Sunday, February 10, 2013

MIRR Follow Up

MIRR = Modified Internal Rate of Return: a metric used to rate the efficiency of an investment.

So I'm talking to my work buddy Mike and I say... There's this website I go to that has data in a spreadsheet type format. Would you know how to write a program that could pull data from these spreadsheets? Yeah I could do that... That would be fun. Two hours later I've got a seed program.

I took the seed and wrote additional code that directed the seed here and told it to download this and that. Go to one of the offers and you'll see what I mean about how the form is structured. Bing Bang Boom The program downloaded 7100 individual system breakdowns dating back to mid-2010. The program captured data on system price, system size, module size, module cost, expected performance in terms of kWh/kWp, financing rates, borrowing percentages and so on.

I ran the relevant data through an economic analysis that calculated LCOEs, IRRs and MIRRs for all the systems - the MIRR graph is to the right. The graph is plotted by date. June 2010 data starts at the top and then 4500 data points later we're down to January 2013. It completely trips me out how the MIRR line hugs around 10% so strikingly. This is crazy. The FiT rates fell from 34 to 17 cents/kWh from the start to the end of the data set. The data covers systems of different sizes receiving different FiT rates. Average system costs fell from 3000 to 1500 Euro/kW during the span! How could this metric hold consistent throughout that multi-directional madness? Must be magically magnetic man.

MITCH: Did he just pour on the corn?
BUTCH: That was definitely a corn foul.
CONSUELO: WTF are ju jokers talking about?

I admit I have my reservations. I massaged the data some. Could be my calculations have some bugs. And ya know it may be something about MIRRs I don't understand. Sure looks interesting though. Hope it stays interesting upon cross-examination.

*About 2500 systems were scrubbed due to gibberish and/or incomplete data. The scrubbed systems were evenly dispersed in the set.

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