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One of the headlines about solar energy or solar power is saving money and being a good investment. Here are some illustrations of why solar energy is a good investment and how by using as much as can yourself, it saves you money especially with what seems like a high upfront cost.
Commercial solar is a little different to home solar although commercial solar can benefit from some of the same things as home solar like the Smart Export Guarantee (SEG). Commercial solar has more of an opportunity to use all the electricity in the business as they are working during the day unlike with home solar energy where the occupants are usually out during the peak generation times.
Let’s start with three scenarios to see the savings and Payback Period. In the first scenario the business uses all of the solar power generated, in the second 50% of the solar power generated in the business, exporting the other 50% via SEG. Third exporting all the power via SEG only as many people imagine will happen with commercial solar power.
The 25 year figure for total savings is used as 25 years is the warranty period on most panels, however solar panels go on generating way beyond with some best solar panels being given a 40 year warranty now.
Important note, all these scenarios qualify for SEG as the generation is under 5 MW under the same rules as homeowners receive.
Solar Panel Only System
All figures are illustrations only based on averages, savings / payback periods will depend on the your prices, and every solar energy system installation varies.
Small Rooftop Solar Installation – Small Office Building
A 11 KWp solar panel system with little shading producing an average 10,600 kWh per year. Installation cost £18,600.
This gives an equivalent lifetime electricity price £0.07 per kWh.
Solar Power Use | Money Saved | Money Earnt (SEG) | Total Money Saved | Payback Period | 25 Year Savings |
|---|---|---|---|---|---|
All Within The Business | £768 | £0 | £768 | 10.2 Years | £11,340 |
50% Business, 50% Export | £384 | £198 | £582 | 13.5 Years | £6,690 |
All SEG Export | £0 | £397 | £397 | 19.8 Years | £2,065 |
Medium Rooftop Solar Installation – Barn, Small Factory Unit or Warehouse
A 31 KWp solar panel system with little shading producing an average 23,471 kWh per year. Installation cost £35,300.
This gives an equivalent lifetime electricity price £0.06 per kWh.
Solar Power Use | Money Saved | Money Earnt (SEG) | Total Money Saved | Payback Period | 25 Year Savings |
|---|---|---|---|---|---|
All Within The Business | £6,806 | £0 | £6,806 | 5.2 Years | £116,850 |
50% Business, 50% Export | £3,403 | £1,760 | £5,163 | 6.8 Years | £93,775 |
All SEG Export | £0 | £3,520 | £3,520 | 10 Years | £52,700 |
Large Rooftop Solar Installation – Office Block, Large Factory Unit or Warehouse
A 75 KWp solar panel system with little shading producing an average 56,785 kWh per year. Installation cost £82,000.
This gives an equivalent lifetime electricity price £0.057 per kWh.
Solar Power Use | Money Saved | Money Earnt (SEG) | Total Money Saved | Payback Period | 25 Year Savings |
|---|---|---|---|---|---|
All Within The Business | £16,467 | £0 | £16,467 | 5 Years | £329,675 |
50% Business, 50% Export | £8,233 | £4,258 | £12,491 | 6.6 Years | £230,275 |
All SEG Export | £0 | £8,517 | £8,517 | 9.6 Years | £130,925 |
Savings calculated using Ofgem price cap rates and Octopus Energy Export tariffs July to September 2023.
Solar Energy System With A Solar Battery
Looking at the figures above and you can see that the real benefit comes when you can use all the solar power you generate. As above for businesses this is easier and if the company has EV’s you can charge during the day it is easier still to use all the solar energy production. However if all the solar energy cannot be used the answer is to time shift your solar power from when it is produced to when energy consumption is high but generation cannot cover the use using solar batteries.
If you are in this situation although solar batteries add to the initial cost they can help you save more overall as you use more of your own generated energy. The below shows what happens to payback period and savings adding an appropriately sized solar battery to use all the solar energy generated in your system.
Solar Power Use | Money Saved | Payback Period | 25 Year Savings | Savings vs 50%/50% | Savings vs SEG Only | Lifetime £/kWh |
|---|---|---|---|---|---|---|
Small Energy System | £3,074 | 8 Years | £51,850 | £12,150 | £30,700 | £0.094 |
Medium Energy System | £6,806 | 7.5 Years | £118,850 | £25,075 | £66,150 | £0.087 |
Large Energy System | £16,467 | 6.9 Years | £297,675 | £67,400 | £166,750 | £0.08 |
There are other advantages to having a solar battery too. With a battery system designed to take advantage of lower prices at night, in the low solar generation months of winter, you can charge the battery using low cost electricity and then use it when prices are higher, saving the difference and paying off your solar system even faster.
Another advantage is protection against power outages, keep the lights on when the power goes out.
So although batteries do add to the initial cost, they are VAT free if added with a solar panel system, and can give you larger savings than without a battery over the lifetime of the system.