Solar Project Feasibility: Key Financial Metrics (2026)
A proper solar feasibility study goes beyond payback period. Institutional investors, banks, and large commercial buyers require NPV, IRR, DSCR, and LCoE analysis before committing capital. Here's what each metric means.
Key Financial Metrics Explained
- NPV (Net Present Value): Present value of all future savings minus investment. Positive NPV = project creates value. For a 3kW residential system at ₹1L net cost in Maharashtra: NPV ≈ ₹4–₹6L over 25 years.
- IRR (Internal Rate of Return): The effective annual return on your solar investment. Residential solar in India typically yields 18–35% IRR — far exceeding FD rates.
- LCoE (Levelised Cost of Energy): Total lifecycle cost ÷ total generation. Good Indian rooftop solar: ₹2.50–₹4.50/unit LCoE over 25 years vs grid tariff of ₹6–₹10/unit.
- Payback Period: Time to recover initial investment from energy savings. India average: 3–6 years for residential, 4–7 years for commercial.
Bankability Criteria for Commercial Solar Loans
SBI, PNB, and Canara Bank will fund commercial solar if: payback <7 years, DSCR (Debt Service Coverage Ratio) >1.2x, and IRR >12%. Use our Solar Loan EMI Calculator to structure your financing.