The underlying equations used to compute several of the key financial metrics are documented here:
Levelized Cost of Electricity
Levelized Cost of Electricity (or LCOE) is calculated as follows:
Where,
N = Analysis period in years
Cn = The annual project costs in year n ($). This includes Installation Costs, Opex costs, Loan Principle Repayment, Loan Interest, Taxes and Incentives
Qn = The electricity generated by the system in year n (kWh)
d = discount rate (real or nominal)
Payback and Net Present Value
Payback period and Net Present Value (or NPV) for the solar plant is calculated as follows:
Internal Rate of Return
Internal Rate of Return (or IRR) for the solar plant is calculated as follows:
Where,
N = Analysis period in years
Cn = The after-tax cash flow in year n ($)