At OnGen, we examine the feasibility of a range of renewable energy technologies every day. We understand that not everyone may have this in-depth knowledge, so our latest blog post series will help anyone understand and learn about the most common renewable technologies. First up, solar!
Solar PV (photovoltaic) is a mature renewable technology for converting sunlight directly into electricity. By harnessing the sun’s energy, solar PV panels can generate electricity, which helps meet the energy demands for your organisation. This is achieved by creating direct current (DC) electricity and converting it into alternating current (AC) via an inverter. Contrary to popular belief, solar panels can still generate electricity on cloudy and cooler days. The efficiency of solar panels is increased in lower temperatures, making them suitable across the UK.
Solar PV costs have fallen by 85% over the past decade, whilst their efficiency has increased. Most of the latest commercially available solar panels are between 18% to 22% efficient, making them financially feasible even without government subsidies.
There are two types of solar mounting options: roof mounted and ground mounted. As the name suggests, roof mounted solar PV systems attach to brackets on a roof. Such systems, particularly for domestic premises, have been very popular, accounting for over 96% of all solar PV installations. Roof mounted solar PV systems are easy to install and can last upwards of 40 years. They boomed with support from the Feed-in-Tariff (FiT), which generated income for both electricity generated and electricity exported to the grid. The FiT was replaced by the Smart Export Guarantee (SEG) in January 2020, which also requires electricity suppliers to offer payments to low-carbon generators but only for exporting surplus electricity to the grid. However, since the cost of solar PV has fallen so much, the payback and return on investment have surpassed what it was under the FiT scheme.
“The payback now is five years, so it’s actually better than it was at the peak of the Feed-in Tariff”
Simon Nicholls, Managing Director of UK renewable energy developer, Olympus Power
Ground mounted solar PV is an effective alternative to roof mounted if the latter is unsuitable for your site. However, it can be just as cost effective and easy to install as roof mounted. Ground mounted systems can be more efficient, as they can be strategically located, pitched and oriented at optimum angles for solar gain. This means that it is possible for you to generate more electricity than a roof system of around the same size. They also tend to cover larger areas compared to roof mounted systems due to not being confined to a roof area.
The benefits of using solar PV
Solar PV is a sensible investment for any business or campus with a suitable roof (or plot of land) and an intention to stay in the premises long-term. Owning the freehold of the premises or having a long lease over the property is also ideal and beneficial.
OnGen has collated seven key benefits of solar PV to give you more insight:
- A positive impact on the environment: Solar energy is a natural, renewable source because it is naturally replenished, unlike fossil fuels which are limited. Solar energy also produces no emissions when it is converted to electricity. By investing in this source of renewable energy, you are helping the UK reach its carbon emissions reduction targets and reducing your carbon footprint.
- Financial returns from bill savings: By decreasing the amount of electricity imported from the grid, the site’s electricity bills will be reduced. It is important to remember that every unit of energy generated and used by the solar PV system is one less that needs to be bought. Cost savings from reduced electricity bills, alongside an income generated from an export tariff (Smart Export Guarantee), will typically combine to give a positive financial return (IRR%). Smart Export Guarantee rates vary between suppliers, but they average around 3 pence per kilowatt-hour.
- Independence from the grid: An appropriately sized solar system can provide a significant proportion of an organisation’s electricity demand. This proportion increases further when co-located alongside battery storage.
- Resilience against rising electricity prices: The cost of electricity is increasing and is likely to continue to rise as fossil fuel power stations close. Using onsite solar generation can protect you from these price increases, as sunlight is free. Therefore, no payment is required for the electricity generated, with the only costs being for installation and maintenance. Onsite generation can also protect you against non-commodity cost increases, such as the Climate Change Levy.
- Improved property valuation: Investing in renewable onsite energy generation can increase the value of your commercial property. Improved energy efficiency and acquiring an enhanced Energy Performance Certificate (EPC) are outcomes that can especially add value.
- Improved standards: Solar PV can help buildings, especially new builds, become compliant with evolving environmental regulations and targets. For example, from the 1st of April, 2023, a commercial property’s lease will become unlawful if it has an Energy Performance Certificate (EPC) rating lower than E. Installing solar PV can improve your EPC rating and provide compliance with increasing standards.
- A positive response: Employees, the public and potential customers will respect your decision to reduce carbon, protect the environment and improve efficiency. Installing onsite solar PV is a very clear and visible indication of your positive environmental commitment. This can influence business success, with nearly half of UK consumers seeking offers from companies that emphasise a positive environmental impact.
- Corporation tax incentives: Solar PV installations are specifically included as an eligible asset class under the UK Government’s corporation tax super deduction initiative, which provides a 130% capital allowance deduction against taxable profits. This was announced in the March 21st budget and runs for 2 years from the 1st April 2021.
The Ministry of Justice has announced plans for installing solar PV at several of their properties within England and Wales. Prisons, including HM Prison Bure and HM Prison Whitemoor, will have solar panels deployed onsite. These projects were initially scoped using OnGen’s software, the OnGen Expert, which helped the Ministry of Justice understand the full potential of renewables at their sites. The renewable energy deployments will reduce carbon emissions by over 2,300 tonnes, helping the Ministry of Justice exceed its 2025 carbon reduction target. If you are interested in finding out the potential of onsite renewables for your sites, contact OnGen today.
If you are interested in finding out if your non-domestic building has a strong business case for installing solar PV, try the OnGen Expert. Our award-winning software allows for the financial and practical assessment of both rooftop and ground mounted solar PV, as well as various other onsite renewable technologies. Get in touch for a free software demo of the OnGen Expert or to enquire about our managed service.