- Eligible basis = Installed Cost − Upfront Rebates
- Tax credit = Eligible basis × (Tax Credit %)
- Net upfront cost = Installed Cost − Rebates − Tax credit
- First-year gross savings = Annual kWh × [Self%×Retail Rate + Export%×Export Rate]
- First-year net savings = First-year gross savings − Annual O&M
- Simple payback (years) = Net upfront cost ÷ First-year net savings
- Cumulative payback finds the first year cumulative net cashflow ≥ net upfront cost, using escalation, degradation, O&M escalation, and replacement costs.
- Enter installed cost and any upfront rebates or grants.
- Set the tax credit percent you expect to claim.
- Provide annual production from PV modeling or past energy data.
- Choose self-consumption percent and export credit rate.
- Add annual O&M and optional escalation and degradation rates.
- Include inverter replacement cost and year when applicable.
- Press Calculate Payback to view results above the form.
- Use Download CSV or Download PDF for reporting.
| Output | Typical Value | Why it matters |
|---|---|---|
| Net upfront cost | $11,200 | Cash required after rebates and tax credit. |
| First-year net savings | $1,140 / year | Early indicator for quick screening decisions. |
| Simple payback | 9.8 years | Shows time to recover cost using first-year savings. |
| Cumulative payback | 8–10 years | Accounts for escalation, degradation, and replacements. |
| ROI over analysis period | 80–180% | Helps compare against other capital upgrades. |
Capital Cost Inputs and Incentives
Use installed cost to capture engineering, procurement, and construction scope, including structural upgrades, switchgear, and commissioning. Many commercial projects land between 1.0 and 2.5 currency units per watt, depending on rooftop access and interconnection complexity. Include permitting and design fees too. Rebates reduce the eligible basis, while tax credits apply as a percentage of that basis. The calculator converts these items into a net upfront cost for screening.
Energy Yield and Site Assumptions
Annual production drives savings and should come from PV modeling, measured irradiance, or comparable operational assets. For a quick check, multiply system size by 1,200 to 1,700 kWh per kW, then refine for shading, tilt, and downtime. Capture curtailment and soiling losses explicitly. Because production declines, the degradation input reduces each year’s kWh. This improves realism when comparing bids, layouts, or module options.
Rate Structure and Export Credits
Self-consumption determines how much generation offsets retail purchases versus being exported. Construction sites with steady daytime loads often exceed 70% self-consumption, while lightly loaded facilities may export more. Retail rate and export credit should reflect the tariff, demand rules, and netting period. Confirm export terms in interconnection agreements. The calculator escalates both rates by the electricity escalation setting, allowing you to test conservative and aggressive price paths.
Operations, Degradation, and Replacement Planning
O&M covers cleaning, inspections, monitoring subscriptions, and minor corrective work. Typical annual allowances range from 10 to 25 currency units per kW, but higher values may be justified for dusty climates or tight access. O&M escalation models inflation in service contracts. Inverter replacement is a common midlife event; entering a replacement year and cost prevents overstating long-term cashflow and payback.
Interpreting Payback for Construction Decisions
Simple payback divides net upfront cost by first-year net savings, useful for fast comparisons. The cumulative payback estimate is more decision-ready because it includes changing rates, aging production, O&M growth, and replacements. Use results to prioritize projects that repay within your target window, support capital committee narratives, and document assumptions for permitting and utility review. Export CSV or PDF to attach to bids and approvals.
FAQs
What does simple payback mean here?
Simple payback equals net upfront cost divided by first‑year net savings. It is a fast screening metric and does not fully reflect changing tariffs, inflation, or replacement events.
How should I estimate annual production?
Use a PV model, measured irradiance, or a comparable operating system. As a rough check, multiply system size by 1,200–1,700 kWh per kW per year, then adjust for shading and downtime.
What if my export credit is very low?
Enter the actual export credit rate, even if it is zero. Lower export value increases payback time, especially when self‑consumption is low. Improving on‑site load matching can materially change results.
Which escalation and degradation values are reasonable?
Escalation should reflect your planning case for electricity prices, often 0–5% per year. Degradation commonly ranges around 0.3–0.8% per year for modules. Use conservative values for budget approval.
Why include inverter replacement cost and year?
Inverters often require replacement during the analysis period. Adding this cost prevents overstating cumulative cashflow and keeps payback estimates aligned with lifecycle budgeting and warranty expectations.
Can I compare multiple scenarios for a project?
Yes. Run the calculator with a baseline, then adjust one factor at a time, such as export rate or self‑consumption. Download CSV or PDF for each scenario to document assumptions and compare outcomes.