Are Solar Panels a Good Investment?

Businesses across the UK are feeling the pressure of rising costs and energy bills. The new 6-month cap on wholesale energy prices may help temporarily, but a long-term solution could be needed to help future-proof your business against further inflation.

Investing in solar panels is one solution that can provide attractive benefits to businesses of all sizes that operate during daylight hours. Other than substantial energy cost savings, it can increase your additional income potential, and you can lower your business’s carbon footprint which makes you eligible for certain tax benefits.

Of course, looking at the bigger picture, it is also a huge benefit to the environment to use renewable energy and will contribute to delivering the UK requirement for 2030, forecast by the National Grid future energy scenarios (FES). We should all do our part to make for a greener and more sustainable future.

How Much Money Do Solar Panels Save?

Using solar energy costs substantially less than electricity from utility companies. Even businesses with smaller premises can benefit from using solar energy and save hundreds, which with a 25-year lifespan on solar panels can add up to a large amount. However, it goes without saying that the more roof space you have, the more energy you can produce and the more money you can save.

Electricity UsageCost @ 0.34p/kWh
Annual electricity usage (50,000kWh)£17,000
(-) 20kW solar system (18,500kWh pa – Avg. South England)
Reduced annual usage (31,500kWh)£10,710
Energy Savings£6,290
Estimated SEG pay per year£1,549
Total Savings per year£7,839

20kWh Solar SystemCost
System Cost£18,200
VAT @ 20%£3,640
Total Cost£25,840
Written Example based on a medium business using 50,000kWh per year with 100m2 roof space in the south of England. Sources: Green Match, Up Level Green.

It’s important that you have a professional survey on your premises to accurately calculate how much energy can be produced using solar panels based on your individual location, roof size, angle and direction, all of which make a big difference.

The above is based on information from Up Level Green. The average payback time for this scenario is approximately 4 years, with further savings made from the asset’s substantial lifespan. If you are interested in potentially investing in solar panels you can enquire with us on our eligibility checker.

To calculate how much financing a solar system might cost for you, try our finance calculator.

Another example is from a report commissioned by the UK warehousing association (UKWA) that shows massive possible benefits for the warehousing and logistics sector for installing PV solar panels systems on their warehouse rooftops, which occupy approximately a third of commercial roof space in the UK.

Installing solar panels could cut warehousing electricity costs between 40-80%, saving the warehousing sector about £3bn a year.

Maintenance costs are also very low as they only need professional examinations every four to six years. All that is required regularly is light cleaning to remove dust or debris to ensure maximum efficiency. Once the initial investment has been made, there’s not much cost thereafter.

How Efficient Are Solar Panels?

Everyday operations of your business can be made more efficient with commercial solar panels. The standard efficiency is around 15-20% but in some cases can reach up to 42%, depending on weather conditions and the material they’re made from.

Monocrystalline panels are known to be the most efficient on the market but are also the most expensive. However, their high-efficiency rating makes them more space-efficient, meaning you can purchase less to fulfil energy requirement. They also perform better in low-level sunlight which is ideal for UK weather.

What Tax benefits and Grants Are Available?

Possibly the most appealing benefit for businesses for installing solar panels is increased income potential through solar panel grants. The Smart Export Guarantee (SEG) is a government-backed initiative that requires some SEG Licensees to pay small-scale generators (who have a total installed capacity (TIC) of no more than 5MW, or no more than 50kW for Micro-CHP) for low-carbon electricity which they export back to the National Grid.

SEG Licensees determine the rate, the contract length and other terms, so if you do apply for an SEG tariff, you should shop around to see which tariff is best for your business.

In terms of tax relief, companies can currently claim up to 130% of their capital allowances back from the government for investing in solar panels. Under the scheme, companies can save up to 25p on taxes for every pound invested. However, this super deduction is only applicable until March 2023, so if you want to take advantage of the tax relief, you should invest sooner rather than later.

How Can You Affordably Invest in Commercial Solar Panels?

Despite the abundance of financial and environmental benefits, many businesses are reluctant to invest in renewable energy due to the rather substantial initial costs. Portman can provide you with a solution to this – all planning, purchasing and installation can be done with finance, meaning you can reap all the perks of this investment without having to restrict your cash flow.

Business loans, asset finance and recovery loans are all possible solutions that could help you make this worthwhile investment with a fixed-rate deal and affordable monthly payments. Portman can help you build a more efficient and sustainable business that not only does good for the economy but also the planet.

Call now to speak to one of our experts if you have any questions on 01604 669352 or check your eligibility if you’re ready to invest in your business.