Commercial & small business

Commercial solar NPV calculator

Discount your system's future electricity savings back to today's dollars. See whether the project clears your chosen discount rate, and by how much.

Your numbers

1 Project details Optional
Shown on your exported report. Leave blank to skip.
2 Your system
From your installer's proposal, or the size by square footage tool.
US commercial systems typically run $1.10 to $1.80 per watt before incentives.
Typical commercial O&M runs $15 to $25 per kW per year.
3 Production, rate, and horizon
Use your installer's estimate, or the capacity factor calculator.
Your blended commercial rate, from a recent utility bill.
US and Canadian utility rates typically rise 2% to 4% a year.
Your cost of capital or required return. Most businesses use 5% to 8%.
How many years of savings to discount and count.
4 Incentives
Check the ITC calculator if you're unsure which rate applies.
Leave blank if your state or utility doesn't offer one.

How it works

Three steps to a net present value

Step 1

Settle on your net system cost

Start with an installer quote for total system cost, then confirm your ITC rate with the ITC calculator. That net figure, after the credit and any rebate, is the outflow every future year of savings gets measured against.

Step 2

Map out savings for every year ahead

Enter your expected annual production, blended rate, and a realistic rate escalation. If you want the simpler break-even number first, run the payback calculator before coming back here.

Step 3

Pick a discount rate and compare

Use your actual cost of capital as the discount rate. A positive NPV means the project clears that bar. For a second view of the same numbers, check the IRR calculator, which finds the discount rate where NPV hits exactly zero.

Understanding your commercial solar NPV

What NPV actually measures

Net present value converts every future year of electricity savings into today's dollars, then subtracts your net system cost. A positive number means the project is worth more than what you paid for it, once you account for the fact that money today is worth more than the same money in 10 or 20 years. A $198,700 NPV on a $163,000 system, for example, means the project is worth roughly 2.2 times what you put in, measured in today's dollars. See Levelized Cost of Energy Calculator for the source data behind this figure.

Why the discount rate changes everything

A higher discount rate shrinks the present value of savings that arrive further in the future, which lowers NPV even though nothing about the system itself changed. Most businesses use 5% to 8%, based on their cost of capital, and it's worth testing your NPV at a couple of different rates to see how sensitive the result is. The ITC calculator and MACRS depreciation calculator can help you refine the year-zero cost side of the equation first.

NPV versus payback period versus ROI

Payback period tells you when you break even, ROI tells you your total return as a percentage, and NPV tells you the dollar value created after accounting for the time value of money. They're three different lenses on the same investment, and a strong project usually looks good across all three. Compare this result against the payback calculator and ROI calculator for the full picture, or the 25-year lifetime savings calculator in our savings and payback section if you want to see the same math applied at a residential scale.

What a negative NPV tells you

A negative NPV doesn't necessarily mean solar is a bad fit. It usually means your discount rate is set high relative to the project's return, your electricity rate is low, or your installed cost per watt is above market. Try the IRR calculator to see the actual break-even discount rate for your project instead of just a yes or no answer, and the roof space vs. output estimator in our system sizing section if a low system output relative to roof area might be part of the problem.

What this calculator doesn't account for

This is a simplified discounted cash flow model. It doesn't include MACRS depreciation tax savings, panel degradation, or financing interest if you're using a loan instead of cash. For the full tax picture, pair this result with the payback calculator, which builds in year-one depreciation benefits. The Department of Energy's guide to going solar outlines the broader cost and savings factors most discounted cash flow models like this one are built from, and NREL's own Levelized Cost of Energy Calculator walks through a related capital-cost-to-per-kWh framework if you want to see the underlying methodology from a different angle. If demand charges are a big part of your bill, the battery charge time from solar calculator in our Battery & Storage section can show whether a battery would shave your peak enough to pay for itself.

Questions Roof condition decides a lot here. The roof inspection cost before solar estimator in our Solar + Roofing Integration section can help you check inspection and replacement costs before you size the system.

Frequently asked

A positive NPV of any size means the system beats your discount rate, and most well-sited commercial systems land between $100,000 and $250,000 in NPV per 150 kW installed. A 150 kW system with a $163,000 net cost, discounted at 6% over 25 years, returns an NPV of about $198,700, meaning it creates roughly $199,000 in value above what a 6% alternative investment would deliver.

Most businesses use 5% to 8%, based on their cost of capital or the return they'd expect from an alternative investment of similar risk. A business with cheap financing might use 5%, while one comparing solar against a higher-return core business investment might use 8% or more.

Payback period tells you how many years until the system breaks even, without accounting for the time value of money. NPV accounts for that by discounting future savings, and also captures the full value created over the system's entire life, not just the break-even point.

Yes, a positive NPV means the project is expected to earn more than your chosen discount rate, so it beats the return threshold you set. Compare the NPV against your commercial solar IRR calculator result for a second view of the same investment.

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Commercial solar ROI calculator Commercial solar IRR calculator Commercial solar payback calculator Commercial solar 25-year TCO calculator Commercial ITC calculator MACRS depreciation schedule calculator Solar vs. grid-only, 10-year comparison All commercial & small business tools