Metric Dependence of PV Economics

Photovoltaic (PV) systems are installed by several types of market participants, ranging from residential and commercial customers that buy or lease systems for their roofs, to large-scale system developers building several megawatt ground-mounted systems. The relative returns on a PV investment can be very different for each market participant. This is partially driven by fundamental differences in PV prices, incentives, financing options, and the value of PV electricity generated in wholesale or retail markets. It can also be driven by the use of different economic performance metrics to characterize PV value. Here, we evaluate the relative performance of PV investments using several economic performance metrics, including payback time(s), net present value, profitability index, benefit to cost ratio, internal rate of return, monthly bill savings, and the levelized cost of electricity. We evaluate the relative PV performance for each metric over a range of system characteristics, including PV price, performance, financing and market conditions. Lastly, we highlight the potential unintended consequences of policy design based on the different, metric-driven PV returns seen by each market participant.