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Risk modeling of domestic solar water heater using Monte Carlo simulation for east-coastal region of India

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  • Rout, Auroshis
  • Sahoo, Sudhansu S.
  • Thomas, Sanju

Abstract

One of the key barriers to diffusion of domestic solar water heater in India is its high capital cost. Hence, there is a perception among people that it is not economically viable. The objective of this paper is to check the validity of this perception using net present value as a tool. An explicit formula has been developed from first principle to calculate the net present value of a domestic solar water heater which can be used globally. Scenario analysis has been conducted taking three scenarios: current, pessimistic and optimistic, to understand the spread in net present value. Taking probability of each scenario, expected net present value is calculated. The next objective is to go a further step to simulate using Monte Carlo simulation to attach a probability value with the net present value. Monte Carlo simulation model has been developed for risk assessment of solar water heaters. A range of values of all input variables have been considered assuming a normal distribution curve and based upon that a probability distribution curve of net present value is obtained. It was found that solar water heater is a viable option for east-coastal region of India.

Suggested Citation

  • Rout, Auroshis & Sahoo, Sudhansu S. & Thomas, Sanju, 2018. "Risk modeling of domestic solar water heater using Monte Carlo simulation for east-coastal region of India," Energy, Elsevier, vol. 145(C), pages 548-556.
    • Handle: RePEc:eee:energy:v:145:y:2018:i:c:p:548-556
    DOI: 10.1016/j.energy.2018.01.018
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