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Self-financed systems

The financial justification for installing Solar PV on commercial property is compelling. It can be viewed as not just a money saving exercise, but an investment with a secure and predictable revenue stream for a 20 year term. The return on investment is typically between 10-15%, depending on the proportion of energy generated that can be used on site.

By understanding the electricity demand profile, we can specify appropriate systems that strike the optimum balance between the FiT, Export Tariffs and electricity purchase savings.

Here is a typical 50kW example, where the system becomes cash positive in Year 5 and the simple ROI in Year 1 is 16.7%.

Roof Pitch – 15

Direction – South Facing

Current energy cost – 10.5p per kWh

Cost to install – £56,000

Required roof area – 340m2

Estimated system output – 45,000

Income & Saving

The green bars represent the total saving on electricity, the red bar shows export tariff income and the orange bars show the FIT payments.

Assuming that 70% of generated energy is used on site:

Annual Energy savings – £3,300, Annual FIT income – £5,450, Annual export tariff payments – £640

ROI = 16.7%

Payback reached in Year 5, with FIT payments continuing to 20 years from installation

Below is an example solar PV generation profile from one of our 50 kWp systems for 2013, along with the target values:

The vast majority of the predicted annual generation of the solar is during the period from April to September. The blue bars represent the target values for each month, set using meteorological averages over several years. As you can see the actual electricity generation varies, and may fail to hit the target or exceed it in a given month depending on the weather. Despite this, over the course of a whole year our predictions are very conservative – this array exceeded its target by 5.58% in 2013 – and in fact most of our systems are currently over-performing by anywhere between 4% and 7%, having a significant impact on their financial performance.