Economics: Financial Analysis of Solar PV Systems
Understand the economic factors that determine solar PV viability. Learn about costs, incentives, financing options, and return on investment calculations.
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Section 4 of 5Solar PV Economic Analysis
The economics of solar PV systems depend on multiple factors including upfront costs, available incentives, electricity rates, system performance, and financing options. While solar panel prices have declined dramatically over the past decade, the levelized cost of energy (LCOE) for solar PV has become competitive with traditional energy sources in many markets.
Key economic metrics include payback period, return on investment (ROI), net present value (NPV), and internal rate of return (IRR). These calculations help determine whether a solar installation makes financial sense and how long it will take to recover the initial investment. Government incentives, tax credits, and rebates can significantly improve the economics.
Economic Factors
- Capital Costs: Solar panels, inverters, installation, and permitting
- Operating Costs: Maintenance, insurance, and monitoring
- Revenue Streams: Electricity bill savings and potential feed-in tariffs
- Incentives: Tax credits, rebates, and grants
- Financing: Cash purchase, loans, leases, or power purchase agreements
- Risk Factors: Performance degradation, electricity price escalation, policy changes
Interactive Solar Economics Calculator
Financing Options
Tax Incentives & Rebates
Financial Summary
25-Year Cash Flow Analysis
Cash Flow Timeline
InvestmentPayback
Period25
Years