Is your energy provider giving you a 14% ROI? No, you say? So if you could generate your own clean green energy, fix your energy costs at a third of the amount you currently pay and make a return on investment of around 14%, then wouldn’t you jump at the chance?
This must be too good to be true, right? Wrong! UK business are actually doing just this with Solar PV.
Rising electricity prices and falling Solar PV installation costs means an achievable ROI from solar PV surpasses 14%. Due to cheaper manufacturing costs and advancements in panel technology the cost of installing solar panels has decreased significantly whilst output from each panel has increased. Panels are producing more energy then ever before and perform better even in shaded positions.
Prices are only going to rise
Traditional electricity supplied from the grid is only going to rise. Experts suggest bills are set is increase by 33% in the next 5 years. With a global push to reduce emissions and energy consumption, taxes and levies on grid purchased energy will only escalate. Solar PV offers businesses protection against such rises as they can effectively forward purchase their energy requirements for the next 25 years at a price of around 4p per unit. This is less than half the average unit price a business is probably currently paying. Energy brokers are quoting starting prices for contract renewals in November 2017 typically between 12.5 and 13.5p per unit.
A UK SME business installing an average size commercial solar PV system of 50kW (192 panels) using 65% of the generation on site, can expect a projected first year income and savings of £6,700, giving a first year return on capital of 15.6% before indexation. Any unused energy can be sold back to the National grid. Average payback length is 6-8 years and a solar investment can be cash flow positive in as little as 2 years. With low interest rates and the additional tax benefits, solar is therefore viewed as a low risk investment. Higher energy users, such as those with cold storage facilities and food producers can see even greater savings.
Generating your own clean energy is the future. Our cars and commercial vehicles will all become electrically fuelled increasing our energy demands. The UK government are still currently offering the Feed-in-Tariff (Fit) subsidy at 4p per unit which is guaranteed for 20 years and linked to inflation. This subsidy offer won’t be around forever.
Added benefits to a business looking to install solar is the green CSR aspect. Solar energy reduces a business’s carbon footprint significantly. Some 25 tonnes of Co2 emissions can be avoided each year with a 50kw solar PV installation. Customers are also demanding companies operate in an environmentally friendly way. They also want the best price so if you can keep your costs the same because your overheads are low and reduce you’re your carbon footprint then that’s a win-win!