Finance Assignment: "Getting Closer to Zero: The Economics of Transitioning to Clean Energy"

Overview:

Climate change is one of the defining challenges of our time, and transitioning to clean energy is a crucial part of the solution. This assignment will explore the financial implications of converting a household to clean energy over a 25-year period.

Objectives:

- Understand the financial costs and benefits of transitioning to clean energy.

- Apply financial analysis techniques to real-world applications.

- Evaluate the long-term economic impact of sustainable investments.

Scenario:

You are given the task of transitioning a household to zero carbon emissions. The household consists of a 5,000 sq. ft. home in Longmont, Colorado, and two gasoline-powered vehicles. Your goal is to calculate the 25-year cost and savings of implementing the following clean energy solutions:

  1. **Solar Panel System Installation**
  2. ** Heat Pumps for Heating and Cooling**
  3. **Two Electric Vehicles and Charging Infrastructure**

Assignment Tasks:

  1. **Initial Cost Estimation**:

- Research and estimate the initial costs of the solar system, the heat pumps, electric vehicles, and chargers.

  1. **Operating and Maintenance Cost Analysis**:

- Estimate the operating and maintenance costs for the systems and vehicles over 25 years.

  1. **Savings Calculation**:

- Calculate the savings from not purchasing gasoline and natural gas. Consider the escalation of energy prices over time. (Can use 2% per annum, applied at the end of the year)

  1. **Financial Analysis**:

- Determine the Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period for the investments.

  1. **Environmental Impact Assessment**:

- Quantify the reduction in carbon emissions as a result of the transition.

  1. **Report and Presentation**:

- Prepare a detailed report and presentation that includes:

- Methodology for cost and savings calculations.

- Financial models including cash flow projections.

- Analysis of the financial viability of transitioning to clean energy.

- Discussion on the potential barriers and economic incentives to promote clean energy adoption.

Deliverables:

- A written report detailing your findings and analysis.

- A presentation summarizing the key aspects of your report.

- Excel spreadsheets with your financial models and calculations.