Financial assumptions and loan
These assumptions determine the cash flows over the life of the installation. They are set in 5 · Economics (and in Advanced settings).
Assumption
| Parameter | Default | Effect |
|---|---|---|
| Discount rate | 5 % | Minimum return required on the money: reduces the value of future flows (NPV) |
| Energy inflation | 2 % per year | Raises the savings every year (the electricity price increases) |
| Module degradation | 0.5 % per year | Reduces production every year |
| Horizon (service life) | 25 years | Years over which NPV, IRR and payback are calculated |
| Cost inflation | 2 % per year | Raises OPEX every year |
The savings in year n are: year-1 savings × (1 − degradation)^(n−1) × (1 + energy inflation)^(n−1).
Replacements
They are included by default and can be turned off:
| Component | Year | % of cost |
|---|---|---|
| Battery | 12 | 60 % |
| Inverter | 15 | 70 % |
Only the first replacement of each is considered, if it falls within the horizon. Replacements include VAT (paid by the client).
Financing
If part of the investment is financed with a loan, in year 0 only the unfinanced part is paid and the instalment is deducted each year. NPV, IRR and payback then become those of the equity.
| Parameter | Default |
|---|---|
| Financed percentage of CAPEX | 0 % |
| Annual interest (nominal rate) | 5 % |
| Term | 10 years |
The instalment is constant (French amortisation): c = P·r / (1 − (1 + r)^−n).
Annual cash flow
Net flow = Savings − OPEX − Replacements − Loan payment
Year 0 = −(CAPEX − Financed principal)
The cumulative flow for each year is shown in a table and a chart.
What the savings include
The savings add up: self-consumed energy (direct and from the battery) × purchase price of each hour, plus the export income (with a monthly cap if simplified compensation applies). See Compensation.