Cash Flow |

Solar Advisor reports annual data in the cash flow table, including the system's annual electric output in kWh, electricity price in $/kWh, net-metering receipts or sales revenue, project expenses, taxes, and cost streams used to calculate the project payback. The cash flow table only displays data from on the analysis base case, which is the set of results calculated from the input variable values that are visible on the input pages. The cash flow table does not include results from parametric, sensitivity, optimization, or statistical analyses defined on the Configure Simulations page. The cash flow table is available in two places:
• | On the Results page data tables by clicking the the Base Case Cashflow tab (drag the grey border above the tab to expand the table)
• | By exporting to Excel by clicking the Export and view data button on the Results page, or clicking Cashflow on the Results menu.
An after-tax cash flow graph is also available as an option on the Results page Graphing tab. Solar Advisor calculates the values for the cash flow and other economic metrics after completing the performance simulation calculations. The model uses the first year annual energy output value from the simulation results in the cash flow calculations. It also uses input variable values from the following input pages:
• | Utility Rate (for commercial and residential projects only) for offset electricity payment calculations.
• | Financing for electricity price, tax and insurance and debt-related calculations.
• | Tax Credit Incentives for tax credit calculations.
• | Payment Incentives for incentive payment calculations.
• | Annual Performance for year two and later annual energy output calculations.
To calculate the project capital and operating costs, Solar Advisor uses input variables from the system costs page for the appropriate technology. In the explanations below, the term "system costs page" refers to one of the following input pages:
• | PV System Costs
• | Trough System Costs
• | Dish System Costs
• | Tower System Costs
• | Fossil System Costs
Note. You can learn more about the cash flow calculations by exploring the Excel formulas in the financial spreadsheets posted on the Solar Advisor website: https://www.nrel.gov/analysis/sam/download.html. Energy (kWh) The energy quantity reported for year one is equal to the Annual Energy value displayed in the Metrics table. The quantities in year two and subsequent years is based on the year one value adjusted for the degradation rate on the Annual Performance page. Energy Price ($/kWh) For commercial and residential projects, the energy price is the annual average utility rate as defined on the Utility Rate page. For utility and commercial third party projects, the energy price is the 1st Year PPA price displayed in the Metrics table. For year two and later, the energy price is the first year price adjusted by the PPA escalation rate also displayed on the Metrics table. Energy Value ($) Residential and commercial projects may receive net-metering offset payments for electricity generated by the project. Commercial projects pay federal and state income tax on these payments as shown in the after tax cash flow explanation below. For utility projects, annual revenues are determined in each year by the annual energy output and the electricity sales price for that year. Energy Value = Energy (kWh) x Energy Price ($/kWh) Operating Expenses The operating expenses include operation and maintenance costs, and insurance and property tax payments. The values in the Operating Costs row of the cash flow table is calculated as follows: Operating Costs = Fixed O&M Annual + Fixed O&M + Variable O&M + Fuel O&M + Insurance + Property Taxes Note. The Recapitalization value is not used in the current version of Solar Advisor. The operation and maintenance (O&M) costs are defined on the system costs page and escalated in each year after year one using both the escalation rate for each O&M category on the system costs page and the inflation rate value on the Financials page. The insurance and property tax rates are also both on the Financials page, and apply to the total installed cost value on the system costs page. CSP trough, CSP tower, and generic fossil systems also include an annual cost of fuel in the total operating expense. (When the fossil fill fraction variable on the Thermal Storage page for troughs or towers is greater than zero, the systems consume fuel for backup energy.) and For photovoltaic and CSP dish systems, the fuel cost is always zero. Operating Income and Deductible Expenses For residential and commercial projects, the deductible expenses are project costs that can be deducted from federal and state income taxes. For residential projects, the deductible expense amount equals the property tax amount: Deductible Expenses = - Property Taxes For commercial projects, all operating costs are deductible: Deductible Expenses = - Operating Costs For utility projects, the operating income is the difference between revenues and operating costs: Operating Income = Revenues - Operating Costs Financing The debt balance in year one is equal to the principal amount displayed on the Financing page. The debt balance in years two and later is equal to the previous year's debt balance less the previous year's debt repayment amount: Debt Balance = - Debt Balance (previous year) - Debt Repayment (previous year) The debt interest payment is the debt balance multiplied by the loan interest rate on the Financing page: Debt Interest Payment = Debt Balance × Loan Rate The debt repayment amount is the annual payment on principal amount assuming constant payments over the loan term defined on the Financials page and at the constant annual interest rate defined on the Financials page. Solar Advisor calculates the amount using a methodology equivalent to Excel's PPMT function. The total debt payment is the sum of interest and principal payments: Debt Total Payment = Debt Interest Payment + Debt Repayment Income, Taxes and Incentives All projects pay state and federal taxes on the total taxable income for each year when the state and federal annual tax rates on the Financing page are non-zero. Federal and state tax cash flows are displayed in two separate sections of the cash flow spreadsheet, under the rows labeled Tax Effect on Equity (State) and Tax Effect on Equity (Federal). The tax amount for each year appears in the Tax Savings row under each section. Depreciation For utility and commercial third party ownership projects with a depreciation option defined on the Financials page, Solar Advisor displays the depreciation amount in the State Depreciation and Federal Depreciation rows of the cash flow table. The depreciation amounts and applicable years are determined by the options on the Financials page. Income Less Deductions The cash flow table shows two income streams each for state and federal tax calculations:
• | For residential and commercial projects, the incentive income less deductions is the sum of all incentive amounts less applicable deductions:
Income Less Deductions = Deductible Expenses + IBI + CBI + PBI - Interest Payment For residential projects with the loan financing (not mortgage financing) option on the Financing page, the interest payment amount is not deducted. For utility and commercial third party projects, the incentive income less deductions is the operating income less applicable deductions: Income Less Deductions = Operating Income + IBI + CBI + PBI - Depreciation - Interest Payment
• | The taxable income less deductions is the sum of all incentive amounts that are defined as taxable on the Payment Incentives page less applicable deductions:
Taxable Income Less Deductions = Income Less Deductions - [IBI, CBI, PBI defined as taxable] Income Taxes The state and federal income tax amount is the taxable income multiplied by the tax rate on the Financing page for the applicable tax: Income Taxes = Taxable Income Less Deductions × Tax Rate Tax Savings For both federal and state taxes, a positive value of Tax Savings indicates a tax savings or cash inflow. A negative value indicates a tax liability or cash outflow. The tax savings amount is the income tax less PTC and ITC tax credit amounts: Tax Savings = Income Taxes - PTC - ITC The PTC and ITC are the production tax credit and investment tax credit, respectively:
• | The PTC, if it applies, is calculated for each year by multiplying the tax credit percentage from the Tax Credit Incentives page by the value electric output amount for that year.
• | When an ITC applies, it is subtracted only in year one of the project; it is not subtracted in year two and subsequent years. The ITC is either equal to the fixed amount on the Payment Incentives page, or calculated by multiplying the ITC percentage on the Incentives page by the applicable basis.
A note about incentives. Some incentives have caps that limit their maximum value, while others have escalation rates that increase their value from year to year. Others have term limits that end payments after a given number of years. In some cases the incentive income is taxable at the federal or state level, and in other cases it is not. Finally, investment and capacity based incentives may or may not reduce the basis on which the investment tax credit (ITC) is calculated. All of these factors are defined on the Payment Incentives page. After Tax Cash and Cost Flow Year zero of the cash flow shows represents project capital cost. The capital cost is equal to the total installed cost displayed on the system costs page minus the loan principal amount from the Financing page. Year one is the first year that the project generates electricity. The cash flow for year one and subsequent years accounts for project expenses, income from electricity sales, taxes, and incentive payments. The after tax cash flow for year one and subsequent years is given by:
| After Tax Cashflow = After Tax Cost +
Residential | Offset Electricity Payments
Commercial | Offset Electricity Payments - Offset Electricity Payments × Effective Tax Rate
Utility | Revenues
The after tax cost in year one and subsequent years is: After Tax Cost = State Tax Savings + Federal Tax Savings + PBI Incentives - Operating Costs - Debt Total Payment Note. The cash flow table for utility projects does not include a row for the After Tax Cost flow. The effective tax rate is a single number that includes both the federal income tax rate and state income tax rate. Solar Advisor uses the effective tax rate for several calculations requiring a total income tax value. The effective tax rate calculation is: The federal and state tax rates are input variables on the Financing page. Payback Cash Flows Solar Advisor displays payback cash flows for commercial and residential projects only. These cash flows are used to calculate the project payback displayed in the Metrics table and are explained in the payback description. Payback expenses included = After Tax Cashflow + Debt Interest Payment × (1 - Effective Tax Rate) + Debt Repayment Payback expenses excluded = Payback expenses included + Operating Costs + Deductible Expenses × Effective Tax Rate The cumulative cash flow for each year is the sum of the current year's "payback amount" and the previous year's amount. PreTax Debt Service Coverage Ratio (Utility and Third-party Ownership Only) Solar Adviser displays the annual debt service coverage (DSCR) amounts for utility and commercial third party ownership projects only: PreTax DSCR = Operating Income ÷ Total Debt Payment