Accurately Calculating the Avoided Cost of a Solar Project?
by Adam Gerza on Oct 11, 2016
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Calculating “avoided cost”, which is how much a project saves in dollar terms, is a critical part of the solar project development process. In this video tutorial we look deeply at how avoided cost gets calculated, explaining the difference between how much a customer pays ($/kWh average blended cost) and how much a customer saves ($/kWh average blended savings).
We model a number of real world examples to illustrate how the $/kWh avoided cost changes, based on the project assumptions, like the customers’ unique load profile, which utility rate schedule they are on and/or switch to, and the design parameters of the solar system. At the end of the video we demo how the Energy Toolbase platform can optimize the avoided cost of a project, based on all these inputs.
It’s very important for solar salespeople to understand how savings (aka avoided cost) gets calculated. As an industry we have a moral obligation to present accurate and realistic savings estimates to customers.