# Electricity Savings

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Hi

How does PV Sol calculate the Energy savings line in the cashflow?

What is the formula used?

thanks

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Hi Tom,

Basically, the "Electricity Savings" are calculated as follows:

(From-Grid Tariff Energy Price) * (Inflation Rate for Energy Price) * (Degradation of Modules) * (Total Consumption covered by PV power)

However, this may differ from the selected feed-in concept. Note, that the savings values are calculated monthly, so that the values can differ from the calculation with annual values.

Best regards,

Marcel

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Thanks, Marcel for the reply.  I have a feed in concept.  Can I please find out what the formula will be?

Do I just add the feed in sales proceeds?

best regards

Toim

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Hi Tom,

the formula would be, as I have shown you, in addition you have to take into account the "annual average return on the capital employed",

savings = (From-Grid Tariff Energy Price) * (Inflation Rate for Energy Price) * (Degradation of Modules) * (Total Consumption covered by PV power) / (annual average return on capital employed).

savings(Year) = EnergyPrice * (1 + InflationRate)^Year + Degradation * ConsumptionCoveredByPV / (1+ReturnOnCapital)^(Year+1)

For example,

Energy Price = 0.20 \$/kWh

Inflation Rate for Energy Price = 2 % / year

Degradation of Modules = 100 % (no degradation )

Total Consumption covered by PV power = 500 kWh

annual average return on capital employed = 1%

savings(Year) = 0.20 \$/kWh * (1 + 0.02/year)^Year * 1 * 500 kWh / ( 1 + 0.01)^(Year+1)

for year 0 (first year)  = \$ 99.01

for year 1 = \$ 99.99

Kind regards,

Marcel

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