Question 9.12: Cost of PV Energy Including Income Tax Benefit. The PV syste......

Renewable and Efficient Electric Power Systems [1073600]

Cost of PV Energy Including Income Tax Benefit. The PV system for the house in Boulder costs $16,850 and annual payments on its 6%, 30-year loan are $1224. If the homeowner is in the 30.5% marginal tax bracket, what is the cost of PV energy in the first year?

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From (9.20) the reduction in federal income tax will be

$\text{First-year tax benefit} \ = \ i \ \times \ P \ \times \ MTB$ (9.20)

\text{First-year tax benefit} \ = \ 0.06 \ \times \ \$ 16,850 \ \times \ 0.305 \ = \ \$ 308

The net cost of the PV system in that first year will therefore be

\text{First-year cost of PV} \ = \ \$ 1224 \ − \ \$ 308 \ = \ \$ 916

which means that its electricity cost will be

\text{Cost of electricity} \ = \ \frac{{\$ 916}/{yr}}{4000 \ {kWh}/{yr}} \ = \ {\$ 0.23}/{kWh}

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