Npv Solar Panels

So maybe that 19 000 is the net present value of the estimated future savings.

Npv solar panels.

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. 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. Hence npv accounts for the future value of the investment made into an installation project. Net present value npv is a common metric to express the value of future income or savings from a solar installation.

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 does account for the time value of money. Net present value is the cost of the solar pv system minus what it s worth to you. Npv is how much return the solar plant will make accounting for the time value of money.

If you re not familiar with the concept of npv the video below explains it in more detail. 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.