I am challenged by rate of return and pay back analysis HOMER does calculate payback and other comparison metrics like IRR. When you double click on a system configuration in the Optimization Results list, the Simulation Results window will appear. On the Cost Summary tab, click Compare. Now you can choose a system configuration to use as a ba

How do you calculate the ROI? There are numerous possible definitions, but the one we chose is ROI = TotalReturn / (TotalInvestment * ProjectLifetime). The total return is the sum of all the nominal cash flows, excluding year zero. The total investment is the year zero cash flow.

I am unsure about project life time, fixed capital cost, fixed O&M cost, and capacity shortage penalty. The project lifetime is simply the length of time over which you want to calculate the life cycle cost. It is not an important variable, and I recommend leaving it at its default value of 25 years. The system fixed capital cost is the c

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 syste

The grid sales seems to be reflected in the COE. If so, is COE a better indicator of feasibility than NPC? Grid sales income affects both NPC and COE. You might be noticing that they affect the COE more than the NPC, but that's just because grid sales both reduce the numerator (total annualized cost) and increase the denominator (annual useful

Is there a way of forcing the PV array and the converter (inverter) size to track each other? HOMER does not give you the ability to link the converter size to the PV array size. If you want to insure that the converter has the same capacity as the PV array, I suggest you model the PV array and the converter as an AC PV array. If you do that,

Is possible to raise the load profile yearly? No, HOMER assumes that everything remains constant over the project lifetime, so that it needs to simulate only one year of system operation. You can of course do a sensitivity analysis on the size of the primary load to analyze the effect of larger load sizes. You could make multiple runs with in

What's the discount factor and how it was calculated? The discount factor is the number by which you multiply a future cash flow to obtain its present value. Its equation is: where i is the interest rate and N is the number of years since year zero.

I noticed that the values are different if I choose a different base case system. Do the values represent some relative terms? Yes, HOMER calculates payback by comparing one system with another. In calculating payback, you are determining how many years it will take to recoup an investment. You invest a certain amount of money up front, then

I see that the way homer works is that it calculates NPC and places the different configurations in an increasing NPC order, also it tell us the COE, I believe that is the load price at which we will sell this electricity right? You are right that HOMER ranks system in order of ascending total NPC. To calculate the COE, HOMER first calculates

There would not appear to be any place to enter assumption about the future cost of electricity from the grid - it appears the economic analysis assumes the price will remain constant for the next 25 years. Is that what HOMER assumes - no escalation? It seems to me that future escalation of the cost of energy from the grid would be a significant

In our country, the goverment will deduct from taxes in 3 years 75% of the invest in equipment in renewable energy proyects. Can you tell me how can I include this amount in the project using Homer? For example, if you invest en PV panels, US$100,000.00.- You can deduct US$25,000.00 every year the next 3 years from taxes. You can account for t

Can we add Feed-in Tariff into HOMER? With a little work, you can model that kind of incentive with the current version of HOMER. You could model a wind turbine, for example, and let HOMER calculate how many MWh/yr it will produce with your wind regime. Then you could multiply that by the value of the renewable energy certificate to find the

To model the effect of the increasing load, you will need to make at least two simulations in HOMER and then do some post-processing of the results in a spreadsheet. There are several possible approaches, but here is what I recommend: 1. Let HOMER find the optimal system configuration using the year 4 load. 2. Simulate that optimal system conf

One question about the inflation:Is it possible to add my own value at the inflation(e.g.:3%) without take into account the interest rate?For example at the Economics tab there is an option to add the Annual interest rate ,but this takes account of the interest rate given by the equation: i=(i'-f)*(1+f)-1 You can assume any nominal interest rat

When we increase the Interest Rate, the Total NPC will decreased while the COE is increased. So the question is that why Total NPC is decreased? The total net present cost is the total present value of all cash flows. The present value of a future cash flow decreases with increasing interest rate. That’s why the total NPC decreases with incre

I would like to include the Internal rate of Return, that is, to include Tarif Analysis. Please note that HOMER does report the IRR and additional economic comparison metrics such as NPV, ROI, and payback. To do an economic comparison of two systems, double-click on one system to get the Simulation Results window, go to the Cost Summary tab

What is Levelized COE? The levelized cost of energy is the average cost per kWh of useful electrical energy produced by the system. Please look up "levelized cost of energy" in the help file index for more information and to see the equation for this term.

Is it possible to perform Life Cycle Analysis (LCA) of an off-grid system using HOMER? The point of HOMER's simulation is to determine the feasibility and calculate the life cycle cost of a micropower system, which may or may not be off-grid. We call that life cycle cost the "net present cost", and HOMER ranks the possible system configuration

My question is if it is possible to implement the environmental energy act of the german government in the simulation of a on grid system? In Germany, the power companies have to buy kwh from the producers of renewable energy for a certain price per kwh. I know of at least two variants of such feed-in tariffs. Say that the power price is $0.

What do you think about including a Diesel Price Index and a Consumer Price Index in the Net Present Value calculation? HOMER assumes that all prices inflate at the same rate over the project lifetime. That allows us to factor inflation out of the analysis by using the real interest rate, and reporting all costs in constant dollars. To model

Some of my results show net present cost values and total net present cost values in minus. COE for a certain combination is -0.112 $/kWh ? What does that mean? A negative NPC means that revenues exceed costs. The revenue probably comes from selling power to the grid.

The operating cost is the annualized value of everything other than the capital cost. That includes replacement, O&M, and fuel costs, but it also includes salvage value. If you double click on that diesel-only system, go to the Cost Summary tab, and choose Annualized, you’ll see that the annualized values of the O&M cost, fuel cost, and s

I am having some trouble with HOMER in that I am getting some illogical combinations (such as a 120kW PV array paired with 60kW of inverter, etc) in the optimised results. Homer sometimes seems unable to select the Conv-PV combo where it satisfies the condition that a Converter that is to be >= to the size of the PV. I realise that HOMER trys al

How I can calculate correct optimum value of source or equipment? HOMER simulates all the sizes you enter in the 'sizes to consider' table, and it ranks the results according to total net present cost. The optimal size can be the smallest, largest, or any intermediate value.

Can the optimization variable in HOMER be chosen to be anything other than minimum NPC? No, HOMER can only use the total NPC as the objective value of its optimization function. Note that you can apply penalties to the NPC to penalize emissions or capacity shortage. That allows you to account for non-economic factors in the optimization, but

I have used HOMER a couple of times. I wasn't, however, able to include the replacement cost. HOMER does let you enter the replacement cost separately from the capital cost. Each component has a cost table in which you specify the capital, replacement, and O&M cost. In the example below, the wind turbine inputs window, I have specified a

How does ROI differ from IRR in HOMER? Before I calculate IRR, ROI, NPV, or payback, I calculate the difference in cash flows between the current system and the base case system. That gives me a single cash flow sequence. Say the base case is a diesel-only system that costs nothing up front, but costs $100k/yr to operate, and say the current

To be really useful to us, we would need a way to put salvage value = 0, as this is how all our customers make their business cases. Is this possible or planned? There is no way to set the salvage value of a component to zero in HOMER. I think the simplest solution to your problem is to set the lifetime of each component you are modeling to b

One of the interesting questions to be asked is how much will it cost to add to the existing set-up. They have some PV already as well as batteries , converter and diesel. Is it correct to put the IC for all these components as $0. Leave the replacement costs as it would be normally? Since they have the existing genset and converter there, i would

I don’t understand how to use/fill in the column of ‘Size to Consider’ in application for battery, wind turbine, converter, solar panel & diesel genset. You must enter one or more sizes in the ‘Sizes to Consider’ table for each system component. In the typical case where you don’t know the best size (or quantity) in advance, we recommend t

Is there any particular criteria for sizing battery storage in HOMER? How do we size a converter? We have found that there is no reliable rule of thumb for determining optimal value of battery autonomy. It depends on many factors, including the daily and seasonal patterns of the load, the daily and seasonal patterns and intermittency of the r

I have a problem with economic inputs in HOMER and i don't have any idea what System Fixed Capital Cost means. You can use the system fixed capital cost input to account for capital costs that occur regardless of the configuration of the system. Please look up 'system fixed capital cost' in the index of the Help system for details.

How do I input the optimal PV, wind power and battery to consider (size consider)? What are the constraints? You do not have to enter the optimal size of each system component in HOMER. Instead, you enter a range of values and HOMER tries all of them in its search for the optimal value. For most components, you enter the O&M cost as an an

What is meant by life cycle cost and how it is determined? HOMER uses the total net present cost (NPC) to represent the life-cycle cost of a system. The total NPC condenses all the costs and revenues that occur within the project lifetime into a single lump sum in year-zero dollars, with future cash flows discounted back to year zero using the

HOMER calculates the IRR, Simple payback, and Discounted payback by comparing 2 systems. For these metrics to make sense, the Base case system you have selected must have a lower Initial capital value and higher Operating cost than the system you are comparing against ("Current system"). If these criteria are not met, the IRR, Simple payback, and