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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.

Is something missing or wrong? Write to us at hola@radiaris.com. Last reviewed: 26 October 2026.