How does Station A calculate IRR (Internal Rate of Return)?

Station A's IRR metric helps property owners and tenants understand the financial return of an onsite clean energy project

Station A calculates an IRR (Internal Rate of Return) of an onsite clean energy project by estimating the initial all-cash cost of a project and the 20-year lifetime savings. The initial cost is based on our own optimal sizing of a system that maximizes the NPV, the latest build cost estimates and available incentives like the federal ITC (Investment Tax Credit). The 20-year lifetime savings is based on our prediction or a customer's actual energy use and cost of electricity and factors in conservative assumptions on electricity cost growth. 

Many property owners and tenants have an internal hurdle rate for allocating capital to a project so the IRR helps to quickly assess whether or not a project is likely to pencil for that particular customer.