Profitability assessment of solar pv installations in Sri Lankan residential buildings

Abstract

The study focused on developing a cost recovery model to evaluate the profitability of installing solar panels in buildings in Sri Lanka to address the growing demand on the electricity supplied from the national grid. The study aimed to make the buildings in Sri Lanka zero carbon buildings. A cost-benefit analysis model was developed using Microsoft Excel to assess the profitability of solar power panels. The model was applied for a sample consisting of 8 domestic (small to large) consumers, to identify the type of domestic consumers most suitable for installing solar panels. Using the standard electricity tariffs enforced by the Ceylon Electricity Board, the average annual costs of electricity consumed by eight consumers were computed along with their Net Present Values (NPV) for a period of 25 years based on the interest rates offered by banks in Sri Lanka, to identify the discounted annual cash flows and evaluate the recovery period of high initial costs of solar power panel installations. The model shows that when solar panels are installed in buildings with high power consumption their high initial installation costs could be recovered in a relatively short period of time. Therefore, the installation of solar penal in such buildings would be profitable.