MICRO-GENERATION - 27.11.2020

Time to think again about solar power?

Solar power schemes now offer the “cheapest electricity in history” with the technology costing less than coal and gas. Is it time to think again about installing solar panels, and if so what are the best options for a small business?

Cheaper than previously thought

The International Energy Agency (IEA) publishes the World Energy Outlook every year (see The next step ). It gives a prediction as to what the future make-up of global energy generation will look like. The latest version suggests that the world will have 43% more solar power being created by 2040 than it expected in 2018. This is mainly because its new analysis shows that solar power is between 20% and 50% cheaper than twelve months prior.

The IEA says that for solar, the cost of capital is much lower, at 2.6%-5% in Europe, largely as a result of policies designed to reduce the risk of investing in clean energy. In some parts of the continent where governments are giving the most financial support, solar can now generate electricity “at or below” £15.11 per megawatt hour, making solar photovoltaic (PV) the “cheapest source of electricity in history”.

Should you invest in solar?

With prices falling all the time there is now more of an incentive to go for solar.

Tip. Unless you have land that you could transform into a mini solar farm, the most practical option would be to install PV panels on the rooftops of your buildings. Creating your own energy is one of the best ways to cut costs - and you will see reductions to your electricity bill almost immediately.

What costs are involved?

The average cost of producing energy from solar PV panels is around 5p per kWh. Right now, you are paying between 11p and 15p for the same amount of energy. Once you’ve saved enough money to repay your initial investment, you will continue to save money every month. However, there is an upfront cost. A small-scale solar PV system will cost between £5,000 and £10,000, taking around six to ten years to pay back. Solar thermal energy systems are a little cheaper, costing between £3,000 and £5,000, which will be paid back in around five years.

No support

Government financial support for solar systems has pretty much dried up. But you can still make use of the Smart Export Guarantee (SEG), which is now the only type of solar panel funding available (see The next step ). It came into play on 1 January 2020 and it enables you to obtain payments for any surplus clean energy you can export back to the grid. It’s not a direct government grant, but all licensed electricity suppliers must now offer an export tariff to their customers.

Tip. Get in touch with your energy company to see what your options are and how much they will pay you for the solar power you produce.

Tip. You might also consider using solar thermal panels to produce hot water if that makes sense to your business needs.

Tip. Those selling the equipment will be able to help you identify if government funding or grants are available and how to apply. Make sure you ask, as it could make the difference between making an investment worthwhile or not.

For a link to the World Energy Outlook report and further information on the SEG scheme, visit https://www.tips-and-advice.co.uk , Download Zone, year 15, issue 06.

Research identifies that solar power is between 20% and 50% cheaper than previously thought. Up-front investments in systems are repaid in less than ten years. Funding is available through the Smart Export Guarantee scheme.

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