What is a return on investment (ROI) for commercial solar?

The return-on-investment (ROI) of a solar project gives you an idea of how much you’ll save over the lifetime—typically 25–30 years—of your system. A comprehensive ROI formula for commercial solar is included in every Solar Technologies evaluation and will include: The current rate and demand charges for your utility kilowatt-hours (kWh) usage.

What is an example of an IRR calculation for a solar system?

Here’s a fictional example of an IRR calculation for a solar system installed on a commercial building: Company: GreenTech Inc. Project: Rooftop solar panel installation (500 kW capacity) Assumptions: Upfront Investment: $300,000 (includes panels, inverters, installation, and permitting). Cash Flows:

How do commercial solar installers calculate the cost of a system?

Commercial solar installers often calculate the net cost of a system by taking its net cost (after applying incentives) and dividing it by your annual projected utility bill savings. To calculate the payback period of your system, use this formula:

What is a good IRR rate for a solar project?

While there’s no definitive “good” IRR rate, industry benchmarks can provide a general reference point. According to various reports, the average IRR for commercial solar projects in the United States can range from 10% to 15%. The best approach to determining a good IRR for a solar project is to consider the unique circumstances of your project.

What are the cash flows associated with solar projects?

Cash flows generally associated with solar projects are: This is the initial cost to acquire and install a solar system. It includes: Cost of solar panels (and/or any other type of solar service). Inverters. Mounting equipment. Electrical upgrades (if necessary). Permitting fees. Labor costs.