Good progress, class! We have now completed our three-lesson arc through Lesson 5: economic analysis, Lesson 6: solar utility for the client and locale, and finally Lesson 7: financial life cycle cost analysis.
In Lesson 7, we read about and discussed ways to deliver metrics to our clients that would be useful for financial assessment and project comparison. We called the overall process Life Cycle Cost Analysis (LCCA), dealing with concepts of financial paybacks on investment, solar savings, time value of money for long periods of evaluation, and levelized costs of energy. We introduced solar-specific terms such as the annual Solar Fraction (F), the Solar Savings (SS), and the Life Cycle Savings (LCS).
We discovered that financial analysis can be as direct as using a spreadsheet and some basic assumptions to assess financial cash flows and energy flows, or it can be a detailed simulation using meteorological data. We used discrete annualized methods of analysis common to project management in industry.
I also thought it was pretty neat how our reading tied directly in to the elements that we use in SAM for Solar Hot Water project analysis for the learning activity. Wait a minute, maybe that was where we initially found the citation! When you have time, I recommend visiting the NREL SAM site again to check on the abundant resources to explain their methodologies and databases.
Keep in mind that for our final project proposal development during the end of the semester, we will use SAM again as a tool for analysis. So, this was a good warm up. Also, you should have noticed that the problems are becoming more and more open-ended in nature as we keep adding to the pattern that we are addressing. Coming up in the next three lessons, we will add to that strategy, and you will keep developing your arguments by building from sources found on the web (or from clients).
Design is pattern with a purpose.
Whereas art and science provide mechanisms to ultimately open windows into apparent patterns about us, design and engineering are purposeful approaches to establish systems that fit the revealed pattern. [Brownson, SECS, Ch. 16]
Reminder - Complete all of the Lesson 7 tasks!
You have reached the end of Lesson 7! Double-check the to-do list on the Lesson 7 Learning Outcomes page to make sure you have completed all of the activities listed there before you begin Lesson 8.