Care Home Solar Payback Periods and ROI: Real Figures from Real Sites

What IRR and Payback Have Spirit Energy Care Home Installs Achieved?

The table below shows completed Spirit Energy installations, not financial projections.

The variation in IRR reflects system size, roof configuration, tariff rates at time of installation, and self-consumption profile. A 24% IRR at Osbourne Court reflects a well-matched system to a high-consumption building with strong daytime load. 

Why Do Care Homes Outperform Offices and Retail on Solar ROI?

The financial return from solar depends almost entirely on how much of the electricity you generate you actually consume yourself, at the moment it is generated.

Exported electricity earns around 4–6p/kWh through the Smart Export Guarantee. Electricity consumed on-site displaces grid electricity costing 24–28p/kWh for commercial users. The difference is approximately 5:1.

An office building is largely empty at night and at weekends. A care home is never empty. Its consumption profile is flat and consistent across 24 hours, seven days a week. That means a care home uses far more of its own solar output than a comparable office building on the same roof area.

Self-consumption rates by building type (approximate):

Care homes sit towards the top of this table for the same reason they sit towards the top of the energy cost table: they never stop.

What Does a Worked Financial Example Look Like?

The following is based on a typical 50-bed care home in southern England, spending £48,000 a year on electricity with a 50 kWp system installed.

A 50 kWp system in the UK generates approximately 45,000 kWh per year. At a self-consumption rate of 55%, the care home uses 24,750 kWh directly, avoiding grid electricity at 25p/kWh. That produces a saving of £6,188. The remaining 20,250 kWh is exported at 5p/kWh, generating £1,013. Total year one benefit: approximately £7,200.

For the B&M Care Homes portfolio, real-world results at Osbourne Court broadly match this model, with a better-than-average self-consumption rate reflecting the site's specific load profile.

How Does the Funding Route Affect the Financial Return?

The IRR figures quoted above (19–30%) assume direct capital investment. The return changes materially depending on how the project is funded.

Direct capex: Highest IRR. Your organisation pays for the system, owns it immediately, and captures 100% of the energy saving. Zero VAT on combined solar and battery until March 2027 reduces the effective capital cost.

Hire purchase: You own the system at the end of the term. Monthly repayments are typically offset by monthly energy savings from the outset on a well-sized system. IRR is lower than direct capex because of financing costs, but the project can be self-funding from month one.

Power Purchase Agreement (PPA): Zero upfront cost. The system is owned by Spirit Energy's finance partner. You pay for the electricity generated at a rate below your current grid tariff, producing an immediate saving without capital deployment. IRR does not apply in the conventional sense, but the cash-flow saving is positive from day one.

For a full comparison of all three routes, see our solar funding options for care homes.

What Happens to the Return If Energy Prices Fall?

This is the right question to ask, and it deserves a direct answer.

Our IRR projections use conservative assumptions on energy price escalation. Even if grid electricity prices remain flat in real terms for the next 25 years, with no increase from today's levels, a 50 kWp system at current commercial tariffs produces a positive return with a payback of 5–8 years, depending on self-consumption rate.

If prices fall by 20% from current levels and stay there permanently, the payback extends but the project remains financially positive over the system lifetime. Solar panels produce electricity for 25–35 years. The capital cost is fixed at installation.

The scenario in which solar on a care home produces a negative return requires sustained, material falls in electricity prices over a 25-year period. UK prices are currently 118% above the European median. The structural direction of travel is not downward.

What Is the Minimum Roof Area Needed for a Viable System?

There is no hard minimum, but below 20 kWp the economics become less compelling for a care home at typical commercial tariff rates. Spirit Energy's care home installs have ranged from 28.35 kWp at Wentworth Lodge to 132.9 kWp at St Luke's.

A 50 kWp system requires approximately 250–300 square metres of usable south-facing roof space, or more if east/west split. Spirit Energy surveys every site before recommending a system size, and we will tell you plainly if the roof area does not support a financially viable installation.

For more information on what your site might support, see our care home solar FAQ.