Two or three weeks ago we launched a 'Back-of-Envelope' Solar PV Calculator.
You can access it here:
I have been using the calculator to get a rough idea of what the returns from solar PV look like in a post-subsidy world, without bothering our Estimating team (who, as you can imagine, are pretty busy in the run up to the Feed-in Tariff closure on 31st March 2019).
Here's an example of what 75kWp of un-subsidised solar PV looks like, retro-fitted to a factory roof...
75kWp on a Kingspan Factory Roof
Take a three storey factory, facing South, 8 degree slope to horizontal, local to us in Reading. The roof covering is Kingspan trapezoidal sheet metal. The factory consumes a reasonable amount of electricity such that most of the solar electricity will be used on site.
Roof dimensions as follows:
1: Length of bottom of roof: 50 metres
2: Distance from eaves to ridge: 10 metres
3: Length of top of roof: 50 metres
Using standard efficiency (275W) panels measuring 1.7m x 1m (approx.), the calculator tells you that the house will fit a 75kW system.
Optimised Number of Panels (Standard Efficiency Panels): 18
System Size: 75.35 kWp
The Financial Benefits
The system is expected to generate 67,000 kWh in the first year, 1,500,000 kWh over the 25 year system life.
Assuming a daytime cost of electricity of 13p per kWh, and 90% usage on site, annual savings in the electricity bill should be around £7,840.
With half-hourly metering in place, the factory will also earn around 5p per kWh for the exported solar electricity, giving another £335 a year of income.
Let’s call the first year savings / income £8,170 a year.
Electricity Price Inflation Has Outstripped General Inflation by 2.1% a Year
On average over the last 10 years, electricity price increases have out-stripped general inflation by 2.1% per annum.
If these electricity price rises continue (as might reasonably be expected given that we are decommissioning 25% of our central power stations by 2025, whilst switching our cars to electric) then, in real terms, the AVERAGE annual savings / income will be around £9,100 a year.
The system cost will be around £57,000 so that’s a 6 to 7 year payback. Versus a system life of 25 years.
Lifetime Cost of Electricity
In simple terms, the cost of the electricity produced by the system would be a staggeringly low 3.7p per kWh.
The subsidy has done its job. Solar PV is a sustainable technology!
Since the tariffs started in April 2010, there has been sufficient market growth to fuel cost reductions and improvements in efficiency such that the technology can now stand on its own two feet.
The example we have chosen is a "best case" - factory roofs tend to be inexpensive to install on and, with a high on site consumption, the economics are always going to be more favourable than if most of the electricity was exported to the grid.
But even if we install 75kWp on:
- a three storey sloping tiled roof;
- facing South East;
- assuming 50% on site consumption;
the payback time is decent (11 years versus a 25 year system life) and the 'lifetime cost' of solar electricity used on site is 7p per kWh. This compares to an average expected cost of grid electricity of 17p per kWh.
Request a quote
Of course you don't have to work out the returns yourself. We are always happy to do a free desk-top quote for you, to give you an idea of what returns you can get from a solar system and / or a solar PV system. Just call us on 0118 951 4490, email us on email@example.com, or fill in our online form:
The Results in Full
For completeness, here are the full results for the example above.
|Estimated System Size||75.4||kWp|
|Estimated System Output in First Year||67,000||kWh|
|User Inputs: On-Site Usage and Tariffs|
|Proportion of Generated Electricity Used on Site||90||%|
|Proportion of Generated Electricity Exported||10||%|
|Daytime Electricity Tariff||13||p / kWh|
|Export Tariff||5.0||p / kWh|
|Average Annual Income & Savings|
|Estimated Average Annual Savings on your Electricity Bill (from solar electricity used on site)||£9,200|
|Estimated Average Annual Income from Export of Excess Electricity||£390|
|As you have entered that you have or expect to have in place half-hourly metering or smart metering, we expect (but cannot guarantee) that you should be able to earn income from excess solar electricity exported to the Grid.|
|Total Average Annual Income & Savings||£9,590|
These estimates are based on your current tariff of 16 p / kWh and calculated over the 25 year system life in real terms by assuming electricity price inflation will exceed general inflation by 2.1% per annum (as has been the case historically – see chart above).
|Estimated System Cost|
|Estimated Cost of System (excluding VAT)||£57,000|
|As this system will be for commercial use, all costs and payback periods will be calculated and displayed excluding VAT.|
|Lifetime Benefit Analysis|
|Estimated System Life||25||years|
|Subject to expected inverter replacement after around 13 years.|
|Expected Lifetime Output||1,500,000||kWh|
|Estimated Payback Time||6||years|
|Lifetime Reduction in Carbon Footprint (C02 emissions)||790||tonnes|
|Equivalent Mass of Coal Saved||4,800||tonnes|
|The mass of coal that would be required to generate the electricity your system would output in its lifetime. Source: https://www.euronuclear.org.|
|Solar Electricity Costs|
|Lifetime Cost per kWh Generated by System||3.7||p / kWh|
|Lifetime Cost per kWh Used on Site||3.8||p / kWh|
|Takes Export Income into account.|
|Expected Grid Electricity Cost For Comparison|
|Expected Average Real Cost of Grid Electricity per kWh over System Life||17||p / kWh|
|Assuming 2.1% real annual inflation in electricity prices. Based on your current tariff of 13 p / kWh.|