Npv Solar Panels

Net present value npv is a common metric to express the value of future income or savings from a solar installation.

Npv solar panels.

Hence npv accounts for the future value of the investment made into an installation project. If you re not familiar with the concept of npv the video below explains it in more detail. 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. Npv is how much return the solar plant will make accounting for the time value of money.

Factors such as opportunity cost inflation and risk are all accounted for in npv to give the overall value of the project in today s time. Commentary let s talk about net present value and solar panels without understanding it you ll never know if installing solar panels or buying a stock is a good deal or not. 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. Discussion a positive npv suggests that the solar pv system would be a good investment while a negative npv suggests that the pv system would be a poor investment.

Npv does account for the time value of money. In solar this initial investment is the system cost and future cash flows are the resulting.