SE Engr. Solar Policy, Economics, and Sustainability 2

Question 1

A commercial PV system costs $1,000,000 and claims a 30% investment tax credit. Under federal rules, what is the depreciable basis for MACRS?

Accepted Answer

$850,000

Answer

The depreciable basis is reduced by half the ITC amount, so $1,000,000 minus $150,000 equals $850,000.

Question 2

Under MACRS, commercial solar energy property is generally depreciated over what recovery period?

Accepted Answer

5 years

Answer

Solar energy property is classified as 5-year MACRS property.

Question 3

Which metric is the ratio of the present value of lifetime costs to the present value of lifetime energy produced?

Accepted Answer

Levelized cost of energy (LCOE)

Answer

LCOE divides discounted lifetime costs by discounted lifetime energy output, usually in $/kWh.

Question 4

If a project's NPV is exactly zero at a 7% discount rate, what does that tell you about its IRR?

Accepted Answer

The IRR equals 7%

Answer

IRR is defined as the discount rate at which NPV equals zero.

Question 5

Which federal law first required utilities to buy power from qualifying small power producers at the utility's avoided cost?

Accepted Answer

PURPA (1978)

Answer

The Public Utility Regulatory Policies Act of 1978 created qualifying facilities and avoided-cost purchase obligations.

SE Engr. - Solar Energy Engineering Certification Practice Test