There are many reasons to install solar panels on your business premises or home. It’s an investment in cleaner energy and everything that brings with it. It’s also an investment in your property. But when we make investments, we do it with the goal of turning a profit. So if you install solar panels this year, how soon will your investment have paid off?

The Cost Effectiveness of Solar Panel Systems

While it would be great just to write a single number here – 4 years or 8 – it’s not quite as simple as that.

There are a lot of factors that go into how quickly it pays off. One of the most obvious is how much it cost. If you qualify for solar panel funding,  your own investment goes down. That’s going to mean a quicker payoff.

Another is how far north or south you are in the UK.

It’s a common misconception that solar panels are only effective at peak summertime – if you’re getting daylight, you’re generating power – but the further north you go, the shorter the hours of daylight. (You can measure this for yourself in the autumn – spend a night in Carlisle and the next night in Bristol and check when the sun goes down on each day).

On the other hand, the Scandinavians get value from solar panels installed further north than John O’Groats!

The third big factor is how many panels you’ve installed and how efficient they are. At Go Green Solar Group, we make it our mission to install high-quality solar PV panels in all our projects. You can rely on their quality and efficiency, but a bigger building with 20-30 panels will generate much more energy than a residential property with 6-12.

On the other hand, that same building probably uses a lot more. Many residential properties generate more power during daylight hours than they use in the same time. (This is especially true if you’re not working from home.)

That power can be stored in battery storage, but if your system and energy tariff are SEG (Smart Export Guarantee) compliant, you can sell that surplus energy back to the grid. You’ll be paid for every kilowatt-hour (kWh) you generate, at a rate determined by your tariff.

Calculating on Solar Panel Return on Investment

The Energy Saving Trust estimates the average rate of SEG return at about 15p per kWh, but the high is more than double that. Based on that estimate, they anticipate a typical home in the UK with solar panels earning £270 to £400 per year on energy sent back to the grid. That’s before you take into account the reduction in your bill due to using your own solar energy.

Currently they estimate around £575 a year return on investment for that average residential home. If the Energy Price Cap rises, that ROI will rise with them, speeding up the point you break even against not having installed panels.

If you’re working from home (and taking advantage of that to do your laundry during the day), your savings will be better than the average; if you’ve got more solar panels than the average, likewise. A battery system also allows you to really make the most of your installation, although it will need to be factored into your installation costs. Batteries allow you to force charge from the grid on a lower rate electricity cost; most suppliers charge between 0.08p per kWh between the hours of 2AM and 5AM. This helps support solar energy users during the winter months.

A typical home breaks even between 5 and 9 years, after which your solar panels will provide virtually free, zero-carbon electricity and a steady return through the SEG.

But what about a business?

Obviously the variables for this are much wider. The more panels you install, the less power you’ll need to draw from the grid; sloping roofs recoup more energy than flat roofs (to say nothing of having to work around any skylights), and the amount of energy that a factory or a refrigerated warehouse needs is obviously much higher than many other businesses.

On the other hand, the more panels you install, the greater the cost you have to pay off.

So with all of those variables in mind, we can say that studies show commercial solar panels break even, on average, in around four years. With the same 25-year panel lifespan, that gives you 21 years of zero-carbon electricity.  More complex installations will take longer, but economies of scale mean they still break even faster than residential systems, with almost all systems paid off within 2.5 years to 5 years.

Making the Decision

We recognise that these are still significant investments. Whether you need residential or commercial solar panels, we believe that a high quality system designed for your specific needs will always be the right decision. That’s one reason we work to help our customers secure solar grants where possible – to make sure this opportunity is available to everyone.

For a free quote or just to discuss possibilities, get in touch with us today – we’d love to hear from you.