From: Ron Kean (ronkean@juno.com)
Date: Thu Jun 17 1999 - 11:02:09 MDT
On Thu, 17 Jun 1999 09:17:10 -0400 "Michael S. Lorrey" <mike@lorrey.com>
writes:
>I'm not sure if this is right. It's been awhile for me to deal with
>this method.>Perhaps the economists on the list could help out. It seems
to me that >each>year's output would be discounted by the discount rate
for that year
>in>particular, however I gather from your suggestion is that the
discount
>rate for>later years is discounted further. This may be right, I don't
know.
>
As you pointed out, the purpose of this calculation is to make a rational
comparison between using solar cells versus commercial power. Since the
cost of the solar installation is paid all up front, its energy output
should be discounted to present value at the time of the installation.
Purchases of commercial power (energy) are made concurrently with use, so
no discounting is applied to the energy purchased commercially. At least
that's the way I see it.
Ron Kean
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