How does the Commercial Solar PPA vs. Cash vs. Lease Underwriter calculate financial return and payback?

The solver models gross capital expenditure (CapEx), Section 48 Investment Tax Credits (ITC 30%–50%), 5-year MACRS accelerated depreciation, utility demand charge shaving, and levelized cost of energy (LCOE).

Does this calculator account for battery degradation over time?

Yes, it models standardized degradation curves (typically 1.5% to 2.2% annually for LiFePO4 cells) and accounts for battery pack augmentation cycles across a 20-to-25 year lifecycle.

What federal tax credits apply under the Inflation Reduction Act?

Under Section 48 and Section 45Y, qualifying clean energy and battery storage installations unlock a 30% base ITC, plus potential 10% domestic content and 10% energy community bonus adders.

Commercial Solar PPA vs Cash vs Lease Underwriter [25-Yr LCOE & Pro Forma]

Direct Cash 25-Yr Net Savings

Payback: 0.0 yrs

Third-Party PPA 25-Yr Net Savings

$0 Upfront CapEx • Day 1 Green

Capital Lease 25-Yr Net Savings

Yr 10 Buyout: $1

Recommended Optimal Strategy

Cash Purchase

Highest Lifetime NPV

Bankable Model Need an investor-grade solar financial pro forma?

Download the unlocked 25-Year Commercial Solar + BESS Model with 5-Yr MACRS, Section 48 ITC & LCOE Tables (.xlsx).

📊 Unlock Solar Pro Forma • $39

☀️ Solar PV System Sizing & CapEx

Solar Array Capacity (kW DC)

Annual Specific Yield (kWh / kW / yr)

Turnkey CapEx ($ / Watt DC)

Includes modules, inverters, racking, electrical & interconnection.

Utility Retail Electricity Rate ($ / kWh)

Annual Utility Tariff Escalation (% / yr)

🏛️ Cash Model: IRA ITC & Tax Shields

IRA §48 Investment Tax Credit (ITC)

Corporate / Property Income Tax Rate

Cash Model Annual O&M ($ / kW / yr)

Discount Rate for NPV Analysis (%)

📄 PPA Model: $0 Down Contract Terms

Starting Year 1 PPA Energy Rate ($ / kWh)

Rate paid to solar provider for generated kilowatt-hours.

Annual PPA Tariff Escalator (% / yr)

Typical PPA escalation ranges 1.5% to 2.5% per year.

PPA Agreement Term (Years)

PPA Advantage: Third-party provider handles 100% of equipment CapEx, O&M, inverter replacement, insurance, and solar degradation risk.

📑 Capital Lease: Financing & Buyout

Lease Down Payment (%)

Lease Annual Interest Rate (%)

Lease Term (Years)

Lease Advantage: Lessee retains equipment ownership after year 10 buyout ($1 buyout or FMV), eliminating financing costs for years 11–25.

📊 3-Way Comparative Financial Underwriting Table

Evaluation Parameter	1. Direct Cash Purchase	2. Third-Party PPA	3. Commercial Capital Lease
Initial Upfront Out-of-Pocket CapEx	$0	$0.00 (Zero Down)	$0.00
IRA §48 ITC + MACRS Tax Shields	+$0	Retained by PPA Sponsor	+$0
Net Out-of-Pocket CapEx	$0	$0.00	$0.00
Year 1 Net Operating Cash Flow	+$0/yr	+$0/yr	$0/yr
10-Year Cumulative Cash Flow	$0	$0	$0
25-Year Cumulative Net Savings	$0	$0	$0
25-Year Net Present Value (NPV @ 7%)	$0	$0	$0
Levelized Cost of Energy (LCOE)	$0.00 / kWh	$0.00 / kWh	$0.00 / kWh
O&M and Inverter Replacement Risk	Property Owner Responsible	100% Absorbed by PPA	Owner Responsible Post-Yr 10

Commercial Solar: PPA vs. Cash vs. Lease Underwriter

☀️ Solar PV System Sizing & CapEx

🏛️ Cash Model: IRA ITC & Tax Shields

📄 PPA Model: $0 Down Contract Terms

📑 Capital Lease: Financing & Buyout

📊 3-Way Comparative Financial Underwriting Table