| Scenario | System (kW) | Cost ($/kW) | Utility ($/kWh) | Lease (Year 1/mo) | Loan (APR/Term) | Discount (%) |
|---|---|---|---|---|---|---|
| Mid-size site office | 30 | 1,250 | 0.18 | 650 | 7.5% / 10y | 6 |
| Warehouse + lighting loads | 75 | 1,100 | 0.15 | 1,250 | 8.0% / 12y | 7 |
| Remote compound generators offset | 50 | 1,350 | 0.22 | 1,050 | 9.0% / 8y | 8 |
These examples are illustrative and do not include local permitting, structural upgrades, or special interconnection studies.
Prod(y) = kW × (kWh/kW-yr) × (1 − d)^(y−1)
Where d is yearly degradation.
Rate(y) = Rate₀ × (1 + e)^(y−1)
Where e is annual escalation.
Import: max(Usage − Prod, 0) Export: max(Prod − Usage, 0)
GridBill = max(Import×Rate − Export×Rate×NM, 0)
NM is the credit fraction.
PMT = r×PV / (1 − (1+r)^−n)
Annual loan cost is PMT×12.
NPV = Σ Cost(y) / (1 + DR)^y
Lower NPV indicates the cheaper option.
- Enter system size and installed cost from your estimate.
- Set incentives as the combined percentage you expect.
- Add annual usage and your current utility rate.
- Choose lease pricing and escalator terms from the offer.
- Choose cash or loan terms, then add O&M allowances.
- Click Calculate to view NPV results and the yearly table.
- Use CSV/PDF downloads to document your decision.
Project Inputs That Drive Lease Versus Own
On active construction sites, the decision usually hinges on three numbers: installed cost per kW, the first-year utility rate, and the lease escalator. For example, a 50 kW system at $1,200/kW produces a gross capital figure near $60,000 before soft costs. If incentives reduce net cost by 30%, the financed base can fall to about $42,000, changing loan payment and NPV materially.
Cashflow Structure and Discounting
This calculator converts each option into yearly cash outflows and then discounts them to present dollars. Lease cashflow is the contract payment plus the remaining grid bill. Ownership combines down payment, loan service during the term, and annual O&M. A 6% discount rate often reflects internal hurdle rates for project budgeting, but you can set it to match your capital policy.
Energy Offset and Net Metering Sensitivity
Production is modeled as kW multiplied by kWh per kW-year and reduced by degradation. If annual usage is 90,000 kWh and first-year production is 75,000 kWh, the site still imports 15,000 kWh. When production exceeds usage, export credits apply at the selected net metering percentage. Lower credit levels typically favor on-site load matching and may tilt results toward owning when lease pricing is high.
Construction Risk Factors and Allowances
Ownership should include realistic allowances: inverter replacement in years 10–15, preventive maintenance, and optional insurance. Lease contracts may bundle service, but escalators near 2.5%–3.5% can outpace conservative utility growth assumptions on some tariffs. Use the buyout fields to model early termination or conversion to ownership when a site becomes long-term.
Interpreting Outputs for Procurement Decisions
Compare the NPV totals: the lower number is the cheaper option after time value of money. Review the “Own becomes cheaper” year to see when a purchase starts beating the lease cumulatively. Export the CSV for bid tabs, and attach the PDF summary to approval packages so stakeholders see assumptions, discount rate, and yearly totals in one place.
1) What does “NPV” tell me in this comparison?
NPV discounts all future costs back to today. The option with the lower NPV is cheaper after accounting for timing, not just totals. It is especially useful when lease escalators and utility escalation differ.
2) How should I choose a discount rate?
Use your organization’s hurdle rate or weighted cost of capital. If solar competes with other projects, match the standard internal rate. Higher discount rates reduce the value of long-term savings and can favor leasing.
3) What net metering value should I enter?
Enter the portion of the retail rate credited for exported energy. If your tariff pays full retail, use 100%. If it pays an avoided-cost style credit, use a lower percentage that matches your bill rules.
4) Does the model include generator fuel savings?
Not directly. To approximate fuel displacement, convert generator kWh cost into an equivalent “utility rate” and run the comparison. This keeps the structure consistent while reflecting the site’s true avoided energy cost.
5) How does the optional lease buyout work here?
If you set a buyout year and price, the model adds that one-time cost in the buyout year and then stops lease payments afterward. It helps evaluate “lease now, own later” proposals during project transitions.
6) What is a good way to validate production inputs?
Start with the vendor’s modeled annual kWh and divide by system kW to get kWh/kW-yr. Cross-check with nearby sites, shading notes, and orientation. Then adjust degradation conservatively, typically around 0.5%–0.8% annually.