Key indicators to help you evaluate commercial solar investment success

August 25, 2017

Rooftop installation represents a large commercial solar investmentOrganizations making a commercial solar investment are often motivated by lower energy bills, tax incentives, or other sustainable energy goals. But what is the best way to measure a program’s success in hitting these targets? A recent article published by Solar Power World notes five key performance indicators (KPIs) that can help organizations evaluate how much value a new solar power system can add to its triple bottom line. Once a commercial solar system is installed, KPIs can also help operators keep it running at maximum performance levels.

From the article: 

Having access to this data can help keep you well informed about your existing projects and take necessary action to optimize their performance.

The article points to five KPIs commonly tracked in the industry. These can also be helpful in deciding whether installing a commercial solar power system is financially attractive. While also used to analyze other types of projects, these KPIs are particularly informative when reviewing commercial solar power systems:

  • Return on Investment (ROI) - A simple ratio measuring estimated earnings relative to the initial investment. This can be helpful in deciding if a project should proceed or not.
  • Net Present Value (NPV) - This calculation can be used to help evaluate how feasible a solar project is. NPV estimates a solar project’s future value converted into today’s dollars. The higher the NPV, the more profitable it will likely be.
  • Internal Rate of Return (IRR) - A more detailed form of return on investment, this calculation estimates annual project investment earnings.
  • Performance Ratio (PR) - This calculation is particularly well-suited for solar power generation systems. PR compares the amount of electricity produced versus theoretical estimates. A low PR could indicate technical problems.
  • Plant Availability (PA) - A measure of the amount of time a solar power system is generating electricity. Reasons for downtime could include scheduled maintenance or service interruption. The higher the PA percentage, the better (98% or more is desirable). 

Other trackable solar power data might include: 

  • Total capacity
  • Total energy generated
  • Metric tons of carbon avoided

When considered together, these data points can help organizations determine the viability of investment in a solar project and set various benchmarks of success once clean power generation begins. 

 

Related links:

Introduction to commercial solar operations and maintenance (O&M)

9 questions to ask potential commercial solar panel providers

When choosing solar power companies, start with the technology

Overcoming commercial solar savings myopia: how to see long-range benefits more clearly

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