← Renewable Energy Systems
💰

Solar Payback & IRR

Solar Project Economics · Payback · NPV · IRR

When to use: Evaluating the economics of a solar PV investment over its 25-year life. The model nets any upfront incentive/ITC against installed cost, then projects annual savings that grow with utility escalation and shrink with panel degradation. It returns simple payback, NPV at your discount rate, and the IRR (the rate where NPV = 0).

Project Economics
$
subtracted
$
$
savings shrink
%/yr
savings grow
%/yr
for NPV
%
Calculation Steps
Net cost = $25,000 − $7,500 = $17,500
Payback = year cumulative savings first ≥ net cost = 7.3 yr
Simple Payback
7.3 yr
Years to recover net cost
Results
Net Cost$17,500
Simple Payback7.3 yr
IRR14.2%
NPV @ 6% Discount$18,151
25-yr Lifetime Savings$75,001
Year-1 Savings$2,200
References
Simple payback = net cost ÷ savings
NPV discounts future cash flows
IRR = rate where NPV = 0
Includes degradation + rate escalation