Financial modelling – Discounted cash flow analysis of a “Solar side-hustle”
Kawu Musa Idris-Idah, 10th February 2025 There is a rising trend of “9 am – 5 pm” full-timers developing “side-hustles”. In this piece, I summarize the discounted cash flow analysis results of a “solar side-hustle”: perhaps, there are lessons for other full-timers. The underlying logic is transferable across other sectors. Assumptions, albeit being called “assumptions”, are conservatively guided by field research and realities. Executive summary Key economic indicators Net present value ~ 4,000,000 (Naira) Internal rate of return 26% Payout period 9 years, 2034 Assumptions Company life 25 years Peak annualized number of installations 36 installations (3 every month), from 2031 Average size of installations 5 kVA inverter systems Discount rate 20 % Revenue trend 100% annual growth rate from 2025 – 2030. 13% between 2030 and 2031. Remains constant onwards. OPEX trend 15% annual growth from 2027 – 2033. Remains constant onwards. Varies between 2 million naira and 5 million naira annually (real terms, 2025) CAPEX trend Varies between 3 million naira and 4 million naira annually (real terms, 2025) Source of funding Founder equity only Taxes Linear assumption of 10% tax rate over company life Profit Assumed figure results in positive NPV. Would vary according to installation quality.