Distributed Energy Financial Analysis
Value Stack
Financial Return
Risk
Capital Efficiency
Distributed energy projects can reduce grid purchases, create market revenue, and capture incentives, but they still compete against every other potential use of a business owner’s capital.
This Massachusetts example compares a standalone battery with a solar-plus-battery configuration.
How the Solar & Battery Numbers Stack Up
5.9-year payback
12.18% IRR
$308K NPV
$134 NPV per $1,000 invested
The strongest project is not necessarily the smallest or largest. The key question is which configuration uses each investment dollar most productively.
5.5-year payback
13.93% IRR
$1.11M NPV
$167 NPV per $1,000 invested
Where the Value Is Derived
Approximate annual avoided-grid-energy value in the solar-plus-battery case
Approximate coincident-peak value in the solar-plus-battery case
Approximate wholesale-energy value
More Value Potential Does Not Mean Less Risk
Avoided grid energy tied to onsite generation and bill reduction.
Coincident peak, demand response, incentives, and program performance.
Wholesale-market value exposed to pricing and dispatch volatility.
Realizing the DER Value Stack
A compelling model is only the beginning. Program enrollment, dispatch optimization, market participation, compliance, and performance monitoring all affect whether modeled value becomes realized value.
Capital should follow both the size and the dependability of the value stack.
