How is optimal system size determined?

Before answering this question you have to decide how you define “optimal”.
An “optimal” system to someone could mean for example:
1. a system that maximizes kilowatt hour production during a year (to maximize revenue or energy available for use)
2. a system with a high utilization rate (one that runs 100% all the time)
3. a system with a high efficiency (water to wire)
4. a system with a small payback period ( payback period equals number of years to payback original investment)

However, we define the “optimal” as the size and other specifications that maximizes Internal Rate of Return (IRR ) on the project.

Why optimize IRR? Because every other measure is less perfect. Utilization rate or system efficiency or kilowatt hour production or payback period are all poor proxies for overall performance. Your investment performance is best measured by IRR which captures all these other concepts.

As we have decided that an “optimal” system is one that maximizes IRR, we estimate all costs and revenues over a 40 year period for the purposes of calculating IRR. We use our proprietary “Waterwatts” model to “solve” for the optimal size and system specifications that will maximize IRR.

Every system size is considered along with its unique costs and unique expected revenue streams.