Solar project ROI calculator (IRR, NPV, LCOE, DSCR)

How to read the metrics

Project IRR: return of the asset before financing and tax.
Equity IRR: return to the shareholder after debt service.
NPV: value created, in today's money, at the chosen discount rate.
LCOE: discounted cost of producing one MWh, expressed as a flat price — compare it to the selling price.
Break-even price (NPV = 0): the starting price that, with your indexation, makes the NPV exactly zero (equals the LCOE when indexation is 0).
DSCR: ability to cover debt service (lenders want > 1.15–1.30×).
MOIC: multiple on invested equity (total distributed / total invested).

For a bankable, consolidated model — P50/P90, contracts, taxes and NAV valuation — see the solar business plan software and the photovoltaic financial model.

Using this as a solar NPV calculator

To read this tool as a solar NPV calculator: the NPV (Net Present Value) is the sum of the project cash flows discounted at your chosen rate, net of the CAPEX. A positive NPV means the project creates value above that rate; a zero NPV means the project IRR equals the discount rate. Change the discount rate, price or CAPEX and the NPV updates live — and the break-even price (NPV = 0) shows the exact starting price your project needs to clear it.

FAQ

How do you calculate the ROI of a solar project?

You project generation (capacity × yield, less annual degradation), revenue (price × volume), costs (CAPEX then OPEX), then financing via debt and equity. From there you derive the project IRR and equity IRR, the NPV at your discount rate, the LCOE and the DSCR. This calculator runs those computations live from your assumptions.

What is the difference between project IRR and equity IRR?

Project IRR measures the return of the asset before financing (unlevered cash flows). Equity IRR measures the return to the shareholder after debt service: it is usually higher when leverage is favourable (the cost of debt is below the return of the asset).

What is a good DSCR for a solar project?

The DSCR (Debt Service Coverage Ratio) compares cash available for debt service to the annual repayment. Lenders often require a minimum DSCR of around 1.15–1.30× depending on the revenue profile (contracted vs merchant). Below 1.0×, the project does not cover its debt.

Why is the NPV not zero when I enter the LCOE as the selling price?

The LCOE is a flat-price equivalent: the NPV only goes to zero if you enter it as the selling price AND set price indexation to 0 (up to display rounding). With positive indexation, the price exceeds the LCOE from year two onwards, so the NPV turns positive. That is why the calculator also shows the break-even price (NPV = 0): the starting price that, with your indexation, makes the NPV exactly zero — the project IRR then equals the discount rate.

Does the calculator replace a full financial model?

No — it is a quick, simplified estimate (excluding detailed taxes, working capital and sculpted debt). A bankable business plan also covers P50/P90 scenarios, offtake contracts (feed-in, PPA, merchant), corporate taxes, NAV valuation and portfolio consolidation — which is what the Wattvalio application does.

Solar project ROI calculator