Financial Models

SAM's financial model calculates financial metrics for various kinds of power projects based on a project's cash flows over an analysis period that you specify. The financial model uses the system's electrical output calculated by the performance model to calculate the series of annual cash flows.

The equations SAM uses to calculate the financial metrics are based on the definitions and methods described in the following handbook:

  • Short, W., Packey, D., Holt, T. (1995) A Manual for the Economic Evaluation of Energy Efficiency and Renewable Energy Technologies. National Renewable Energy Laboratory. NREL/TP-462-5173. (PDF 6.6 MB)

SAM includes financial models for the following kinds of projects:

It also includes a simple levelized cost of energy calculator based on a fixed charge rate input.

Sample Spreadsheets

These sample spreadsheets are intended to help you understand how SAM's financial models calculate financial metrics such as net present value (NPV), levelized cost of energy (LCOE), and internal rate of return (IRR).

The following Excel files were generated in SAM 2022.11.21 by clicking Send to Excel with equations from the Cash Flow tab on the Results page for the default PVWatts case for each financial model. They replicate SAM's calculations with Excel formulas using inputs from the SAM files. You can generate similar workbooks yourself from the Windows version SAM, or use these sample workbooks if you are using the Mac or Linux version of SAM, or not using SAM at all.

Front-of-meter (FOM) financial models for power generation projects that sell all of the power they generate to earn revenue:

Behind-the-meter (BTM) financial models for distributed energy projects that interact with a building or facility's electric load to reduce the system owner's annual electricity bill:

The following workbook is the original template that was used to develop SAM's PPA fianancial models. Some of the calculations in SAM have been updated since this 2011 workbook, but we have included it here in case it is useful as a historical reference.

  • Original historical Excel template from 2011 for PPA Single Owner, Partnership Flip, and Sale Leaseback models (Excel 1.0 MB)

Videos

Modeling Incentives in SAM Webinar, August 2024

This webinar is a walk-through of the inputs and results associated with electricity bill calculations for SAM's residential, commercial, and third party financial models. It covers weather and load data, electricity rate inputs, electricity bill savings, impact of bill savings on project cash flow.


Supporting materials: