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	Solar Electric Investment Analysis - Part 5: Conducting a Financial Analysis
	Publication #: B-1291.5 Date Published: 08/01/2016 Publication Author(s): Eric Romich Milton Geiger Benjamin S. Rashford

Description:
Photovoltaic (PV) panels are an increasingly common sight on urban rooftops and rural properties across the U.S. The declining cost of equipment and installation makes installing a behind-the-electric-meter (net metered) solar electric system enticing for many homeowners, businesses, non-profits, and agricultural producers. Evaluating the financial prudence of an investment in solar requires careful consideration of installation costs, the value of production, and operation and maintenance costs.

Unfortunately, some installers are not forthcoming with information necessary to make fully informed investment decisions. Third-party ownership structures, such as leases, further increase the challenge of understanding the viability of an investment. This six-part series distills the information collection and decision process into six parts.

Part 5: Conducting a Financial Analysis – Accurately evaluating the viability of a PV system requires understanding financial concepts, such as simple payback, net present value, and the levelized cost of energy. Preferences for risk, environmental attributes, and independence also inform these measures of viability.

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