- Net System Cost = System Cost − Incentives
- Year y Production = Annual kWh × (1 − Degradation)y−1
- Year y Rate = Utility Rate × (1 + Escalation)y−1
- Energy Savings = Production × Rate
- Net Cash Flow = Energy Savings − O&M − Loan Payment
- Break-even Year = first year where cumulative net cash ≥ 0
- NPV = Σ(Net Cash Flow / (1 + Discount Rate)y) − Upfront Cash
- Enter installed system cost and any incentives or rebates.
- Provide expected annual production from your design model.
- Set the current electricity rate and expected yearly escalation.
- Add degradation and annual O&M to reflect performance and upkeep.
- Choose cash or loan, then enter financing terms if needed.
- Click Calculate to see break-even, NPV, and the yearly table.
- Use the CSV/PDF buttons (after results appear) to export.
| Scenario | Net Cost | Annual kWh | Rate | Escalation | O&M | Payment | Break-even | NPV (25 yrs) |
|---|---|---|---|---|---|---|---|---|
| Cash, moderate rates | $17,000 | 12,000 | $0.18 | 3% | $200 | Cash | Year 7–10 | Positive |
| Loan, 10-year term | $17,000 | 12,000 | $0.18 | 3% | $200 | Loan | Year 10–14 | Depends on rate |
| Low rates, high O&M | $17,000 | 12,000 | $0.12 | 2% | $450 | Cash | May not reach | Lower |
Why break-even matters for construction budgets
Solar projects compete with equipment, crews, and schedule risk. Break-even shows when cumulative net cash turns positive, so capital committees can compare solar against other site upgrades. Use the yearly table to see when savings outweigh upfront cash and ongoing costs.
Inputs that drive savings most
Annual production and the blended electricity rate usually dominate results. If tariffs include demand charges, adjust the effective rate to reflect realistic avoided costs. Escalation increases future savings, while degradation reduces output over time. O&M covers cleaning, inspections, monitoring, and minor repairs.
Financing effects on cash flow timing
Cash purchase concentrates cost in year 0, often reaching break-even sooner. Loan financing reduces upfront cash but introduces annual payments that can delay break-even. This calculator uses simple annual payments to keep planning consistent across bids and facility portfolios.
Using NPV to compare alternatives
Net present value discounts future cash flows to today’s terms using your discount rate. A higher discount rate favors faster payback projects. When two options reach break-even similarly, choose the higher NPV because it indicates stronger value after accounting for time and risk.
Practical planning notes for site teams
Confirm roof or ground space, shading, and interconnection constraints early. Incentives may require documentation, commissioning reports, or energy models. For conservative forecasting, reduce production, increase O&M, and use a modest escalation rate. Export CSV or PDF for stakeholder reviews and job files.
FAQs
1) What does break-even mean in this calculator?
It is the first year when cumulative net cash flow becomes zero or higher, after subtracting O&M and any loan payments from energy savings.
2) Why can break-even be “Not reached”?
If annual net cash flow stays too low, cumulative savings may never recover the upfront cost within the selected analysis years. Recheck rate, production, O&M, and escalation assumptions.
3) How should I estimate annual production?
Use a design model or historical site data adjusted for shading, orientation, and downtime. For early planning, apply a conservative buffer to avoid overestimating savings.
4) Does this include battery storage benefits?
No. Storage changes savings by shifting load and reducing peaks. You can approximate by adjusting the effective electricity rate and O&M, but detailed storage modeling needs interval data.
5) What discount rate should I use?
Use your hurdle rate or weighted cost of capital. If you want a conservative comparison, choose a higher rate, which reduces the value of future savings.
6) Can I share results with my team?
Yes. After calculation, export CSV for spreadsheets or PDF for approvals. Include your assumptions so reviewers understand escalation, degradation, and financing choices.