Inputs
Formula Used
Year y production: Py = P1 × (1 − d)y−1
Retail rate growth: Ry = R1 × (1 + g)y−1
Self-use savings: Sy = (Py × u) × Ry
Export revenue: Ey = (Py × (1−u)) × Xy
Net cashflow: CFy = Sy + Ey + Credity − O&My − LoanPayy
Discounted cashflow: DCFy = CFy ÷ (1 + k)y
Recovery period: first year where cumulative cashflow becomes non‑negative (linear interpolation used for fractional year).
How to Use This Calculator
- Enter the installed cost, rebate, and tax credit settings.
- Choose cash or loan, then fill financing fields if needed.
- Provide year‑1 production, self‑use share, and energy prices.
- Add export rate, maintenance cost, degradation, and discount rate.
- Click Calculate to see payback above the form.
- Download the full schedule using CSV or PDF buttons.
Example Data Table
Example values illustrate the schedule shape. Your results will vary.
| Year | Production (kWh) | Savings | O&M | Net CF | Cumulative |
|---|---|---|---|---|---|
| 1 | 8,500 | $1,020 | $180 | $840 | $-10,160 |
| 5 | 8,297 | $1,120 | $195 | $925 | $-6,825 |
| 10 | 8,051 | $1,248 | $215 | $1,033 | $-1,820 |
| 12 | 7,955 | $1,372 | $224 | $1,148 | $480 |
| 15 | 7,813 | $1,465 | $238 | $1,227 | $4,160 |
Recovery Period Meaning for Solar Projects
The recovery period is the time needed for cumulative project cashflow to move from negative to zero. The schedule starts with the net upfront outlay in year 0, then adds annual net cashflows. If net outlay is 11,000 and year‑1 net cashflow is 1,200, payback cannot be earlier than year 9 unless incentives, exports, or higher tariff growth improve cashflows.
Inputs That Drive Payback Accuracy
Production, self‑use, and the retail rate create most of the value. For example, 8,500 kWh in year 1 with 75% self‑use at 0.16 per kWh yields about 1,020 in avoided purchases, before export revenue. A 10% drop in production reduces savings by roughly the same percentage, while a 10% increase in retail price raises savings immediately and compounds with escalation.
Cashflow Modeling Across the Analysis Horizon
This calculator builds a year‑by‑year schedule: savings plus export revenue plus any year‑1 credit, minus operating cost and any loan payment. Loan financing shifts cashflow forward by lowering the initial outlay, but fixed annual repayments can delay recovery. Review the first 10–12 years to confirm that loan payments do not exceed combined savings during early years.
Discounted Payback and NPV Interpretation
Discounted payback accounts for the time value of money using the discount rate. A 6% discount rate reduces the present value of later savings, making discounted payback longer than simple payback. The 25‑year NPV sums discounted cashflows, including year‑0 costs; positive NPV means the project exceeds the chosen rate. Use the discount rate to reflect alternatives such as debt cost, expected returns, or inflation risk.
Using Exports, Degradation, and O&M Assumptions
Export compensation adds a secondary revenue stream that matters more when self‑use is low. If export rate is 0.08 per kWh and 2,000 kWh are exported, annual export revenue is about 160 before escalation. Degradation, such as 0.6% per year, gradually reduces production and cashflow. O&M inflation keeps costs realistic; include cleaning, inverter reserves, monitoring fees, insurance adders, and periodic inspections for long‑term planning. Sensitivity testing is recommended: run low, expected, and high cases for rates, self‑use, and production, then compare payback and NPV to understand decision margins clearly before committing.
FAQs
What does recovery period mean here?
The recovery period is the first point where cumulative net cashflow becomes zero or positive. The calculator also estimates a fractional year by interpolating within the first year that crosses breakeven.
Why are there two payback values?
Simple payback uses nominal cashflows. Discounted payback reduces future cashflows using the discount rate, so it reflects the time value of money and usually produces a longer payback.
How should I choose year‑1 production?
Use an installer proposal, a monitoring record from a similar system, or a PV modeling tool result. Enter expected first‑year kWh after shading and orientation effects, then adjust degradation for long‑term output.
How are exports and self‑use treated?
Self‑used energy offsets retail purchases and earns savings at the retail rate. Exported energy earns revenue at the export rate. Both rates can escalate annually using the provided escalation inputs.
What discount rate is reasonable?
Pick a rate that matches your alternative: loan APR, target investment return, or a conservative hurdle rate. Higher discount rates reduce the present value of later savings and can extend discounted payback.
Can I model loan versus cash fairly?
Yes. Loan mode reduces the initial outlay and adds annual payments for the chosen term. Compare payback and NPV under both modes to understand liquidity effects and total value.