ROI on Commercial Solar Installations in the UK
The United Kingdom has seen a significant increase in the adoption of renewable energy sources, with solar power being one of the most popular. Commercial solar installations have become a common sight across the country, with businesses of all sizes recognising the financial and environmental benefits. This article will delve into the return on investment (ROI) that businesses can expect from commercial solar installations in the UK.
Understanding the Cost of Commercial Solar Installations
Before we delve into the ROI, it’s important to understand the initial investment required for commercial solar installations. The cost can vary depending on the size of the system, the type of panels used, and the complexity of the installation. However, on average, a commercial solar installation in the UK can cost between £1,000 and £2,000 per kWp.
Government Incentives and Schemes
The UK government offers several incentives and schemes to encourage businesses to switch to renewable energy sources. These include the Feed-in Tariff (FiT) scheme, which pays businesses for the electricity they generate and any surplus they export back to the grid. There’s also the Smart Export Guarantee (SEG), which requires energy suppliers to pay for the renewable energy fed back into the grid.
Calculating the ROI
The ROI on commercial solar installations can be calculated by considering the initial cost of the system, the savings on energy bills, and the income from government incentives. Here’s a simple breakdown:
- The initial cost of the system: This includes the cost of the panels, installation, and any maintenance or repairs.
- Savings on energy bills: Solar panels can significantly reduce a business’s energy bills. The exact savings will depend on the size of the system and the amount of sunlight the location receives, but on average, a business can expect to save around £400 per year for every kWp installed.
- Income from government incentives: Through the FiT scheme and the SEG, businesses can earn money from the electricity they generate and export. This can add up to several hundred pounds per year.
By adding the savings and income and subtracting the initial cost, businesses can calculate their ROI. On average, businesses can expect an ROI of around 10-12% over 20 years.
Case Study: IKEA
A great example of the ROI on commercial solar installations is IKEA. The retail giant has installed solar panels on all of its UK stores, with a total capacity of 12.3 MW. This has resulted in annual savings of around £1.2 million and an estimated ROI of 11% over 20 years.
Conclusion
Commercial solar installations in the UK offer a significant ROI for businesses. Not only can they reduce energy bills and earn income from government incentives, but they also contribute to a greener, more sustainable future. With the cost of solar technology continuing to fall and the efficiency of solar panels improving, the ROI is likely to increase in the coming years. Therefore, investing in commercial solar installations is a smart move for any business looking to save money and reduce its environmental impact.
