The discount rate is a percentage that Aurora uses to calculate the present value of your customer's future solar savings. It reflects the idea that money received in the future is worth less than the same amount of money today — a concept known as the time value of money.
Your account admin sets an organization-wide default discount rate in Settings. Individual users can also override it on a per-project basis in Sales Mode, if they have permission to do so. The value affects key financial outputs, including net present value (NPV), LCOE, and the lifetime savings your customer sees on their proposal.
This article covers:
- What the discount rate represents
- Where to find the discount rate
- What value should you choose?
- How the discount rate affects your proposal
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 or earning interest rather than applied to a solar purchase.
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 attractive.
Where to find the discount rate
Organization default (admin only)
Account admins set the default discount rate that applies to all projects in your organization. To update it:
- 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
Per-project override (Sales Mode)
If you have permission to edit financing settings, you can override the organization default for a specific project in Sales Mode. The field is labeled Cash flow discount rate in this context. To update it:
- Open a project in Sales Mode
- Navigate to the Financing page (the dollar sign icon in the top nav)
- Click Edit in the Advanced financing settings panel on the right (gear icon)
- Update the Cash flow discount rate field
What value should you use?
There's no single correct discount rate — the right value depends on your customer's financial profile and your financing partner's assumptions. As a general reference:
- Consumer financing context: many solar installers use a discount rate between 4% and 8%, aligning with typical consumer borrowing costs or inflation expectations.
- Cash purchase: a lower rate (3–5%) may be appropriate, reflecting a conservative opportunity cost assumption.
- Loan or financing product: your financing partner may specify a rate — use their recommended value for consistency with their underwriting model.
If you're unsure what value to use, consult your financing partner or financial advisor. Using an inaccurate discount rate can misrepresent your customer's expected savings and financial outlook.
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:
- Net present value (NPV): a higher discount rate lowers NPV; a lower rate raises it.
- Lifetime savings: the present value of cumulative savings shown on the proposal.
- Payback period: not directly affected, but your customer's perception of value may shift based on how NPV is presented.