Like most investments we make, there are several variables which can impact the return on investment (ROI). In this blog post, we look at the main factors that can impact your ROI and explain how they can each contribute to the payback on solar panel installation.
Quantity of Panels - an obvious but important factor is the quantity of solar panels you have installed. The more panels you have installed, the more ambient sunlight you will benefit from, resulting in more power. This is typically limited by budget and / or surface area. However, discussing this with your solar panel installer can ensure you maximise your potential.
Orientation - of how the solar panels are fitted to the roof can impact the amount of ambient light you will benefit from on any given day. For example, if your roof is orientated east-to-west, the panels will be installed east-to-west. This orientation typically absorbs less than panels orientated in a southerly direction.
Usage - usage is also a big factor especially if you don’t utilise battery storage. For example, if you are a working family and out for most of the day and at home from 4pm, then you are not utilising the energy when it is generated during the day. However, if you are retired and utilise a constant stream of electricity during the day, you are more likely to use the energy when it’s being generated, so minimal wastage.
4. Utilising Battery Storage - there are a number of ways battery storage can impact ROI including:
A) Storing the energy when it is being generated and using when required
B) Charging batteries from the grid when energy is cheaper (usually at night) and utilising when required during the day, when using energy from the grid can be more expensive can significantly increase payback and therefore ROI.
Example - The GivEnergy All in One system is a 13.5kWh battery. If you charged the battery at nighttime when the rate can be as low as 7.5p per kWh it will cost you £1.01. If you utilised the equivalent power in the home when the cost is at peak rate, it could cost you £4.05. If you stored electricity at the cheaper rate every day for a year, this could save you as much as £1,109.60*.
5. Utilising a Diverter - utilising a diverter with your solar panel installation means you can use the energy to heat your hot water. If it is a long day during the summer, you could utilise the energy when you are at home, as well as charge your batteries for charging your electric car and then use the diverter to heat your hot water after your batteries have charged to full capacity.
Savings - not only will this save on the cost of using gas to heat the hot water, but it’ll also help promote the longevity of your boiler!
Example - if you have an immersion heater then it’s even easier to calculate potential ROI. If you heat the water with a 3kW heater at a unit rate of 30p per KWh and you heat water twice per day, it could save you over £50 over three summer months**
6. Exporting back to the grid - some energy providers such as Octopus Energy are offering good deals on exporting back to the grid with SEG. Some suppliers will offer as much as 15p per kWh but this usually requires you to use the same company to supply your electricity.
7. Software Buffer - solar panel installation is heavily regulated but this was not always the case. Since 2007 and the creation of MCS, solar panel installation is now regulated and certificated, ensuring every installation meets with the required standards. Part of the process requires data to be input into software at the consultation stage and this provides potential energy generation data, allowing customers to make informed decisions about whether to move forward with the installation of solar panels.
Before these standards were introduced, some installers were providing wildly exaggerated data which lead to common algorithms being utilised within specific industry software. It is worth considering that the software does allow for a percentage or buffer to cover any discrepancies between quoted solar generation and actual generation. We are asking some customers if they’d be kind enough to report back their actual data after a year of installation. It is worth considering that data provided is often a modest calculation of what could be achieved, therefore the initial quotation of ROI is likely to be less than what you’ll achieve.
8. Charging the Car with an EV Charger - half of all solar installations now include both battery storage and car chargers. If these figures for savings associated with car charging compared with petrol were one of the factors it could have significant impact on ROI.
Example - if you were able to cover 250 miles per tank and this was costing 21p per mile and you were doing this every week, then it’d be costing you at least £52.50p per week. If you generated enough energy to charge your car, this could be saving you as much as £2,730 per annum.
There are quite a few factors here for you to consider and it is often the accumulation of these that start adding up to a significant return on investment. However, every situation is different and the examples above are based on average prices which will change daily.
If you have any questions or would like to discuss your situation with one of our engineers, then please use the contact form here or call us on: 0333 577 5229.
*Calculations based on Octupus ‘Intelligent Go’ tariff at 7.5p night rate and 30p day / peak rate at the time of publication. Savings are estimates only and are likely to be different from one household to the next. ** Based on cost savings using a day rate of 30p and assuming the three summer months have good ambient light.