The discount rate is a percentage Aurora uses to calculate the present value of your customer's future solar savings. It reflects the idea that a dollar of savings earned ten years from now is worth less than a dollar saved today — a concept called the time value of money.
Your account admin sets an org-wide default discount rate in Settings. Individual users can override it on a per-project basis in Sales Mode if they have the required permissions.
The discount rate affects key financial outputs including NPV, LCOE, and the lifetime savings figure shown on your customer's proposal.
In this article:
- What the discount rate represents
- Where to find and update the discount rate
- What value should you use?
- How the discount rate affects your proposal
- FAQ
What the discount rate represents
The discount rate accounts for three factors that reduce the real value of future cash flows:
- Risk — there's no guarantee that the utility, the solar system, or the customer's financial situation will remain unchanged over a 25-year period.
- Inflation — a dollar of savings 20 years from now won't buy as much as a dollar of savings today.
- Opportunity cost — money your customer has today could be invested elsewhere and earn a return.
A higher discount rate reduces the present value of future savings, making the project appear less financially attractive. A lower discount rate increases the present value, making the project look more compelling.
The discount rate is not the same as an interest rate on a loan. It is a financial modeling assumption about the time value of money — not a financing cost.
Where to find and update the discount rate
Organization default (admin only)
Account admins set the default discount rate that applies to all new projects in your organization.
- Go to Settings.
- Select Financing from the left nav under Pricing & financing.
- Click Edit.
- Find the Discount rate field under the Discounts section and update the value.
- Click Save.
Changes to the account default only apply to projects created after the change. Existing projects retain the discount rate that was in effect when they were created. To apply an updated rate to an existing project, duplicate it.
Per-project override (Sales Mode)
If you have permission to edit financing settings, you can override the organization default for a specific project.
- Open the project in Sales Mode.
- Navigate to the Financing page (the Bank icon in the top nav).
- Click the gear icon in the upper right to open Advanced financing settings.
- Click Edit and update the Cash flow discount rate field.
- Click Save.
What value should you use?
There is no single correct discount rate — the right value depends on your customer's financial profile and your financing partner's assumptions.
| Scenario | Suggested range |
| Cash purchase | 3–5% — reflects a conservative opportunity cost assumption, appropriate when the customer's alternative to solar is a low-risk savings account or bond. |
| Consumer loan or financing product | 4–8% — reflects typical consumer borrowing costs or inflation expectations. Many US solar installers use this range. |
| Financing partner-specified rate | Use the rate specified by your lender for consistency with their underwriting model. This is the most accurate approach when a lender provides a rate. |
If you're unsure what value to use, consult your financing partner or a financial advisor. Using an inaccurate discount rate can misrepresent your customer's expected savings and financial outlook.
⚠️ Setting the discount rate to 0% will produce the highest possible lifetime savings figures by treating all future savings as equal to present savings. This is not a standard financial assumption and may overstate the value of the investment to the customer.
How the discount rate affects your proposal
The discount rate is used by Aurora to discount each year of projected savings back to today's dollars. This affects:
- NPV — a higher discount rate lowers NPV; a lower rate raises it.
- Lifetime savings — the present value of cumulative savings shown on the proposal.
- LCOE — the discount rate is used in the denominator of the LCOE calculation; a higher rate increases LCOE.
Payback period is not directly affected by the discount rate (it uses nominal cash flows, not discounted cash flows). But the customer's perception of value may shift based on how NPV is presented alongside payback.
FAQ
Why does Lifetime Savings drop when I increase the discount rate?
A higher discount rate reduces the present value of future savings. Each year's savings is divided by a larger factor before being added to the total. The result is that more distant savings — years 15–25 — contribute much less to the Lifetime Savings figure than they would at a lower discount rate.
What discount rate does Aurora use by default?
The default is set by your account admin in Settings > Financing > Pricing & financing. There is no universal Aurora default — the value is specific to your organization's configuration. Contact your admin if you're unsure what rate is set.
Can sales reps see or change the discount rate?
Sales reps can see the discount rate on the Advanced financing settings panel in Sales Mode. Whether they can edit it depends on their role permissions — an admin must enable "Edit financing settings" for the relevant role. If editing is enabled, reps can override the org default on a per-project basis using the Cash flow discount rate field.
Does the discount rate affect the payback period shown on the proposal?
No. The payback period calculation uses nominal (non-discounted) cash flows. Only NPV, LCOE, and Lifetime Savings are affected by the discount rate setting.
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