Why is it important to model a solar project’s projected cash-flows prior to construction?
Solar PV systems are costly projects with high upfront costs, but also are designed to produce clean, renewable, carbon-free power for up to 30 years or more. Often times, grants, utility rebates or incentives, renewable energy credits (RECs), federal tax credits, and other incentives are available to reduce the upfront costs and make the economics of investment in solar PV systems attractive. Additionally, due to the continuing cost escalation of utility electricity rates, investment in solar PV systems can be a long-term hedge against future electricity rate increases; which will save a system owner money over the life of the system.
Knowing what these economic and financial projections are prior to committing to build, is sound financial management, and can be used to support and justify the capital outlay for investment in solar PV.