Issue #2: How We Built the Wadadli Solar Economic Model

Economic models are only as trustworthy as the assumptions behind them. This week we open the hood on the Wadadli Solar Economic Model — every input, every assumption, and every place where we've had to make judgment calls in the absence of published local data.

The Core Inputs

The model starts with three non-negotiable local inputs: the current APUA retail electricity rate (EC$0.45/kWh as of October 2025), the average daily peak sun hours for Antigua (4.8 hours, sourced from NASA POWER satellite data for the coordinates 17.12°N, 61.85°W), and a standardized 5-kilowatt residential system as the baseline. The 5kW size was chosen because it represents the most commonly installed system for a medium-consumption Antiguan household — typically a three-bedroom home with air conditioning and water heating accounting for roughly 60% of load.

Installation cost is set at XCD 45,000 for the 5kW baseline. This figure was derived from quotes collected from three active local installers between August and October 2025, then adjusted upward by 8% to account for permit fees, wiring upgrades that older homes frequently require, and a contingency buffer. The cost breaks down roughly as follows: panels account for about 35% (XCD 15,750), the hybrid inverter about 25% (XCD 11,250), mounting hardware and electrical balance-of-system about 20% (XCD 9,000), and labor and permitting the remaining 20% (XCD 9,000).

Energy Generation Calculation

Annual energy generation is calculated as system size (kW) × peak sun hours/day × 365 days × a performance ratio of 0.80. The 0.80 performance ratio accounts for real-world losses from heat (Antigua's ambient temperatures reduce panel efficiency by approximately 5-8%), wiring losses, inverter conversion losses, and minor soiling. For the 5kW baseline: 5 × 4.8 × 365 × 0.80 = 7,008 kWh per year. At EC$0.45/kWh, that represents EC$3,154 in annual electricity value displaced — or roughly EC$8,100 over a rolling three-year average that accounts for modest rate escalation.

The payback period calculation divides the net installed cost by the annual savings. With no incentives beyond the duty waiver (which is already baked into the installation cost quotes), the simple payback is XCD 45,000 ÷ XCD 5,627/year = approximately 8.0 years. This is a conservative calculation that does not credit any export to the grid, because Antigua currently has no functioning net metering program. All savings are modeled as self-consumed generation only.

The 25-Year Horizon and What It Means

Modern crystalline silicon panels are warranted for 25-30 years, with output degradation of approximately 0.5% per year. Our model runs to 25 years, by which point the modeled system still operates at 88% of original capacity. After payback at year 8, the system generates essentially free electricity — valued cumulatively at over XCD 100,000 over the full 25-year lifespan when rate escalation is applied. The internal rate of return on the investment works out to approximately 12.5%, well above the return available on a savings account or fixed-term deposit at any Antiguan commercial bank.

One critical assumption we want to be transparent about: the model does not include battery storage. Adding a 10kWh lithium iron phosphate (LFP) battery system increases costs by approximately XCD 22,000 and extends payback to around 11-12 years. We treat battery storage as a separate scenario rather than the default, because most Antiguan rooftop systems currently installed do not include storage — but we expect this to change as battery prices continue falling and APUA's grid reliability remains a concern.