How does the Commercial Solar PPA vs Cash vs Loan Calculator 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.

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2026 Commercial Clean Energy Structuring Model

Commercial Solar PPA vs. Cash vs. Debt Financing

Underwrite commercial solar photovoltaic & storage projects across all three institutional financing structures: Cash Purchase (full Section 48 ITC & MACRS), Bank Debt / Equipment Loan (levered returns with zero out-of-pocket), and Third-Party PPA (zero operational risk with immediate OPEX reduction).

Project Sizing & Tariffs

Solar System Capacity (kW DC): 250 kW

25 kW (Small C&I) 250 kW 2,000 kW (2 MW)

Turnkey EPC Capex ($/Watt): $1.85 / W

Current Grid Electricity Tariff: $0.165 / kWh

Proposed PPA Starting Tariff: $0.115 / kWh

Typical PPA offers 25%–35% discount vs local utility blend.

IRA Section 48 ITC Qualification:

1. Cash Purchase Maximum 25-Yr Value

Net Outlay (After ITC) $249,750

Payback:4.2 Yrs

25-Yr Net:$1,180k

ITC Tax Credit:$138,750

2. Solar Bank Loan Zero Down Leverage

Initial Outlay $0 Down

Year 1 Cash Flow:+$12,400

25-Yr Net:$920k

Loan Term:12 Yrs @ 6.8%

3. Commercial PPA Zero Capex & Zero Risk

Upfront Capex $0 Capital

Day-1 Savings:30.3% Off

25-Yr Savings:$485k

O&M Liability:Developer (0%)

25-Year Financial & Operational Matrix

Underwriting Metric	Cash Purchase	Solar Loan	Commercial PPA
Upfront Capital Investment	$462,500	$0 Down	$0 Required
ITC Tax Credit Benefit	30% ($138k)	30% ($138k)	Retained by Developer
5-Yr MACRS Depreciation Shield	$82,500	$82,500	N/A
Maintenance & Inverter Replacement	Owner Responsibility	Owner Responsibility	100% Covered by PPA
25-Year Cumulative Savings	$1,180,000	$920,000	$485,000

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