Internal Rate of Return (IRR)
The annualized rate of return on a solar investment accounting for all cash flows over the system's lifetime, including tax credits, energy savings, and maintenance costs.
Why It Matters
IRR lets you compare solar to other investments. Residential solar typically delivers 10-20% IRR, competitive with or exceeding stock market historical returns.
Related Tools
Related Terms
ROI (Return on Investment)
The financial gain from solar expressed as a percentage of the initial cost. Most residential solar has 10-20% ROI.
Net Present Value (NPV)
The total value today of all future solar savings minus the initial investment, discounted at a chosen rate. A positive NPV means the investment is financially worthwhile.
Payback Period
The time it takes for your cumulative savings to equal your initial investment in solar. Typically 6-10 years in the US.