Solar PV is a fantastic investment. Returns of 10% plus are available, non-taxable (for individuals), inflation linked and dependent only on the sun coming out.
In fact, as our recent blog showed, the cost per kWh of solar electricity is around 9p. This is well below the grid cost of electricity, which for homeowners, is about 15p per kWh, and rising (rising by 7% in 2018 - see page 6 of this government publication).
Of course, the financial solar return on investment doesn't tell the whole story. In this age of increasing air pollution, climate change, and decreasing fossil fuels, solar PV makes sense even without the excellent financial return.
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As a guide solar PV systems cost between £1,400 and £1,750 per kWp of installed capacity depending on system size and complexity. To give an accurate quote we need to take into account factors such as ease of access to the roof, the nature of mounting system / roof covering, the length of cable runs, and shading and monitoring requirements.
The table below gives some sample system outputs, based on a nearly East facing system located in not-too-sunny Reading, Berkshire. The system is expected to generate 866kWh per kWp (PVGIS forecast). An optimal south facing system is expected to generate 985kWh per kWp and the returns will be EVEN HIGHER than those below! See below for an explanation of the two income / savings streams produced by a PV system.
|System size (kWp)||Annual generation (kWh)||Total annual savings / payments||Investment rate of return (IRR)|
A 4kWp system costs £5,500 and is expected to produce 3,350 kWh per annum. The user has an energy management device to maximise energy usage. 50% of the electricity is used, and 50% is exported.
(1) FREE electricity (50% gets used): 3,350kWh x 50% x 15p per kWh = £251.25
(2) Export Tariff (50% gets exported): 3,350kWh x 50% x 5.5p per kWh = £92.13
Total annual income / savings = £343.38
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