On Thu, 17 Jun 1999 09:17:10 -0400 "Michael S. Lorrey" <email@example.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
>rate for>later years is discounted further. This may be right, I don't
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.