Analyzing a Solution - Energy and Financial Performance

SolarNexus provides an easy to use, yet very powerful set of features for analyzing the financial results of a defined solution for your customer. To access the screen for analyzing the energy and financial benefits of the proposed solution, click on the Analysis tab within any solution.

Prior to running an analysis, you must have defined a pre-project electric utility rate schedule and customer energy use, one or more energy producing or saving systems (for example PV, solar thermal, or energy efficiency), and a cost estimate.

On clicking the Analysis tab initially, you will be prompted to select a post project electric tariff. The customer will likely be changing to a new rate. To run an analysis, you need only configure the appropriate values for the analysis parameters, and click the "Analyze" button at the bottom of the parameters. After clicking the Analyze button, SolarNexus returns a detailed analysis including:

• System size at STC, PTC, and CEC AC ratings and expected energy production of the system over time
• Customer costs and incentives
• A variety of valuation metrics (levelized cost of energy (LCOE), internal rate of return (IRR), cumulative cashflow payback, net present value (NPV))
• Several graphical presentations of key analysis result data sets

You can modify any of the analysis parameters and re-run the analysis as many times as needed. If you change any of the pre-requisite data (pre-project utility rate schedule, customer energy use, system configuration, or cost estimate), SolarNexus will warn you that your analysis may no longer be accurate.

After an analysis is run, the results are presented on the right side, and graphs of the results are shown at the bottom. Much of the data from the analysis screen is available for use within SolarNexus' document templates used to generate customer proposals and contracts. At the bottom of the results you will find a link to download a CSV file of the project’s annual cashflows over the project’s lifetime. This file can be modified in Excel as desired, and printed out for customer presentation with your proposal, providing complete transparency about how the financial metrics were calculated and the assumptions that were made.  There are also summary cash flow tables available as document template variables for inclusion in your proposals.

Notes on Analysis:

• The analysis data will be incomplete if the specified analysis period is shorter than the calculated payback period.
• The analysis feature is disabled if one of the following conditions occurs:
  • No electric service is defined, or there is no historical electric demand information entered
  • Systems are not adequately defined (for example, if an array does not have complete orientation attributes)
  • Site location cannot be geo-coded

Analysis Parameters

Each and every solution's financial analysis in SolarNexus has its own set of analysis parameter values. It is unique.

The analysis parameters section is broken into two parts. The top section shows several parameter groups that commonly vary from project to project. The second section, called "Other Parameters," contains parameter groups that are collapsed by default. The parameters contained within the “Other Parameters” groups vary less frequently from project to project, and always have default values. However, they may be modified for any particular analysis.

To simplify the population of analysis parameter values, SolarNexus provides the ability to define an entire set of default analysis parameter values that will be pre-populated into the Analysis screen for each new system that is defined. You may create separate sets of default parameter values for both residential and commercial projects by visiting Administration > Project Settings > Analysis Parameters. SolarNexus strongly suggests that you define these sets of defaults so that users are not required to provide a complete set of analysis parameters on each and every system defined. You must have administrative permissions to set these preferences.

Parameters that the user should review for every project analysis include:

Electric Tariff

Section includes the various parameters that control utility bill calculations, such as current and proposed tariffs, and assumed electricity inflation rate. SolarNexus’ leverages Genability's comprehensive nationwide database of utility rates, which is continually updated.  Should you ever find that a rate is not available, please let us know and we will ensure that it is added as soon as possible.

Click Here for details about how Utility Bills are Calculated.

Incentives

Only those incentives that appear on the Analysis screen are used when selecting the Analyze button.  Therefore, if you analyze a solution that has no incentives listed, no incentives will be applied to your analysis.  Likewise, if you add an incentive to the Analysis screen after running an Analysis, you must click the Analyze button again to re-run the analysis with the additional incentive. Any individual incentive can be removed from a solution’s analysis by selecting the grey "X" icon to its upper-right.

Incentives can be linked to specific measures.  A measure is a type of system, like a PV system, a solar thermal system, or an energy efficiency enhancement. Incentives can be assigned to the appropriate type of measure so they are applied properly.  An incentive may also be applied to an entire solution, meaning that it applies to all systems included in the same solution (e.g. a PV and solar thermal system, each included in the same solution).  To choose the appropriate measure (or apply an incentive to the entire solution), use the pull-down menu under Incentives next to the field “Applies to”.

Assuming that a majority of your projects qualify for the same incentives, you should set them as default preferences that are pre-populated into every analysis by default. Users then avoid having to manually select and configure them in each analysis, saving valuable time by requiring far fewer inputs.

Setting Preferred Incentives

SolarNexus allows you to assign defaults to your incentive preferences so it’s faster and more accurate for your team to include the proper incentives.  To access these settings, go to Administration > Project Settings > Analysis Parameters. You will find a section labeled Incentives where you can:

• Choose to include/exclude automatically calculated rebate incentives for PV systems (“Auto-Suggest PV rebate incentives”)
• Choose to include/exclude automatically calculated tax credit incentives for PV systems residential and commercial (“Auto-Suggest PV tax credit incentives”)
• Select specific incentives to include (“Include these incentives as defaults”) for PV, thermal, or energy efficiency

SolarNexus provides separate incentive preferences for residential and commercial system incentives, allowing you to optimize the incentive selection process for each type of system.

Auto-Suggest Incentives

The first two incentive preferences control whether SolarNexus automatically includes or excludes incentives provided by Clean Power Research’s Estimator™ for the defined PV system. When included, SolarNexus will automatically populate commonly used incentives (along with pre-calculated amounts) in every project’s solution as applicable.

SolarNexus recommends including the automatically-suggested incentives when you begin.  If you find that the incentives being suggested are not accurate, or not accurate a large percentage of the time, you should consider excluding them so that users do not have to routinely delete them from the analysis inputs. To exclude automatically populated incentives, simply uncheck the checkboxes in your Project Settings.  When excluded, only the Default Incentives specified will appear (see below).

If you wish to remove these incentives for a specific project, but wish to generally include them, you may delete the automatically-suggested incentives with the given Project.  Within the Analysis screen of the Project, select the grey "X" icon to the upper-right of the specific incentive you wish to remove.  The incentive will be removed from that specific Project’s Solution, but will remain for any other Solutions within that Project.  This enables you do provide comparisons between projects with and without a given incentive, or to remove incentives if they are not valid for the given Solution.

NOTE: Only PV incentives can be automatically suggested at this time.

Default Incentives

The third incentive-related preference that can be set within Account Settings allows you to automatically include specific incentives into your analysis (selected from the SolarNexus DB, or from those defined by your company).  For example, since Clean Power Research™ does not include renewable energy credits (RECs or SRECs), you may include these by custom creating your own incentive.

You may add any number of relevant incentives for both residential and commercial projects.  To add an incentive, click on the Add Incentive link next to “Include these incentives as defaults”.  A drop-down menu will appear, allowing you to select any incentives that your company or SolarNexus have included in the Incentives database (see Administration > Incentives to add your own custom incentives to SolarNexus).

A default incentive will only be added to the solution’s Analysis if the solution meets the relevance rules for that incentive (e.g. project sector, utility, etc.).

If a majority of your projects qualify for the same incentives, and SolarNexus does not include them automatically (i.e., not those included via Auto-Suggest), set them as default incentives that are pre-populated into every analysis by default.  Users will avoid having to manually select and configure them in each analysis, saving valuable time by requiring fewer inputs.

Note that users will retain the ability to add more incentives to the defaults populated on the Analysis screen of a given solution.  This means that if you have a less-frequently used incentive that is applicable in fewer situations, you need not make it a default and include it in all Analyses.  You can simply select the Add Incentive button within the Incentives section of the Analysis screen and add it on an as-needed basis.

Should you enable both Auto-Suggest Incentives and Default Incentives as preferences, the manually selected Default Incentives will appear on all analyses and Auto-Suggest Incentives will appear as appropriate.

Taxes

This section includes various tax rates and tax treatments information to the analysis.

Customer Income Tax Rates

The most important required fields are the customer's assumed federal and state income tax rates. They are required to calculate several project cashflows. Note that these values may already have been entered for the customer participant when the lead was created or at any other time.

Depreciation

Depreciation is only relevant to system owners who are businesses. Select whether to include depreciation, and select which depreciation schedule will be applied to Federal and State income taxes.

NOTE about depreciation - In and of itself, depreciation is not an incentive. Businesses depreciate all capital equipment expenditures. Its simply a tax effect of running a business. However, as an incentive to install solar energy systems, the US federal government has implemented a special depreciation incentive which allows the owner to accelerate his depreciation of solar energy equipment.  This occurs in the first year of the purchase. As such, SolarNexus considers ONLY the first year's accelerated depreciation as an incentive.  Note that this accelerated depreciation of solar energy equipment is scheduled to end at the close December 2013. More on ITC and accelerated depreciation can be found here and in this FAQ.

O&M (Operations and Maintenance)

The values you enter here are used to calculate operation and maintenance expenses for this system over the life of the system. Choose one of three methods of calculating the annual maintenance cost of the system: a flat dollar amount, a percent of the system cost, or a dollar amount per kWstc. In each case, you must also specify the annual rate (in dollars or percentage points, as appropriate). SolarNexus makes no assumptions about operations and maintenance costs, so you'll likely want to set these values. Values are optional. Note: the default values for O&M costs can be set in the Project Settings screen. From the Administration menu, select Project Settings.

Inverter Replacement Costs

You can choose whether or not to include the cost of replacing the inverter after a given number of years. The number you enter in the Replacement Cost field can be designated in the associated dropdown box as a flat dollar amount or as a dollar amount per kW. Choose the Replacement Year from the drop-down box for that field.

 

Other Parameters

The Other Parameters section contains parameters that vary less frequently from project to project. Default values are automatically pre-populated for all of the required parameters in the Other Parameters section. However, you should consider setting analysis parameter values to suit your project's individual conditions. The meanings of the fields found within these categories are described below:

Analysis Period

The expected lifetime of the system. Default is set to 25 years. Note: If the analysis period is shorter than the calculated payback period, then the estimator will not return some analysis data.

Rates

This section contains economic rates important to the financial analysis over time. All rates are entered as percentages (for example, enter “5.5” for 5.5%). Parameters include general inflation rate,  and discount rate. The discount rate is used to calculate discounted cash flows, net present value, and LCOE.

Property Value Increase

Studies show that home buyers are willing to pay more for homes with solar and energy efficiency features. SolarNexus provides two separate methods of quantifying this increase in property value based on the two most well known studies. The most recent studies by Lawrence Berkeley National Laboratory are Selling into the Sun: Price Premium Analysis of a Multi-State Dataset of Solar Homes, January 2015, and Leasing into the Sun, A Mixed Method Analysis of Transactions of Homes with Third Party Owned Solar, March 2017. We suggest using these studies for PV system only solutions. They describe the effect of solar on property values as a function of a PV system's rated size in watts, as well as market and other home attributes. Note that these studies build on previous studies found here:

• An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California, Lawrence Berkeley National Laboratory, April 2011.
• LBL later published an updated analysis in 2013 called Exploring California PV Home Premiums.

The second method is the value increase per annual energy dollar saved. That is, the property's value is anticipated to increase for every dollar in energy cost savings per annum. We suggest a default value of 20 ($20 increase in property value per annual dollar saved). The source of the default value is Evidence of Rational Market Valuations for Home Energy Efficiency, Appraisal Journal, Nevin/Watson, October 1998.

Financing

By default, SolarNexus assumes that the buyer will pay cash. However, you can choose among other financing mechanisms using the “Mechanism” field drop-down selector.

NOTE: If you select Lease or PPA as the financing mechanism, the Incentives and Depreciation parameter sections will be hidden. Leases and PPAs are third party ownership arrangements, where the third party owner receives the incentives (rebates, PBIs, RECs, tax credits) and commercial depreciation of the equipment. Because the end customer is no longer the owner of the system, they are not entitled to those benefits. If your customer is actually the company providing the PPA or lease, then your analysis would be done most likely using cash as the mechanism, and then it would be appropriate to include incentives.

Depending on your choice, you will be prompted for additional parameter values relevant to the selected mechanism. Parameters are described below (Note that some parameters appear in more than one financing mechanism, but they are described here only once). For dollar, percent, and time amounts, it is not necessary to enter units (for example, 7% is indicated simply as 7).

• Finance Period (years): A whole number value for the loan or lease term, in years.
• Loan Rate (%): A numeric value for the annual interest rate on the loan, given as a percent (for example, enter “6.5” for 6.5%).
• Down Payment on System ($): Amount of the down payment, if any, in dollars. If nothing in entered, the calculation assumes that the entire system cost is financed.
• Loan Fee ($): Many banks charge dealers a substantial fee on solar loans. This fee is assumed to be added to the installation price. The loan fee is included in the calculation of loan principal and therefore, affects calculation of loan payments. The loan fee does not affect SolarNexus' calculation of indirect project costs (profit, overhead, commissions). Loan fee is added to the contract price breakdown shown in the Analysis Results. Because loan fees are part of the contract cost, they also affect incentive amounts accordingly.
• Apply Rebates and Tax Credits to Reduce Loan Principal: This feature will assume that any rebate, as well as the Federal investment tax credit will act in a similar fashion to a down payment that reduces the loan principle. It is an approximation to multiple varieties of combo loans.
• Home Loan Amount ($): The value of the new home loan, in dollars.
• Remaining Principal on Existing Loan ($): The amount of the existing loan that is being refinanced, in dollars.
• Existing Loan Rate (%): The fixed annual interest rate on the existing loan being refinanced, given as a percent (for example, enter “6.5” for 6.5%).
• Monthly Payment ($): The expected monthly payment that the customer will pay for the lease (or PPA). Get this amount from the financing program you intend to use. SolarNexus does not determine lease payment amounts as they are determined by each individual financing program. However, SolarNexus does provide a couple of mechanisms for estimating monthly and annual PPA payments.
• Annual Escalation Rate (%): The factor (as a percentage) by which the monthly lease (or PPA) payment increases at each year. The default value is 0.
• Issuance Cost ($): The dollar amount of any one-time up-front fees associated with the lease or PPA. The default value is 0.
• Termination Option: Choose a value from the drop-down box to indicate what happens at the expiration of the initial lease (or PPA) term. The possible values are to “purchase “the system, “renew” the lease (or PPA), or “return” the system.  Note that if the “return” option is selected, all analysis cashflows will end that same year.
• Residual Value: The residual amount is the balance that the lessee would pay at the end of the lease (or PPA) term to purchase the system. Enter “Residual amount” in dollars.

NOTE: SolarNexus assumes that leases are “Fair Market Leases.” “Fair Market Value” leases, or true leases, where the lessee has the option to buy the equipment at market price once the lease expires. During the terms of a fair market value lease, you can claim the lease payments as an expense for tax purposes.  The key component of a FMV lease is that the lessee has the option to return the equipment at the conclusion of the lease--without further obligation. The lessee may also have the option to purchase the equipment for its "fair market value" or to continue leasing the equipment from the lessor.  Technically, the lessee does not own the equipment--it is akin to a rental.  The lessee does not record the equipment as an asset on its balance sheet, nor does the lessee record a long term liability. The lease is generally treated as an off-balance sheet, "operating expense" and hence, it is 100% tax deductible for businesses.

NOTE: We recommend setting the discount rate to the same value as the finance rate, if the system will be financed.

 

Analysis Results

Cash Flows

To analyze the financial performance of a solution, SolarNexus builds a set of relevant cash flows for the entire analysis period. Following a run of the analysis for each solution, SolarNexus provides a link to the resulting cash flows. SolarNexus completes a complete separate cash flow analysis for the current customer case (pre-project), and a complete set of cash flows for the proposed case (post project). This provides transparency for you to see the resulting values for the analysis over the entire course of the analysis period. SolarNexus generates the following cash flows:

• Electric Utility Bill. This is the annual cost of electric energy from the utility.
• Utility Bills-Non-electric. This is the annual cost of non-electric energy from the utility (if applicable). This is typically used for heating water or spaces, and is relevant to solar thermal and energy efficiency measures analysis.
• Cash Payment. This is any cash payments for the solution from the customer.
• Incentives Paid to Others. This is for Customer Incentives paid directly to installers or finance providers, rather than to the customer.  Most frequently this is a rebate payment received by the installer. It may also be a tax credit that is assumed to be paid to the finance company as a one time re-amortization on a combo loan.
• Finance Payments. These are loan, lease, or PPA payments paid by the customer.  SolarNexus calculates these amounts based on rates and down payments specified in the analysis inputs.
• O&M Cost. These are ongoing operations and maintenance costs on the system paid for by customer.  SolarNexus calculates these costs using the specified rates provided in the analysis inputs. Note that O&M costs for third party owned systems are assumed to by paid by the third party, and are therefore zero when the finance mechanism is lease or PPA.
• Tax Liability - Buydown. If the customer will collect any rebates (aka "buydowns") on the solution, then tax law dictates that those rebates count as taxable income and therefore SolarNexus calculates this tax liability by multiplying the customer's effective tax rate (combined federal and state income tax rates) by the customer collected rebate amount. Note that if the installer collects the rebates, there is no tax liability on the customer for that amount.
• Tax Liability - State Tax Credit. Federal tax as result of state tax credit increasing federal taxable income.  State income tax payments are federally deductible.  If you reduce your state tax payments with a credit, then that reduces the federal deduction commensurately. SolarNexus multiplies the state tax credit total by the customer's federal income tax rate to determine the additional federal tax liability. This practice is recommended practice as per the Solar Energy Industries Association's (SEIA) published tax manual.
• Tax Liability - Performance Based Incentive. Payments to customers for performance-based incentives are taxable. SolarNexus calculates this tax liability by multiplying the customer's effective tax rate (combined federal and state income tax rates) by the anticipated PBI payment amounts.
• Tax Liability - REC.  Payments to customers for renewable energy credits (RECs) are taxable. SolarNexus calculates this tax liability by multiplying the customer's effective tax rate (combined federal and state income tax rates) by the anticipated REC payment amounts.
• Incentive - Buydown.  The total of all anticipated rebates on all systems defined in the solution, regardless of who collects the rebate (customer or installer).
• Incentive - State Tax Credit.  Total anticipated state tax credit amounts, if any. These amounts vary in how they are calculated based on the individual state program(s).
• Incentive - Federal Tax Credit.  Total anticipated federal tax credit amounts, if any. These amounts may vary in how they are calculated based on the individual program(s).
• Incentive - Local Tax Credit.  Total anticipated local tax credit amounts, if any. These amounts vary in how they are calculated based on the individual local program(s).
• Incentive - Performance Based (PBI).  Total anticipated performance based incentive (PBI) payments, if any. These amounts vary in how they are calculated based on the individual program, but are the result of multiplying the generated kWhs by some given rate structure for the program.
• Incentive - REC.  Total renewable energy credit (REC) payments, if any. These amounts vary in how they are calculated based on the individual program, but are the result of multiplying the generated kWhs by some given rate structure for the program.
• Tax Savings - Depreciation.  Depreciation is a means for commercial entities to write off business equipment from their taxable income. SolarNexus calculates the depreciation by determining the tax basis amount for the defined solution, and applying the depreciation schedule specified in the analysis inputs.
• Tax Savings - Financing. This is the tax deductible loan interest (individual, secured loan), or lease/PPA payments (commercial).  In secured loan case, SolarNexus calculates by summing the interest portion of secured loan payments and multiplying by the customer's effective tax rate.  In the commercial lease/PPA case, we assume that the payments are business operating expenses, and therefore 100% tax deductible.
• Tax Savings - Utility Bill.  Commercial entities can deduct utility bill expenses.  SolarNexus calculates this tax savings by multiplying the anticipated utility bill amounts by the customer's effective tax rate.  Lowering utility bill expenses has the effect of increasing taxable
• Tax Savings - O&M Cost.  Commercial entities can deduct maintenance costs.  SolarNexus calculates these savings by multiplying the operations and maintenance costs by the customer's effective tax rate.

NOTE: SolarNexus assumes that the customer can fully apply available tax credits (that is, the customer has enough tax liability to use the tax credits).

SolarNexus strives to be transparent in its data and calculations so that you can have complete confidence in the analyses you provide. For each financial scenario, you can download the cash flows into a spreadsheet that you can review and provide to your customer if desired. See below for the control to download:

The measures of value described below are calculated based on these cash flows.

Payback - Cumulative Cashflow

SolarNexus provides a payback value based on cumulative cash flows. This allows us to include the effects of taxes and financing. The payback is the time in years when the cumulative cash flow reaches zero.

This approach differs from the notion of “simple payback.” Simple payback is calculated by dividing the total net cost of the system by the energy cost saved in the first year. This method leaves out many factors, making it very inaccurate. It does not, for example, take into account the following:

• expected energy cost increases
• degradation of PV module output over time
• benefits of production based incentives
• operations and maintenance costs

For these reasons, SolarNexus suggests that you avoid the notion of calculating simple payback.

IRR, Internal Rate of Return

Internal Rate of Return (IRR) is used as a means to compare the profitability of multiple possible investments (or projects) of same size and duration. The higher a project's internal rate of return, the more desirable it is to undertake the project. Assuming all projects require the same amount of up-front investment, the project with the highest IRR would be considered the best and undertaken first.  A firm (or individual) should, in theory, undertake all projects or investments available with IRRs that exceed the cost of capital (the cost of capital may be an interest rate, so for example if you have a customer who rolls the cost of a PV System into their mortgage, their cost of capital can be very low (perhaps their interest rate is 6%/yr). So a PV System with an IRR of 11% and a loan rate of 6% means that they are making 5% on money that they didn't have to spend upfront.  This is a fairly simplistic example, but illustrative.

Also, its important to understand the drawbacks of IRR, for example its only good for comparing two investments of same size and time period (e.g. put the same amount of money into the stock market  for the same 25 year period). Its also dependent on the discount rate assumed.  In SolarNexus you define a default discount rate on the Project Settings screen. You can edit this default value for any solution's analysis from the Other Analysis Parameters section.  Depending on the sophistication of your customer, they may want to know this as an assumption.

You can verify the IRR provided by looking at the series of Net annual cashflows in the provided CSV file.  If you open the CSV output in Excel, then in an available cell input Excel's IRR formula using the series of cells containing net annual cashflows, and use 0.08 as the initial guess, you will get the same IRR as shown in the SN analysis.

Pre-Tax IRR

Pre-Tax IRR allows you to compare PV investment with other investments like stocks/bonds which quote returns prior to being taxed. SolarNexus converts cashflows that are paid using post-tax dollars to their pre-tax equivalents using the customer income tax rate. This results in investment returns "before they are taxed."

LCOE, Levelized Cost of Energy

LCOE is the average cost of energy ($ / kWhr) purchased over a period of time. It is a sum of all costs to acquire the energy divided by the total kWhrs purchased, with a discount rate applied to future values. SolarNexus provides three distinct LCOE measures that can facilitate comparisons:

• LCOE - Utility. This is the no solar case, including only kWhs and bill costs from utility if the customer continues to purchase all of their energy from the utility.
• LCOE - Utility and Solar. This includes costs for the solar system as well as any remaining utility bills divided by the total customer used kWhs.
• LCOE - Solar. This calculation only includes costs for acquiring and operation the PV system divided by the total kWhs generated by the PV system.

LCOE is for a series of years projected into the future so there are two effects included: 1) rate escalation, and 2) discount rate. The discount rate effectively translates the amount into "todays dollars," that is, this is the net present value of the rate paid for the energy. Mathematical definitions are easy to find (wikipedia, NREL).

NPV, Net Present Value

Net present value (NPV) is the current net value of the investment in today's dollars. It is calculated by summing the series of annual cashflows (both incoming and outgoing), discounted to account for the time value of money. That is, the value of money in the future is discounted to give an amount in "today's dollars." NPV is a standard method for using the time value of money to appraise long-term projects.  A positive NPV indicates the project will add value to the party undertaking the project.

You can see the net discounted cashflows near the bottom of the provided CSV cashflows output file (available by clicking the download CSV file link at the bottom of the Analysis Results area).  You can also see the assumed discount rates by year.  The analysis provided in SolarNexus assumes a discount rate that grows over time.  This assumption is more conservative than a fixed discount rate, since later cashflows are more significantly discounted. You can confirm the provided NPV value from the CSV of cashflows simply by summing all of the Net Discounted Cashflows values (Note that this will be different from using Excel's formula to calculate NPV, as Excel's NPV function assumes a constant discount rate).

 

Comparing SolarNexus to Other Analysis Tools

Your customers will inevitably compare your analyses to others given by your competitors. It is important to be aware of this and to understand that other analysis tools may overstate the benefits of a solar system, which can make your proposal less compelling and put the sale at risk.

For example, some use the practice of converting utility bill amounts to "pre-tax" dollars (utility bill / (1-combined tax rate)). This approach shows larger annual utility bill savings (potentially up to 30% larger), making the analysis seem more compelling. We believe this practice overstates benefits and misinforms customers. Residential customers pay for their bills with after tax dollars and do not have the ability to write off any of this expense from taxes so we just use the after-tax savings value. For commercial customers who are able to write off their utility bills from their taxes, we account for the tax effect related to smaller bills even though this generally makes the savings smaller.

Having some understanding of the financial dynamics at play presents you with an opportunity to pick apart a competitor's sales proposals to identify why their proposal might show better financial benefits than yours. In reality, two systems of same size and price will likely produce about the same financial results, even if the analysis shown in the two proposals varies significantly.  In truth, the financial analyses presented to customers are more about what is input into a financial model, than the results. Its easy to make benefits look better, and there is no shortage of means to do that. But by being able to identify those things, you can demonstrate the expertise and trust with the customer that always ends up being the most powerful sales method.

Having a misinformed customer is seldom good for long-term success, especially when a customer becomes disappointed after the system they purchase does not realize the promised savings. By employing the most accurate analysis practices, SolarNexus strives to provide a financial performance analysis that a customer can expect to receive with their system.