant is $0.06 per kilowatt-hour. The photovoltaic system is characterized by the following:
Batteries must be replaced every 5 years while power control is replaced every 10 years.
Assuming a service life of 20 years, annual interest rate of 10%, capacity of the photovoltaic system of 30 kilowatt-hours per day and ignoring the installation cost, should NB Power implement the system?

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Definitions:

Cookies

Small files created by a web server while a user is browsing a website and are stored on the user's computer, designed to hold a modest amount of data specific to a particular client and website.

Total Variable Cost

Total Variable Cost is the sum of all costs that vary with the level of production or output, including materials, labor, and other expenses that change in proportion to activity.

Fixed Cost

Fixed cost refers to expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Marginal Cost

The additional expenditure required to produce one more unit of a product or service.