Turn site sunshine into measurable long term savings. Compare scenarios using escalation, degradation, and upkeep. Decide faster with payback, ROI, and NPV clarity built-in.
Use realistic construction assumptions. Include incentives, expected production, tariff escalation, O&M, degradation, and discount rate.
Sample inputs and resulting key outputs for a mid-size construction facility system.
| System cost | Incentives | Annual kWh | Rate | Period | Payback | ROI |
|---|---|---|---|---|---|---|
| $120,000 | $20,000 | 150,000 | $0.1400 | 25 | ~6.8 years | ~240% |
| $320,000 | $65,000 | 420,000 | $0.1250 | 25 | ~7.4 years | ~210% |
| $75,000 | $10,000 | 95,000 | $0.1600 | 20 | ~5.9 years | ~190% |
Solar ROI in construction is driven by avoided utility purchases. The calculator converts year-one production into annual savings using the entered tariff, then applies escalation to reflect rate pressure. Degradation reduces output each year, so savings rise slower than the tariff alone. This interaction is why two projects with the same first-year savings can show payback times.
Upfront cost is modeled as system cost minus incentives. Incentives shorten payback by reducing the negative year-zero cashflow. For facilities, include interconnection, racking, upgrades, and commissioning. If incentives exceed cost, the model warns that the net cost is zero, because ROI and payback lose meaning when there is no capital at risk.
Annual O&M covers cleaning, inspections, inverter servicing, and monitoring. Escalation captures labor and parts inflation. For dusty sites or coastal exposure, higher O&M may be realistic. Degradation is entered as a yearly percentage; even a small change influences lifetime kWh and therefore NPV, especially over 20–25 years.
NPV discounts each year’s net cashflow back to today using the selected discount rate. A positive NPV indicates the project beats the hurdle rate. IRR is the break-even discount rate where NPV equals zero. Use higher discount rates for riskier projects, shorter site access, or uncertain tariffs, and lower rates for stable owner-occupied assets.
Inputs: System cost $120,000; incentives $20,000; annual production 150,000 kWh; rate $0.14/kWh; rate escalation 2.5%; O&M $1,800; degradation 0.7%; period 25 years; discount rate 6%.
Typical outputs: Payback about 6–7 years, ROI above 200% over the period, and a positive NPV when escalation offsets discounting impacts.
ROI compares lifetime net savings against the net installed cost. It uses total net cashflow over the analysis period and shows the percentage gain relative to invested capital.
NPV shows value in today’s money at your discount rate. IRR shows the break-even return rate. Together they explain absolute value and percentage performance.
Use your hurdle rate or cost of capital. Increase it for higher risk, uncertain tariffs, or short site tenure. Decrease it for stable, long-term owner operations.
No. It models avoided purchases minus O&M. If you earn export revenue or add storage, approximate by increasing the effective rate or annual benefit.
The calculator uses annual kWh, which already reflects seasonality when taken from a design model. For more precision, use measured site data or a P50 estimate.
Payback may not occur if savings are low, O&M is high, or net cost is large. Review tariff, kWh estimate, escalation, and incentives for realistic inputs.
Yes. Reduce the analysis period to match site duration and use a higher discount rate. Short timelines need strong offsets and reusable equipment to pencil out.
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.