What a commercial solar financial model includes
A credible commercial solar financial model for UK rooftop PV typically includes:
- Capex build-up — per-panel cost plus site adders (inverter, scaffold, grid connection, design).
- Generation profile — hour-by-hour yield matched to site irradiance and roof geometry.
- Self-consumption split — import savings vs export revenue based on load profile, not a flat assumption.
- 25-year cashflow — tariff escalation, O&M, degradation, and inverter replacement.
- Decision metrics — simple payback, NPV, IRR, and LCOE.
Every Stage1Energy feasibility dossier includes all of the above, with sourced workings. See the example report financial section.
Payback vs NPV vs IRR
Simple payback is the years until cumulative savings equal capex. It is easy to explain but ignores cash timing after payback and money's time value.
NPV (net present value) discounts future cashflows to today using a hurdle rate — typically 7% in UK commercial feasibility. Positive NPV means the project beats your required return.
IRR (internal rate of return) is the discount rate at which NPV equals zero. Useful for comparing solar against other capex options.
Guides: commercial solar payback UK, NPV explained, IRR vs payback.
Self-consumption and export
On most UK commercial buildings, electricity used on site during generation hours is worth more than exported surplus — because it avoids retail import tariffs. A feasibility model that assumes a flat 50% self-consumption without reference to your load profile will misstate returns.
Stage1Energy matches generation to consumption hour by hour where data allows: Σ min(generation, load) per hour. Guide: self-consumption vs export.
The 25-year cashflow model
Commercial solar is a 25-year asset. The cashflow model escalates electricity tariffs and O&M costs, degrades panel output annually (typically 0.5%/year), and prices an inverter replacement around year 12–15. The result is a year-by-year chart a board can read without specialist knowledge.
Deep dive: 25-year solar cashflow model explained. Building the business case: commercial solar business case and solar investment board paper.
Defaults and overrides
Feasibility models use stated defaults — discount rate, tariff escalation, degradation, O&M — drawn from published sources (Green Book, Ofgem trends, IRENA cost bands). Every default can be overridden with site-specific data: actual bills, quoted tariffs, firm grid quotes.
The dossier's assumptions page records exactly which values were used. Our approach: methodology page. Cost to commission: pricing.