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Financial Forecast & ROI Profile

Updated

 

Core financial assumptions

Lifecycle (yrs): The total duration, in years, over which the financial returns and project costs are evaluated. This determines the timeline for your cash flow projections.

Discount rate: Used to turn future savings into today's dollars and affects Net Present Value (NPV). It does not change Simple Payback. Higher % = more conservative: NPV goes down. Separate from tariff/export escalation and CPI. 6–10% is common for C&I.

 

Module Degradation

Year 1 degradation (%): The percentage of efficiency lost during the first year of operation.

Subseq. Yrs (%): The annual percentage of efficiency loss for every year following the first year. This represents the steady, long-term aging of the hardware.

 

ROI Profile (optional) - Advance ROI Settings

The Advanced ROI section allows you to fine-tune the financial parameters and return-on-investment calculations for your specific project needs. These settings provide granular control over how long-term value is projected for each customer. 

Key Features

  • Profiles & Duplication: Save settings as a profile for future use or duplicate existing quotes to save time.

  • System Integration: Load pre-defined system packages directly into your ROI analysis.

  • Interface Control: Toggling Show Advanced ROI Options will reveal the ROI profile settings that can be saved and reused. Toggling again will not only hide but will delete the current advanced settings, once a confirmation prompt is clicked. 

Advanced Parameters

  • Models & Confidence: Adjust the Straight line depreciation model or Confidence level & IAV.

  • Financial Assessments: Toggle between Bankable Project (pre-tax) or Customer Benefit (after-tax) views.

  • Escalation Rates: Set annual growth for Grid/Export tariffs and Consumption (load growth).

 

1. Reusable ROI profiles

Streamline your workflow by saving specific financial and performance configurations.

  • Save as Profile: Enter a unique name to store your current settings for use on other quotes or contacts.

  • Load a Profile: Quickly apply previously saved configurations from the dropdown menu to maintain consistency across projects.

 

2. Confidence level & IAV

P90 (conservative): Based on typical published derating (e.g., NREL) applied to your TMY run. This is an indicative P90, not a full multi-year sensitivity/Monte Carlo study. Please note, P90 reflects lower-confidence energy outcomes but does not represent a full probabilistic financial risk assessment.

Inter-annual Variability (%): Set the percentage that accounts for year-to-year fluctuations in weather patterns, which impacts the consistency of energy generation.

 

3. Financial policy

The Financial Policy section allows you to account for the real-world costs of maintaining and operating a solar asset over its lifetime.

Annual Maintenance Cost ($): The fixed yearly amount spent on routine upkeep, such as panel cleaning, site inspections, and minor electrical repairs.

Reinvestment Amount ($): The projected cost for the equipment and labor associated with the replacement or upgrade in those specific years.

Reinvestment Schedule (Year): Allows you to designate additional years (e.g., Year 7, Year 12) for major hardware upgrades or battery replacements.

 

4. Depreciation & Assessment Type

Depreciation refers to how the value of your solar system or its components reduces over time. This is important for financial modeling, especially when accounting for tax offsets or determining system value over the project's lifetime.

A.) Assessment Type:

Bankable Project Assessment (Pre-tax):

This is the default, conservative setting designed for formal financial reviews.

  • Exclusions: Depreciation tax benefits are excluded from this view.

  • Inclusions: Renewable energy incentives remain included in the calculation.

  • Primary Use: Ideal for investment committees, banks, and internal capital approval analysis where a high level of fiscal caution is required.

Customer Benefit Assessment (After-tax):

This is a sales-oriented perspective that highlights the total economic advantage for the system owner.

  • Inclusions: Both depreciation tax benefits and renewable energy incentives are included.

  • Display: Specifically designed to show customer-level economic value and the full impact of tax-related savings.

  • Primary Use: Best used during customer presentations to demonstrate the total value of ownership.

 

NOTE: Some metrics such as IRR and NPV are consistently bankable/projects based and exclude tax benefits

 

B.) We support two common depreciation methods:
1. Diminishing Value Depreciation (Declining Balance Method) - DEFAULT SETTING

This method applies a fixed percentage to the remaining value of the asset each year — meaning the annual depreciation amount reduces over time.

How it works:

  • A higher percentage is usually applied in Year 1 (e.g., 15%), followed by a lower percentage (e.g., 30%) in following years.

  • Each year, the depreciation amount is calculated from the asset’s remaining value, not the original value.

  • This results in faster depreciation upfront and smaller deductions in later years.

  • This method may better reflect the declining efficiency or usage benefit of an asset over time.

Example:

If your system starts at $10,000:

  • Year 1: $1,500 (15% of $10,000)

  • Year 2: $2,550 (30% of $8,500)

  • Year 3: $1,785 (30% of $5,950)

  • … and so on, until the asset is fully depreciated.

2. Straight-Line Depreciation - TOGGLED ON

This method assumes the asset loses the same amount of value each year over a fixed number of years.

How it works:

  • The total depreciable value is divided evenly over the asset's useful life.

  • A set value or percentage is applied in Year 1 (this can be a fixed amount or a percentage).

  • The same percentage is used for each subsequent year, until the end of the depreciation period (e.g., 20 years).

  • Tax deductions are calculated each year based on this scheduled depreciation.

Example:

If your system costs $10,000 and the annual depreciation rate is 5%, then:

  • Year 1: $500

  • Year 2: $500

  • … and so on, up to the designated number of years (e.g., 20 years).

 

C.) Configuring Depreciation Parameters

Once you have selected an assessment type that includes tax benefits, you can define the specific depreciation schedule:

  • Depreciation type in Year 1: Select whether the initial depreciation is calculated as a Percentage (%) or a flat dollar ($) amount.

  • Asset value depreciated in Year 1: Enter the specific value or percentage of the system to be depreciated in the first year.

  • Annual depreciation rate (%): Define the steady percentage at which the asset value declines in subsequent years.

  • Max. number of years depreciation: Set the total duration for which the depreciation benefits should be applied.

  • Nominal tax rate (%): Input the applicable corporate or individual tax rate used to calculate the actual value of the tax shield generated by depreciation.

 

5. Grid tariff escalation by year 

A. Default Escalation (from Year 2)

  • Input: The annual percentage (%) increase for utility rates.

  • Function: This rate is applied automatically every year starting from Year 2 to account for inflation and rising energy costs.

. Escalation Overrides

Use this to account for known or expected price spikes in specific years that differ from your default rate.

  • Specific Year Rate: Set a custom percentage for a particular year (e.g., a 10% hike announced by a utility for Year 3).

  • Subsequent Years: Note: The rate you specify for the last override year will continue to be applied for all subsequent years in the project lifecycle, replacing the default escalation rate from that point forward.

 

6. Export tariff escalation

The Export Tariff Escalation section allows you to model how the payments you receive for sending excess energy back to the grid will change over time. Because these payments (Feed-in Tariffs) are set by energy retailers rather than the government in many regions, they can be more volatile than standard grid prices. 
Please note: Escalation if positive and reduction if negative, of export rates per year.

 

7. Consumption escalation (load growth)

This section defines how your energy consumption changes over time. Growth is applied consistently to baseline quantities to ensure a fair "before and after" comparison.

Growth Modes

  • Constant Annual Growth (Linear): A steady, year-on-year increase based on the original baseline.

    • Example (2%/yr): Year 1: 1.00x, Year 2: 1.02x, Year 3: 1.04x.

  • Year-by-Year Growth (Custom): Allows you to specify unique growth rates for specific years (e.g., a planned facility expansion in Year 3).

    • Note: The most recent specified rate continues for all subsequent years.

  • S-Curve / Logistic Growth: Best for modeling electrification ramps (e.g., moving to an EV fleet) where growth is fast initially but levels off at a practical limit.

    • Settings: Define the early minimum growth, long-run maximum plateau, the "Mid-year" (fastest growth point), and the steepness of the ramp.

Important Technical Notes

  • Scaling vs. Simulation: Growth scales the Year 1 baseline quantities; it does not re-run hourly dispatch simulations for every future year.

  • Export Interaction: As load growth increases, your self-consumption typically rises, which often reduces the fraction of energy exported to the grid.

 

8. Cash adjustments

Use one-time year-specific adjustments for known costs or benefits (e.g., rebates, upgrades, fees). Positive values increase cashflow; negative values reduce it.

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