Npv Solar Panels

Npv is presented in dollars and is calculated by subtracting the cost of the initial investment from the sum of the total discounted future cash flows over the lifetime of the investment i e the present dollar value of future cash flows calculated using the discount rate.

Npv solar panels.

If you re not familiar with the concept of npv the video below explains it in more detail. Commentary let s talk about net present value and solar panels without understanding it you ll never know if installing solar panels or buying a stock is a good deal or not. Factors such as opportunity cost inflation and risk are all accounted for in npv to give the overall value of the project in today s time. Npv is how much return the solar plant will make accounting for the time value of money.

In solar this initial investment is the system cost and future cash flows are the resulting. Hence npv accounts for the future value of the investment made into an installation project. Sure enough after some digging i found the prerulemaking document for the new solar rule which indeed makes clear that what they re talking about are present value energy cost savings over the 30 year period of analysis. Discussion a positive npv suggests that the solar pv system would be a good investment while a negative npv suggests that the pv system would be a poor investment.

Using a solar npv formula rec solar can show you how the 25 to 30 year lifetime cash flow of a solar project compares in today s dollars factoring in for inflation interest and other lost opportunity costs. So maybe that 19 000 is the net present value of the estimated future savings.