What is Net Present Value and How Does it Apply to C-BED?
Present Value (PV) is a concept routinely applied to all financial transactions that involve a payment schedule, and is based on the concept that “money today is worth more than the same money tomorrow.” People who borrow money pay interest to the lender over the period of the debt to account for the time value of money, and the interest rate (sometimes called the discount rate) is the rate at which the value of the borrowed money is discounted over time. The PV is the current value of the sum of interest payments and principal repayments over the time period of a payment schedule. Net Present Value (NPV) is a modification of PV that takes into account inflation and return. NPV Rate is an invention of the C-BED initiative that leverages NPV to reduce the risk of wind power projects. Since power purchase agreements (PPAs) between electric utilities and wind energy producers are for a fixed time period (typically 20 years), and since the amount of electricity produced by a specific C-BED
