Short answer
Solar is economic when the present value of self-consumption, export and operating cost exceeds investment. NPV recognises timing; IRR shows the implied return.
Important variables
- Investment from actual quotes
- Production and self-consumption
- Grid price and export tariff
- Degradation, maintenance and discount rate
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Worked example
At 9,000 kWh generation and 35% self-consumption, 3,150 kWh of grid purchase is avoided. At €0.34/kWh that is €1,071 in year one; the surplus earns the entered tariff.
Break-even: What changes the result?
More self-consumption and higher avoided grid cost improve NPV. A higher discount rate weakens distant cash flows.
Common mistakes
- Valuing export like self-consumption
- Omitting degradation
- Confusing payback with return
- Pretending tariffs or incentives are live data
Terms in this guide
Sources & assumptions
- RATIOXA — Methodology and formulas (2026-08-17)
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