ASE
APPLIED SOLAR ENERGY
831-333-1919

Internal Rate of Return (IRR) of a Photovoltaic System

Sample Calculation

Variables
32% Marginal Tax Rate
1443 annual kwh per kw capacity
4789 PV Cost (net per kW)
1.00% Electricity Rate Inflation
Results
8.4% PV Internal Rate of Return (IRR)
12.4% Taxed equivalent rate
Utility
Electricity Rate per kwh
$0.258
$0.261
$0.263
$0.266
$0.268
$0.271
$0.274
$0.277
$0.279
$0.282
$0.285
$0.288
$0.291
$0.294
$0.297
$0.300
$0.303
$0.306
$0.309
$0.312
$0.315
$0.318
$0.321
$0.324
$0.328
$0.331
$0.334
$0.338
$0.341
$0.344
Photovoltaic System
Utility Savings PV Cost (per kW) Annual Net Savings
$372 $4,789 -$4,417
$376   $376
$380   $380
$384   $384
$387   $387
$391   $391
$395   $395
$399   $399
$403   $403
$407   $407
$411   $411
$415   $415
$420   $420
$424   $424
$428   $428
$432   $432
$437   $437
$441   $441
$445   $445
$450   $450
$454   $454
$459   $459
$463   $463
$468   $468
$473   $473
$477   $477
$482   $482
$487   $487
$492   $492
$497   $497
Tax-free investment @ 8.4%
Money in Acct minus Utility Charges plus earnings
$4,789 $372 $372
$4,789 $376 $372
$4,785 $380 $371
$4,776 $384 $370
$4,762 $387 $369
$4,744 $391 $367
$4,719 $395 $364
$4,688 $399 $361
$4,650 $403 $358
$4,605 $407 $354
$4,552 $411 $349
$4,489 $415 $343
$4,417 $420 $337
$4,335 $424 $330
$4,240 $428 $321
$4,134 $432 $312
$4,013 $437 $301
$3,878 $441 $290
$3,727 $445 $276
$3,558 $450 $262
$3,370 $454 $246
$3,162 $459 $228
$2,930 $463 $208
$2,675 $468 $186
$2,393 $473 $162
$2,082 $477 $135
$1,740 $482 $106
$1,363 $487 $74
$950 $492 $39
$497 $497 $0
$0    
Taxed Investment @ 12.4%
Money in Acct minus Utility Charges plus earnings minus taxes
$4,789 $372 $547 $175
$4,789 $376 $547 $175
$4,785 $380 $546 $175
$4,776 $384 $544 $174
$4,762 $387 $542 $173
$4,744 $391 $539 $173
$4,719 $395 $536 $171
$4,688 $399 $531 $170
$4,650 $403 $526 $168
$4,605 $407 $520 $166
$4,552 $411 $513 $164
$4,489 $415 $505 $162
$4,417 $420 $495 $159
$4,335 $424 $485 $155
$4,240 $428 $472 $151
$4,134 $432 $459 $147
$4,013 $437 $443 $142
$3,878 $441 $426 $136
$3,727 $445 $407 $130
$3,558 $450 $385 $123
$3,370 $454 $361 $116
$3,162 $459 $335 $107
$2,930 $463 $306 $98
$2,675 $468 $273 $88
$2,393 $473 $238 $76
$2,082 $477 $199 $64
$1,740 $482 $156 $50
$1,363 $487 $109 $35
$950 $492 $57 $18
$497 $497 $0 $0
$0      


By Antony Tersol, ASE
Last Updated on 7/14/2002
Copyright 2002, Antony Tersol, All rights reserved