Npv Solar Panels

Hence npv accounts for the future value of the investment made into an installation project.

Npv solar panels. Net present value is the cost of the solar pv system minus what it s worth to you. Net present value npv is a common metric to express the value of future income or savings from a solar installation. In solar this initial investment is the system cost and future cash flows are the resulting. Sure enough after some digging i found the prerulemaking document for the new solar rule which indeed makes clear that what they re talking about are present value energy cost savings over the 30 year period of analysis.

So maybe that 19 000 is the net present value of the estimated future savings. Npv does account for the time value of money. If you re not familiar with the concept of npv the video below explains it in more detail. Using a solar npv formula rec solar can show you how the 25 to 30 year lifetime cash flow of a solar project compares in today s dollars factoring in for inflation interest and other lost opportunity costs.

Npv is how much return the solar plant will make accounting for the time value of money. Npv is presented in dollars and is calculated by subtracting the cost of the initial investment from the sum of the total discounted future cash flows over the lifetime of the investment i e the present dollar value of future cash flows calculated using the discount rate.