HOMER Knowledge Base

HOMER Knowledge Base

Capital cost rebates and salvage value

I would also like to be able to individually model more complex cost considerations for assets such as goverment rebates as a percentage of initial capital cost, salvage value.

 

First, you can account for rebates on initial capital cost of a component by reducing the capital cost without reducing the replacement cost.  For example, if a PV system costs $9000/kW but a government rebate program reduces that to $5000/kW, you could model that in HOMER with the following cost table:

             

Secondly, HOMER does consider salvage value at the end of the project lifetime, although it assumes linear depreciation and doesn't let you change that.  By linear depreciation, I mean the salvage value of the component reduces linearly to zero over its lifetime.  So salvage value only occurs at the end of the project lifetime for components that have not yet reached the end of their own lifetimes.  The salvage value is based on the replacement cost.  For example, if the replacement cost of a wind turbine is $10,000 and its lifetime is 25 years, its salvage value at the end of a 20 year project lifetime is 5yr/25yr * $10,000 = $2,000.