Which of the following is true to make the renewable energy option economically feasible?

A building owner is considering the installation of a solar thermal panel on the roof of the building. The initial cost of the system is higher than a conventional natural gas system.

Which of the following is true to make the renewable energy option economically feasible?
A . Utility cost savings over the lifetime of the system must offset the higher initial cost
B . Higher initial cost must exceed the cost of the utility over the lifetime of the system
C . Higher initial cost must exceed the savings on the utility cost over the lifetime of the system
D . Utility cost savings over the lifetime of the system must be lower than the higher initial cost of the system

Answer: A

Explanation:

The renewable energy option is economically feasible if the present value of the utility cost savings over the lifetime of the system is greater than or equal to the present value of the higher initial cost of the system. This means that the system will pay for itself and generate net savings in the long run.

The utility cost savings depend on the amount of energy produced by the solar thermal panel, the price of natural gas, and the inflation rate. The higher initial cost depends on the size, type, and installation of the solar thermal panel.

Reference: Solar Thermal: Complete Guide to the Pros, Cons and Costs Renewable Energy vs Natural Gas C How The Costs Stack Up

Is Solar Cheaper Than Natural Gas? – PowerSouth Energy Cooperative LEED Reference Guide for Building Design and Construction v4