What this is SolarQuant uses a financial model engine to calculate key metrics for solar projects. This article explains the calculation approach at a high level.
Who this is for - Investors evaluating screening results - Developers submitting projects - Anyone who wants to understand what the numbers mean
What you can do - Understand how IRR, payback, and other metrics are derived - See which inputs affect which outputs - Know what assumptions are built into calculations
How the model works SolarQuant calculates financial metrics using standard project finance methodology: 1. Revenue Projections : Based on system size, generation estimates, and tariff structure 2. Cost Modeling : CAPEX, OPEX, financing costs, and tax implications 3. Cash Flow Analysis : Year-by-year cash flows for the project lifetime 4. Return Metrics : IRR, payback period, NPV calculated from cash flows
Key outputs explained - Project IRR : Internal rate of return for the entire project - Equity IRR : Return on equity investment after debt service - Payback Period : Years until cumulative cash flow turns positive - DSCR : Debt service coverage ratio
Rules and limits - All calculations are indicative based on inputs provided - Model uses default assumptions where user inputs are not provided - Outputs are screening-level estimates, not investment-grade analysis
Common mistakes - Using overly optimistic generation estimates - Forgetting to include all cost categories - Misunderstanding the difference between Project and Equity IRR
Related links - Assumptions Used Glossary - Inputs Guide - Why Outputs Can Change
--- Important : All outputs are indicative and depend on assumptions and user inputs. This does not replace professional due diligence.