Enter Solar Project Inputs
Use the responsive layout below: 3 columns on large screens, 2 on medium screens, and 1 on mobile screens.
Formula Used
Net Initial Investment = (System Size × Installed Cost per kW) − Incentive
Energyt = Annual Energy × (1 − Degradation Rate)t−1
Savingst = Energyt × Tariff × (1 + Tariff Escalation)t−1
O&Mt = Annual O&M × (1 + O&M Growth)t−1
Net Cash Flowt = Savingst − O&Mt − Replacementt + Salvaget
NPV = −Initial Investment + Σ [ Net Cash Flowt / (1 + Discount Rate)t ]
This model discounts each future solar cash flow back to present value. A positive NPV means discounted project benefits exceed the selected required return.
How to Use This Calculator
- Enter the solar system size and installed cost per kW.
- Add any upfront grant, rebate, or incentive that reduces initial investment.
- Enter expected first year energy production in kWh.
- Set panel degradation, tariff, and yearly tariff escalation assumptions.
- Enter annual operations and maintenance cost plus cost growth.
- Choose the analysis period and discount rate.
- Add inverter replacement cost and replacement year if applicable.
- Enter salvage value expected at the end of the study period.
- Click Calculate Solar NPV to view results above the form.
- Review the metrics, graph, and yearly schedule, then export CSV or PDF if needed.
Example Data Table
| Input | Example Value | Unit / Note |
|---|---|---|
| System Size | 100 | kW |
| Installed Cost per kW | 850 | Cost per kW |
| Incentive | 10,000 | Upfront rebate or grant |
| Annual Energy Output | 145,000 | kWh in year one |
| Degradation Rate | 0.7 | % per year |
| Electricity Tariff | 0.14 | Per kWh |
| Tariff Escalation | 2.0 | % per year |
| Annual O&M Cost | 1,500 | Year one maintenance |
| O&M Growth | 2.0 | % per year |
| Analysis Period | 25 | Years |
| Discount Rate | 8.0 | % required return |
| Inverter Replacement Cost | 8,000 | Occurs in year 12 |
| Salvage Value | 5,000 | Added in final year |
FAQs
1) What does solar NPV mean?
Solar NPV is the present value of future solar project cash flows minus the initial investment. It shows whether expected savings and residual value justify the required return you selected.
2) What makes NPV positive?
NPV becomes positive when discounted lifetime benefits exceed the net upfront cost. Higher energy output, better tariffs, larger incentives, and lower maintenance usually improve the result.
3) Should incentives be entered as yearly savings?
No. Upfront grants, rebates, or tax style incentives that reduce initial project cost should be entered in the incentive field, not as recurring yearly savings.
4) Why is degradation included?
Solar modules usually produce slightly less energy each year. Including degradation makes long term savings estimates more realistic and improves the quality of the NPV calculation.
5) What discount rate should I use?
Use a rate that matches your required return, financing environment, and project risk. Many evaluations use a company hurdle rate, weighted capital cost, or internal investment benchmark.
6) Why include inverter replacement cost?
Large solar projects often need component replacement during the study period. Adding inverter replacement prevents overstating future value and helps match realistic lifecycle costs.
7) Can this calculator be used for construction projects?
Yes. It is suitable for rooftop, warehouse, office, industrial, and site support solar studies where you want discounted cash flow based investment screening.
8) Is a positive NPV enough for approval?
Not always. Decision makers may also compare payback, budget limits, financing terms, structural constraints, energy goals, and execution risks before approving the solar investment.