Financial assessment of solar PV system in residential sector of Malaysia

Abstract

Energy usage and its respective become a controversial issue in the modern world. Energy is considered as one of the indispensable factors for continuous development and economic growth. One of the main sources of energy is fossil fuels which is limited; therefore, it is necessary to use another sources for energy such as renewable energy. One of the most useful source of renewable energy is solar energy. The energy generated from solar is clean and natural without contaminating noise, harmful emission and waste products. Malaysia is situated at the equatorial region with a high amount of solar radiation. It has a promising potential to establish large scale solar power installations. Among the wide range types of different buildings, residential buildings are considered as one of the biggest energy consuming sector in the world. The aim of this study is to investigate the financial potential of solar PV systems in residential buildings in Malaysia. To achieve the aim of study, at the first step number and capacity of each component of suitable PV system was estimated. Then with using retail price information of each component that gathered from local manufacturers or exporters in Malaysia, the cost of each component of solar PV system and the price of whole system was estimated. Then the annualized life cycle costs of the system were calculated. At the Last stage of the study, the payback period of initial investment, net present value (NPV), and Internal rate of return (IRR) of the project were determined.