Jamaica Macaroni Factory: Capital Budgeting for Renewable Energy

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Case

Reference no. W34511

Subject category: Finance, Accounting and Control

Authors: Ryan Hudgins (Ivey Business School, Western University); Zach Chen (Ivey Business School, Western University)

Published by: Ivey Publishing

Originally published in: 2023

Version: 2023-11-06

Length: 10 pages

Data source: Field research

Topics: Net Present Value (NPV); Tax incentives; Solar panels; Electricity; Caribbean; Utilities; Food manufacturing; Accounting; Sustainability

Tags: UN Sustainable Development Goals (UN SDGs): Goal 7: Affordable and clean energy

Share a link: https://casecent.re/p/194970

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Abstract

In January 2022, Nicholas Chen had to decide whether to invest in one of two solar power systems to reduce the energy cost of the manufacturing company, Jamaica Macaroni Factory Ltd's (JMF). He could purchase a 100kW solar power system and generate some of the energy JMF used while also selling back electricity to the grid when the factory was not operating, or he could purchase a 230kW system, which would produce more energy but, due to regulatory restrictions, would not sell electricity back to the grid.