Solar PV manchester UK

Are Commercial Solar Panels A Good Investment?

Solar PV manchester UK

Solar PV panels installed in manchester UK

UK solar output nearly doubled last year and in Britain there is now around 8GW installed across houses, offices, schools and poor-quality land – enough to power 2.4 million homes.

According to an article in the Daily Telegraph by the Head of Strategy at the Solar Trade Association, solar power has been an astonishing UK energy success story.

At Energy Gain UK we spend a lot of time talking to businesses about the  benefits of installing commercial Solar panels onto their property. Aside from the fact that the cost of installing a solar photovoltaic system has dropped by 70% over the last 5 years, the returns remain very attractive.

 There are two options for commercial property owners, firstly to purchase a commercial solar panels system outright as capital expenditure and secondly to purchase a system using a finance mechanism.

 So lets look at the costs, benefits and paybacks of a 30KWp commercial solar panel system that is purchased outright at a cost of £36,000.

Over a 20-year period you could expect to see an annual system output of between 25,500 KWh to 20,655 KWh.

You could expect to receive FIT payments of £2,986 per annum which are inflation linked so payments by the end of the 20 year FIT payment term would be approximately £4650 per annum.

In addition to the FIT payments you will also receive export payments for any unused energy you generate.  You could expect to receive export payments of £618 per annum which are inflation linked so payments by the end of the 20 year FIT payment term would be approximately £963 per annum.

Of course you will also significantly decrease your reliance on grid electricity, which could result in a reduction of your electricity bill costs by about 80%. Clearly these costs vary from business to business but for illustration purposes we will assume that a reduction in your electricity bill will save you £2,448 per annum, increasing to £4255 in year 20 when inflation linked.

 This gives a total annual generation annual income of £6,052 in year one, rising to £9,868 in year 20 in line with predicted inflation increases.

 The only other costs that would need to be taken into account post installation are maintenance costs which run at £60 per annum and approximately £2000 in year 10 to replace key components.

 Based on these predictions we would expect that a commercial solar panel system which is purchased outright would give annual returns of £5,992 in year one and £9,808 by year 20.

 In terms of accumulated returns we would expect a return of £153,638 by the end of year 20 and the initial investment recovered by the end of year 5.

Of course another key benefit is to help reduce CO2 emissions and to get ahead of the 2019 zero carbon building requirements. A 30 KWp system could make carbon savings in the range of 12,604 to 10,209.

Financed System

In terms of FIT payments, export payments and energy savings these are the same whether or not you purchase a commercial solar panel system outright or finance your system.

The key difference is that the finance cost would need to come out of these savings.

Typically, a 30KWp system would have a finance cost of £5,701 in the first 7 years. However, this cost should be covered by the generation annual income which should start at £6,052 in year one and rise to £7,093 by year 7. In total, the accumulative total returns by the end of year 20 would be expected to be in the region of £113,269.53.

If you would like to find out what these figures would look like for your business then just give us a call on 0161 339 9685 and book a no obligation energy survey to receive your own tailored calculation.

* The above calculations are based on a RPI index rate of 3.5%, energy price inflation  of 4.1%, cost of purchase energy 0.12., finance rate 5.5% over 7 years.