Economics of Utility Scale Photovoltaics at Purdue University

The research for this case study shows that utility scale solar photovoltaics has become a competitive energy investment option, even when a campus operates a power plant at low electricity rates. To evaluate this an economic model called SEEMS (Solar Economic Evaluation Modelling Spreadsheets) was developed to evaluate a number of financial scenarios in Real Time Pricing for universities. The three main financing structures considered are 1) land leasing, 2) university direct purchase, and 3) third party purchase. Unlike other commercially available models SEEMS specifically accounts for real time pricing, where the local utility provides electricity at an hourly rate that changes with the expected demand. In addition, SEEMS also includes a random simulation that allows the model to predict the likelihood of success for a given solar installation strategy. The research showed that there are several options for utility scale solar that are financially attractive. The most practical financing structure is with a third party partnership because of the opportunity to take advantage of tax incentives. Other options could become more attractive if non-financial benefits are considered. The case study for this research, Purdue University, has a unique opportunity to integrate utility-scale solar electricity into its strategic planning. Currently Purdue is updating its master plan which will define how land is developed. Purdue is also developing a sustainability plan that will define long term environmental goals. In addition, the university is developing over 500 acres of land west of campus as part of its Aerospace Innovation District. This research helps make the case for including utility-scale solar electricity as part of the university’s strategic planning