Solar Financial Analysis — Payback, ROI, and 25-Year Cashflow
A solar quote without a cashflow is just a price. The financial model is what turns a capital cost into an investment decision.
First-year savings
Savings = (self-consumed kWh × retail rate) + (exported kWh × export rate)
Simple payback and ROI
Simple ROI = (Lifetime savings − system cost) / system cost
Typical Philippine residential grid-tied payback is 4–7 years; commercial with higher rates and better daytime match can be 3–5.
The 25-year cashflow
A credible model steps year by year with:
- Panel degradation: ~2% year 1, then ~0.5%/year (so ~85% output at year 25).
- Electricity price escalation: 3–5%/year historically — this increases savings over time.
- Inverter replacement: one replacement around year 10–15.
- O&M: cleaning and minor repairs, ~0.5–1% of capex per year.
What to present
Year-1 savings, simple payback, 25-year net savings, and the break-even year on a cashflow chart. Add NPV and IRR for commercial clients who compare it against other investments.
EngEst Pro’s Solar PV Calculator produces the financial estimate automatically — annual generation, first-year savings, payback, and a lifetime cashflow with degradation and escalation — in your local currency, alongside the BOM.
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