BS in Agricultural Business
This study was performed to determine the feasibility of integrating a full offset solar power unit at Cal Poly’s dairy operation. The dairy is relatively small, with four hundred cows and only two hundred mature milking cows. The dairy’s average annual electricity use is approximately 330,000-kilowatt hours. Based on the size and annual electricity demand, REC Solar, a local solar power company, was able to determine that a 216-kilowatt system would be necessary to meet the electricity demands.
In order to develop an accurate study, governmental grants, rebates and incentives were researched. These forms of aid would provide financial support to the dairy in order to offset some of the initial start up cost associated with installing the solar power unit. An inflation rate and discount rate were also estimated to maintain accuracy. After all figures were analyzed, a thirty-year projection of cash flows was conducted using a Microsoft Excel spreadsheet. The net present value and internal rate of return were calculated to determine the feasibility of integrating the solar power unit. A sensitivity analysis was conducted using different discount rates in order to determine how much the net present value and internal rate of return would be affected by the change.
It is concluded that the original hypothesis was partially incorrect. The initial analysis did not present a positive net present value over the thirty-year period. However, integrating a full offset solar unit at the dairy would be an economically feasible option based on the favorable internal rate of return and possibility of Cal Poly receiving a lower discount rate.