Solar Farm IRR Calculator

Investment results

100 MW Solar Farm · Project Site · USD

Base scenario

Review these assumptions:

Minimum DSCR is below 1.00, indicating a debt-service shortfall.

Project IRR

5.85%

Equity IRR

4.38%

Pre-tax IRR

6.36%

After-tax IRR

5.85%

MIRR

5.31%

Project NPV

-$12,083,523.49

Equity NPV

-$7,337,780.54

Simple payback

11.69 years

Discounted payback

Not reached

LCOE

$70.52/MWh

Minimum DSCR

0.70×

Average DSCR

1.23×

Total CAPEX

$75,787,500

Cost per kW

$757.88

Initial equity

$24,032,019

Debt amount

$53,051,250

Lifetime revenue

$242,658,436

Lifetime O&M

$97,303,223

Lifetime project cash

$58,680,560

Return on investment

76.92%

Profitability index

0.84

Break-even energy price

$70.52/MWh

First-year energy

163,028 MWh

Lifetime energy

3,840,277 MWh

Project and scenario settings

Project name

Location

Scenario

Currency code

Currency symbol

Decimal precision

Operating life, years

Construction period, years

Capacity and energy production

Installed DC capacity, MW

Inverter AC capacity, MW

DC-to-AC ratio

Specific yield, kWh/kWp

Used when direct first-year energy is zero.

Direct first-year production, MWh

Annual degradation, %

System availability, %

Grid curtailment, %

Other system losses, %

Combine soiling, shading, wiring, inverter, transformer, and temperature losses.

Electricity revenue and incentives

PPA rate, per MWh

PPA duration, years

Post-PPA merchant rate, per MWh

Electricity price escalation, %

REC revenue, per MWh

Carbon credit revenue, per MWh

Annual capacity payment

Other annual revenue

Government grant

Investment tax credit, %

Capital expenditure

Solar modules

Inverters

Mounting and trackers

Electrical equipment

Civil works

Land purchase and preparation

Grid interconnection

Development, permits, legal

Engineering and procurement

Battery storage

Other initial costs

Contingency, %

Initial working capital

Operating expenses and lifecycle costs

Fixed annual O&M

Variable O&M, per MWh

Annual land lease

Annual insurance

Asset management

Grid and metering charges

Property taxes

Other annual expenses

O&M inflation, %

Inverter replacement year

Inverter replacement cost

Battery replacement year

Battery replacement cost

Decommissioning cost

Salvage or terminal value

Debt, tax, and discounting

Debt financing, %

Loan interest rate, %

Loan term, years

Principal grace period, years

Repayment method

Balloon payment, %

Loan arrangement fee, %

Corporate tax rate, %

Depreciable asset basis, %

Straight-line depreciation, years

Discount rate or WACC, %

MIRR finance rate, %

MIRR reinvestment rate, %

Custom annual cash-flow adjustments

One line per adjustment: year, revenue adjustment, O&M adjustment, CAPEX adjustment

Use positive values to add revenue, costs, or replacement spending. This supports special payments, repairs, staged upgrades, and owner-defined events.

View results

Annual cash-flow schedule

Year	Energy MWh	Rate/MWh	Revenue	O&M	EBITDA	Depreciation	Interest	Tax	Replacement CAPEX	Principal	Debt service	Closing debt	Project cash flow	Equity cash flow	Cumulative project	Discounted cash flow	DSCR
1	163,028	$55.00	$9,455,618	$2,924,542	$6,531,076	$3,410,438	$3,448,331	$0	$0	$0	$3,448,331	$53,051,250	$6,531,076	$3,082,745	-$69,756,424	$6,047,293	1.89×
2	162,213	$55.83	$9,542,166	$2,990,319	$6,551,846	$3,410,438	$3,448,331	$0	$0	$1,798,773	$5,247,104	$51,252,477	$6,551,846	$1,304,742	-$63,204,577	$5,617,152	1.25×
3	161,402	$56.66	$9,629,609	$3,057,778	$6,571,831	$3,410,438	$3,331,411	$0	$0	$1,915,693	$5,247,104	$49,336,784	$6,571,831	$1,324,727	-$56,632,746	$5,216,931	1.25×
4	160,595	$57.51	$9,717,956	$3,126,959	$6,590,997	$3,410,438	$3,206,891	$0	$0	$2,040,213	$5,247,104	$47,296,570	$6,590,997	$1,343,892	-$50,041,749	$4,844,579	1.26×
5	159,792	$58.37	$9,807,216	$3,197,906	$6,609,310	$3,410,438	$3,074,277	$0	$0	$2,172,827	$5,247,104	$45,123,743	$6,609,310	$1,362,205	-$43,432,440	$4,498,185	1.26×
6	158,993	$59.25	$9,897,398	$3,270,663	$6,626,735	$3,410,438	$2,933,043	$0	$0	$2,314,061	$5,247,104	$42,809,682	$6,626,735	$1,379,630	-$36,805,705	$4,175,967	1.26×
7	158,198	$60.14	$9,988,510	$3,345,275	$6,643,235	$3,410,438	$2,782,629	$6,763	$0	$2,464,475	$5,247,104	$40,345,207	$6,636,472	$1,389,368	-$30,169,233	$3,872,318	1.26×
8	157,407	$61.04	$10,080,563	$3,421,788	$6,658,775	$3,410,438	$2,622,438	$156,475	$0	$2,624,666	$5,247,104	$37,720,542	$6,502,300	$1,255,196	-$23,666,933	$3,512,991	1.24×
9	156,620	$61.96	$10,173,565	$3,500,249	$6,673,315	$3,410,438	$2,451,835	$202,761	$0	$2,795,269	$5,247,104	$34,925,273	$6,470,555	$1,223,450	-$17,196,378	$3,236,888	1.23×
10	155,837	$62.89	$10,267,525	$3,580,708	$6,686,817	$3,410,438	$2,270,143	$251,559	$0	$2,976,962	$5,247,104	$31,948,311	$6,435,258	$1,188,154	-$10,761,120	$2,980,770	1.23×
11	155,057	$63.83	$10,362,452	$3,663,213	$6,699,240	$3,410,438	$2,076,640	$303,040	$0	$3,170,464	$5,247,104	$28,777,847	$6,396,199	$1,149,095	-$4,364,921	$2,743,220	1.22×
12	154,282	$64.79	$10,458,357	$3,747,816	$6,710,541	$3,410,438	$1,870,560	$357,386	$0	$3,376,544	$5,247,104	$25,401,303	$6,353,156	$1,106,051	$1,988,234	$2,522,925	1.21×
13	153,511	$65.76	$10,555,248	$3,834,568	$6,720,680	$3,410,438	$1,651,085	$414,789	$0	$3,596,020	$5,247,104	$21,805,283	$6,305,891	$1,058,786	$8,294,125	$2,318,663	1.20×
14	152,743	$66.75	$10,653,136	$3,923,524	$6,729,611	$3,410,438	$1,417,343	$475,458	$0	$3,829,761	$5,247,104	$17,975,522	$6,254,154	$1,007,049	$14,548,278	$2,129,296	1.19×
15	151,980	$67.75	$10,752,029	$4,014,739	$6,737,290	$3,410,438	$1,168,409	$539,611	$2,500,000	$4,078,695	$5,247,104	$13,896,827	$3,697,679	-$1,549,425	$18,245,957	$1,165,663	0.70×
16	151,220	$68.76	$10,851,938	$4,108,269	$6,743,669	$3,410,438	$903,294	$607,485	$0	$4,343,810	$5,247,104	$9,553,017	$6,136,185	$889,081	$24,382,142	$1,791,094	1.17×
17	150,464	$69.79	$10,952,873	$4,204,170	$6,748,702	$3,410,438	$620,946	$679,330	$0	$4,626,158	$5,247,104	$4,926,858	$6,069,373	$822,268	$30,451,515	$1,640,363	1.16×
18	149,711	$70.84	$11,054,843	$4,302,504	$6,752,339	$3,410,438	$320,246	$755,414	$0	$4,926,858	$5,247,104	$0	$5,996,925	$749,821	$36,448,440	$1,500,725	1.14×
19	148,963	$71.90	$11,157,859	$4,403,329	$6,754,529	$3,410,438	$0	$836,023	$0	$0	$0	$0	$5,918,506	$5,918,506	$42,366,946	$1,371,389	—
20	148,218	$72.98	$11,261,931	$4,506,709	$6,755,222	$3,410,438	$0	$836,196	$0	$0	$0	$0	$5,919,026	$5,919,026	$48,285,972	$1,269,916	—
21	147,477	$45.00	$7,078,884	$4,612,707	$2,466,177	$0	$0	$616,544	$0	$0	$0	$0	$1,849,633	$1,849,633	$50,135,604	$367,440	—
22	146,739	$45.68	$7,142,539	$4,721,388	$2,421,150	$0	$0	$605,288	$0	$0	$0	$0	$1,815,863	$1,815,863	$51,951,467	$334,011	—
23	146,006	$46.36	$7,206,858	$4,832,820	$2,374,038	$0	$0	$593,510	$0	$0	$0	$0	$1,780,529	$1,780,529	$53,731,996	$303,251	—
24	145,276	$47.06	$7,271,849	$4,947,070	$2,324,779	$0	$0	$581,195	$0	$0	$0	$0	$1,743,584	$1,743,584	$55,475,579	$274,962	—
25	144,549	$47.76	$7,337,517	$5,064,209	$2,273,308	$0	$0	$568,327	$0	$0	$0	$0	$3,204,981	$3,204,981	$58,680,560	$467,985	—

Performance charts

Two-variable IRR sensitivity

Rows change total CAPEX inputs. Columns change PPA and merchant energy prices.

CAPEX \ Price	-20%	-10%	0%	10%	20%
-20%	4.5%	6.4%	8.1%	9.6%	11.1%
-10%	3.4%	5.3%	6.9%	8.3%	9.7%
0%	2.4%	4.3%	5.8%	7.2%	8.5%
10%	1.5%	3.4%	5.0%	6.3%	7.5%
20%	0.6%	2.6%	4.2%	5.5%	6.7%

Formula used

Internal rate of return:
0 = Σ CF_t ÷ (1 + IRR)^t

Net present value:
NPV = Σ CF_t ÷ (1 + discount rate)^t

Annual production:
Energy_t = First-year energy × (1 − degradation)^t−1

Equity cash flow:
Equity cash flow = Project cash flow − principal − interest

Debt service coverage ratio:
DSCR = Cash available for debt service ÷ annual debt service

How to use this calculator

Enter project capacity, energy yield, availability, losses, and degradation.
Provide PPA pricing, merchant pricing, escalation, certificates, and other revenue.
Complete the CAPEX, operating expense, replacement, and terminal assumptions.
Set debt terms, taxes, depreciation, discount rates, and equity assumptions.
Choose a scenario, calculate, and review IRR, NPV, LCOE, DSCR, and payback.
Study annual cash flows, charts, warnings, and the sensitivity matrix.
Export the complete projection to CSV or PDF for review.

Example assumptions

Input	Example value	Purpose
Installed capacity	100 MW DC	Defines the project scale.
Specific yield	1,750 kWh/kWp	Estimates first-year production.
PPA rate	$55 per MWh	Calculates contracted energy revenue.
Project life	25 years	Sets the modeling horizon.
Debt financing	70%	Determines leverage and equity funding.
Interest rate	6.5%	Calculates interest and debt service.
Discount rate	8%	Calculates present values and NPV.

Interpretation and limitations

Project IRR measures returns before debt financing. Equity IRR measures returns received by equity investors. Higher leverage can increase returns and risk.

NPV measures value at the selected discount rate. Positive NPV indicates modeled value above the required return. DSCR tests annual debt payment capacity.

This calculator provides planning estimates, not investment advice. Actual generation, pricing, taxes, financing, and regulations may differ. Independent technical, legal, tax, and financial review remains essential.

Frequently asked questions

What is solar farm project IRR?

Project IRR is the discount rate making unlevered project NPV equal zero. It evaluates operating returns before financing structure effects.

What is equity IRR?

Equity IRR uses investor cash contributions and distributions. It includes loan proceeds, interest, and principal repayments.

Why can equity IRR exceed project IRR?

Debt reduces the initial equity contribution. Successful leverage can increase equity returns, but it also increases downside risk.

How does panel degradation affect returns?

Degradation reduces annual electricity production. Lower production reduces revenue, cash flow, NPV, and often IRR.

What is a reasonable DSCR?

Required DSCR varies by lender and project. A ratio below one indicates insufficient modeled cash for debt service.

Why might IRR be unavailable?

IRR requires both negative and positive cash flows. Some cash-flow patterns also produce multiple mathematical IRRs.

What is LCOE?

LCOE divides discounted lifetime costs by discounted lifetime energy. It estimates the average cost of producing one MWh.

Should incentives be included?

Include incentives only when eligibility and timing are supportable. Grants and tax credits can materially change returns.

How should merchant pricing be estimated?

Use defensible long-term market forecasts and downside cases. Merchant prices are uncertain and should receive sensitivity testing.

Does this replace a bankable financial model?

No. It is a screening and planning tool. Bankable models require detailed contracts, tax rules, financing covenants, and audited assumptions.

Can custom annual events be modeled?

Yes. Add yearly revenue, O&M, or CAPEX adjustments using the custom adjustment input.