T: 01242 620894 E: info@mypoweruk.com

Commercial-scale roof-top solar: how the finances add up

As from the 1st April, the Government will no longer be paying generation or “feed-in tariffs” (FiTs) to new small-scale energy schemes generating power from renewable sources such as solar, wind or biomass. It now believes the FiTs scheme is no longer compatible with its “desire to move towards fairer, cost-reflective pricing and the continued drive to minimise support costs on consumers.”

Is this disastrous for renewable energy? Not for commercial-scale, roof-top solar power - it was already competing successfully against other forms of ‘conventional’ energy in the open market, and its financial rewards for businesses are as strong as ever.

The reason is a combination of cheaper solar PV technology, a 25-year fixed-cost for solar energy generation, minimal maintenance of the solar PV system post-installation, and continuing rises in the cost of National Grid-supplied electricity. Altogether, the result is solar energy that’s around 60-70% cheaper than buying from the National Grid. Additional enticements are the 100% asset finance available and the annual investment allowance which can offset the capital cost against income tax in year 1.

As an example: a roof space of 36m x 9m can accommodate a 50kW system generating 48,000kWh/year of electricity. The system costs around £37,500 but will provide £5,700 in savings in the 1st year (assuming 70% of the electricity is used on site), a 15.2% ROI, and have a payback time of <7 years with a panel warranty of >25 years and a 10-year inverter warranty.

Sound too good to be true? Below is a comparison chart illustrating how the figures relate to the above 50 kW example from 2012 to now.

 

2012

2014

2016

2019

Supply & install costs

£79,000

£62,000

£51,000

£37,500

FiT subsidy

15.2p/unit

12.1/unit

4.39/unit

0/unit

ROI Year 1

14.3%

15.9%

13.5%

15.2%

Payback

7.0 years

6.3 years

7.4 years

6.6 years

Typical SME Grid electricity price

9.8p/unit

10.2p/unit

12.0p/unit

14.5p/unit

Equivalent forward purchase price of Solar electricity fixed for 25 years (includes capex & O&M costs)

8.6p/unit

7.1p/unit

6.1p/unit

4.8p/unit

Difference between solar and grid electricity price.

-1.2p

-3.1p

-5.9p

-9.7p

 

 

News Headlines

Solar power will thrive despite ending of government support from March 31st 2019

More compelling evidence to combine solar with EV charging

Latest statistics show how quickly the EV charging structure is growing

Tesla sells more cars than Mercedes in last US quarter

UK gas storage capacity relative to demand is extremely vulnerable

The big interview with Mypower's Ben Harrison

No Feed-in Tariff - no problem

Powering your growing business

Could the real surge in EVs be vans not cars?

Dyson releases details on its entry into the EV market

Tesla sales have soared in Germany

Commercial-scale roof-top solar: how the finances add up

Mypower champions solar power on regional TV and radio

We’re making the News!

Big announcement about Tesla's new Superchargers

Shell plans to transform from big oil to big electricity

Mypower receive another superb review

BMW facing a threat in modern EVs

Maserati is bringing the first electric GT coupe to the market

A rapid transition to electric buses is happening