When a commercial business owner opens a solar proposal, they are often greeted by glossy renderings, complex financial charts, and technical acronyms. Understanding what these numbers mean is key to evaluating whether a proposal represents a solid project opportunity.
1. System Size vs. Annual Production
System size is measured in kilowatts DC (kWdc), representing the total nameplate capacity of the solar panels. Annual production is measured in kilowatt-hours (kWh), representing the actual electricity expected to be generated over 12 months. Comparing proposals on $/Wdc helps normalize pricing across different array sizes.
2. Production Modeling Inputs
Solar contractors use software tools (such as Helioscope or PVSyst) to model annual output. However, output estimates depend heavily on modeling assumptions regarding shading losses, soiling, inverter efficiency, and local weather datasets.
3. Degradation & Financial Lifespan
All solar panels experience gradual annual efficiency degradation (typically between 0.3% and 0.5% per year). Proposals that model flat, un-degraded production over 25 years will overstate long-term electrical output.
4. Utility Rate Assumptions
Check the annual utility rate escalation percentage assumed in the proposal. If a contractor models an aggressive 6% annual utility rate increase, projected long-term utility bill avoided costs will look higher. Ensure utility escalation rate assumptions reflect realistic regional historical baselines.