Can solar panels reduce my business electricity bills?
Solar panels, or photovoltaics (PV), use solar cells to convert the sun’s light into electricity. There are now in excess of 1 million homes and businesses worldwide using solar power to boost green credentials and sustainability. But does it save you money?
The growth in renewable energy in the UK has been remarkable. Renewable energy overtook fossil fuels in the National Grid back in 2019 with 40% of the UK’s electricity generated by solar, wind and biomass fuels. In Q1 2020 renewables’ share of electricity generation (wind, solar, hydro and other renewables) increased to 47%, mostly due to increased capacity and higher wind speeds in February 2020.
Wind and solar combined accounted for a record high of 32.2 per cent of electricity generation in 2020 Q1. You only have to look at new house builds to see the increasing use of solar panels and no doubt you’ve seen at least one such solar installation on a farm building or on agricultural land near you.
Can I get paid for the electricity I generate using solar panels?
The Smart Export Guarantee (SEG), is how the UK government legislates for the payment to customers supplying renewable energy. Customers generating renewable energy will be paid for electricity that is fed back to the National Grid. Therefore, if you produce more energy than your business needs, you will receive a payment from your energy company.
How much you will be paid depends on the energy company you use as energy companies set their own tariffs for buying electricity back from you. Customers can choose between a short-term fixed rate or a market-tracking variable rate. While wholesale electricity prices can sometimes fall below zero, the energy company must offer you a rate that always stays above zero. A fair rate is likely to be somewhere in the region of 5p-6p per kWh, according to the Solar Trade Association.
Your SEG licensee (the company that pays you for your energy) does not have to be the same as your electricity supplier, so you are free to shop around. City Utilities can help you find the best rate for your business.
What is the cost of the solar panels required?
Solar panel prices have been reducing. An average set-up of a 4kW system, comprising 16 panels and a grid connector, costs just under £6000 ex VAT.
You may also have to replace the inverter every 10 years or so. Solar PV inverter replacement costs can vary from £500 to £2000. It depends on a range of factors, including the potential power output of an inverter, its conversion efficiency, and the type of solar panel inverter it is.
You will also need a smart meter so that you can measure the energy that you export to the grid. Many energy companies will now offer these to business customers at low or no cost.
A battery storage system will store up your generated electricity so you can use it later, such as when it’s dark. This could be useful if your business uses a lot of electricity in the evening or if you run electric vehicles that need charging.
Solar panels do carry an upfront cost so shouldn’t be viewed as a quick fix to reduce your energy costs. However, they can generate a medium to long term saving on your electricity bills.
To learn more about saving money on your electricty bills contact our renewable energy experts on 01273 600 300 or fill out our short contact form.