Solar ROI Calculator Methodology

PV Yield uses a simplified but transparent yearly cashflow model. It is suitable for early screening, not final project finance.

1. System capacity and investment

If capacity is entered directly, the model uses that value in kWp. If roof area mode is used, capacity is estimated from usable roof area multiplied by capacity density. Initial investment is capacity multiplied by EPC cost per kWp. Loan interest is modeled separately and is not included in initial EPC cost.

2. Irradiation and first-year generation

Weather input can come from built-in examples, coordinate-based lookup, or a custom 12-month POA file. POA means plane-of-array irradiation. First-year reference energy is estimated from POA, capacity, and a set of correction factors such as tilt, shading, soiling, thermal loss, mismatch, wiring loss, inverter loss, and availability.

3. Degradation

The model applies a first-year degradation value and then an annual degradation rate. This gives lower output in later years, matching the common practice that PV modules produce less energy as they age.

4. Revenue

Generation is split into self-consumed electricity and exported electricity. Self-consumed power is valued at the avoided retail tariff. Exported power is valued at the feed-in tariff. If incentives, demand charges, time-of-use prices, or storage dispatch apply, users should adjust inputs or use a more detailed model.

5. Operating cost and tax

Operation and maintenance cost is estimated per kW per year. Tax is represented as a simplified rate for early screening. Real tax treatment can depend on ownership type, jurisdiction, depreciation, VAT, subsidy rules, and income classification.

6. Payback, IRR, NPV, and LCOE

• Payback is the year when cumulative after-tax cashflow turns positive.
• IRR is the discount rate that makes project net present value close to zero.
• NPV discounts future cashflows using the user-entered discount rate.
• LCOE divides discounted lifecycle cost by discounted lifecycle generation.

Because this is a screening calculator, local tariff contracts, interconnection costs, roof conditions, permits, incentives, and financing documents should be checked before a final decision.