Model cash and loan costs side by side. Include incentives, escalation, maintenance, and tax impacts. See yearly cashflows and choose the smartest ownership path.
| Scenario | System cost | Down payment | APR | Term | Incentives | Savings (Y1) | Discount |
|---|---|---|---|---|---|---|---|
| Typical residential | $25,000 | $0 | 6.50% | 12 yrs | $5,000 | $1,800 | 5.00% |
| Higher savings | $30,000 | $3,000 | 5.25% | 15 yrs | $6,000 | $2,400 | 6.00% |
| Conservative | $18,000 | $2,000 | 7.25% | 10 yrs | $2,000 | $1,200 | 7.00% |
Loan versus cash is a capital‑allocation choice, not only a payment choice. A cash purchase concentrates cost at year zero, then captures utility savings minus annual maintenance. A loan spreads costs over time, preserving liquidity while adding interest and fees that reduce early net savings.
System cost, incentives, and year‑one savings create the baseline. Savings escalation models rising tariffs, while production degradation reduces long‑term output. Loan APR, term, and origination fee determine the financed principal and total interest. Discount rate converts future cashflows into today’s value for an apples‑to‑apples comparison.
The calculator projects yearly savings, subtracts O&M, and then subtracts loan payments when financing is selected. Cumulative cashflow shows when the project “pays back” under a simple, undiscounted view. Compare year‑by‑year totals to see how loan payments can delay or eliminate early positive cashflow.
When loan payments end, the financed option often accelerates. Review post-term years carefully, because the remaining savings can dominate lifetime value for homeowners.
Net present value (NPV) discounts each year’s net benefit using the selected rate, including year‑zero outlay. Positive NPV indicates the investment beats the discount rate. Payback is helpful for communication, but NPV is better for ranking options because it accounts for timing and magnitude of cashflows.
Run best‑case and conservative cases. Increase APR, reduce incentives, and lower savings to stress the loan scenario. For cash, test higher discount rates to represent alternative investments. Adjust escalation and degradation to reflect local utility trends and equipment quality. A decision is strongest when one option remains better across realistic ranges.
If incentives arrive later, decide whether you will apply them to principal or keep them as cash; principal reduction cuts interest over time, while cash can offset bills, reserves, or other upgrades during the first year of ownership.
Positive NPV means the discounted value of savings minus costs is above zero at your selected discount rate. It suggests the option beats that opportunity cost, assuming your savings, escalation, maintenance, and incentive inputs are realistic.
Payback ignores cashflow timing after the breakeven year and does not discount future money. A project can repay quickly yet deliver modest total value, or repay later but generate larger long-term benefits.
Use a rate that reflects your alternative use of cash: loan prepayment value, expected investment return, or a risk-adjusted hurdle rate. Higher discount rates favor near-term cashflows and make long-dated savings less valuable.
Select "After year 1." If you keep the incentive as cash, it boosts year-one cashflow. If you apply it to principal, the model reduces remaining balance, lowering future interest and slightly improving later net cashflows.
No. Escalation increases the dollar value of energy avoided, while degradation reduces the energy produced. The calculator multiplies both effects, so you can represent rising prices alongside gradual performance decline.
Yes. Reduce the analysis period to the number of years you expect to own the property. Compare both options using the same horizon, then review cumulative cashflow and NPV at that year to match your likely exit timing.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.