A financial simulation for investment appraisal in solar panels at fast-food chains : a case study of McDonalds, South Africa

Abstract

The sun is a significant source of inexhaustible free energy with the least adverse impact on the atmosphere. In order to overcome the adverse environmental effects and other issues connected with fossil fuels combustion, many nations have been compelled to investigate and develop environmentally-friendly options that are renewable in order to keep up with the growing demand for energy. This study was motivated by South Africa’s current electrical energy crisis and frequent load-shedding situations. Despite a global push towards renewable energy, South Africa presently relies on coal-fired power plants for more than 90% of its electrical energy. Currently, above-inflationary electrical energy tariffs are expected to increase. One of the renewable energy sources available is solar photovoltaic (PV) energy. The aim of this study was to financially simulate and appraise solar energy investment for McDonalds, an intensive fast-food restaurant energy consumer, to assess the feasibility of the investment. This study was quantitative in nature that simulated a census of 125 McDonalds DriveThru restaurants across South Africa. The data was derived from public domains such as a solar PV watts calculator from National Renewable Energy Laboratory (NREL) and solar system online commercial quotes from Treetops which is a solar system South African based installation company. Thereafter, the data was inputted in the study’s investment appraisement. The findings of the financial simulated investment appraisal prove to be lucrative for McDonalds South Africa to undertake the investment in solar energy. The investment is rewarding in the longer-term compared to the shorter-term considering the initial outlay. The simulation process and the investment appraisal in this study contributes to the knowledge base of the South African fast-food sector and can be adapted and used by businesses to evaluate the feasibility of a solar energy investment.