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.
Why It Matters
NPV accounts for the time value of money, giving a more accurate financial picture than simple payback. Most residential solar systems have strongly positive NPV.
Related Tools
Related Terms
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.
Payback Period
The time it takes for your cumulative savings to equal your initial investment in solar. Typically 6-10 years in the US.
Energy Escalation Rate
The annual percentage increase in electricity prices over time. Historically 2-4% nationally, but varying significantly by state and utility.