Payback Examples

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For many, getting to grips with the benefits of a renewable energy installation and the financial returns they offer can be hard. To help you to understand these financial returns we are going to explain it to you in a nutshell and hopefully give you a good understanding of why you should be seriously looking at investing in renewable energy.

Everyone knows a neighbour or family member with solar panels or a local farm with a wind turbine, you’ve seen them popping up everywhere! So the question you need to ask yourself is why have they installed them? The answer to that question is simple, because there are great financial returns available plus an opportunity to safeguard against rising energy costs whilst doing your bit to reduce your carbon footprint!

Some Key Facts:

  • The Feed In Tariff will last for a full twenty years
  • It is guaranteed from the start date of your contract
  • Once signed up your tariff rate is secure and cannot be changed
  • All Feed In Tariff and Export payments are index linked to the Retail price Index
  • Payments will grow with inflation year on year
  • Those installing a domestic system will benefit from a TAX FREE income!
  • Domestic installations will also attract a lower VAT rate of 5%
  • Feed In Tariff and Export payments are made by your energy supplier on a quarterly basis
  • For commercial systems with larger export rates you can negotiate a higher rate

So here we go, the money you could be earning explained with some examples of existing customers and a simple breakdown of how they are earning and saving money.

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Example 1.
Mr. Davies’s (120 x 250 watt solar PV panels – 30kW system)

This system was Installed and commissioned in December 2013. The reason for its installation was to provide power to the metal fabrication business and reduce its high electricity bills.

Total electricity generated each year by the solar panels = 25,110 kWh’s (units)

This is enough electricity to power 5.5 average UK households for a whole year!

That’s 12.6 Tonnes of CO2 displaced each year!

Mr. Davies’s returns calculated: Year 1 figures

Feed in Tariff = 25,110 kWh’s x 13.03p = £3,271.83 each year

At the time of registration the feed in tariff available for a 30kwp system was 13.03p/kWh (unit). This meant for each kWh (unit) of electricity generated by the solar panels, Mr. Davies would be paid 13.03p TAX FREE. This would be index linked to the Retail Price Index (RPI) growing his returns in line with inflation.

Bill Saving (80% of total energy generated) = 20,088 kWh’s x 12.00p = £2,410.56

Based on Mr. Davies’s electricity usage we predicted that 80% of the electricity generated would be used directly from his roof and the solar panels, avoiding the purchase of 20,088 kWh’s (units) of electricity from the grid each year.

Export payment (50% of total energy generated) = 12,555 kWh’s x 4.64p = £582.55

For any electricity that can’t be used at the time of generation, Mr. Davies would receive a further payment for 50% of the total energy produced by the solar panel system. Now you may ask,why is he not getting paid for just 20% as he would be using the other 80%? The answer to this is simple; at the time of installation, systems of 30kw’s and below would receive a deemed export.

This meant regardless of actual energy consumption, the energy suppliers would make an assumption that 50% of the energy would be used and the remainder exported back to the grid.

The export payments would also be linked to inflation for the full duration of the twenty years Feed In Tariff.

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Example 2.
Mr. Harper (2 x 15m 5kW wind turbines – 10kW system)

This system was installed and commissioned in November 2013. The reason for installing the wind turbines was to provide power to the newly built house, utilising the high wind speeds available in the area.

Total energy generated each year by the wind turbines = 22,752 kWh’s (units)

This is enough electricity to power 5 average UK households for a whole year!

That’s 11.4 Tonnes of CO2 displaced each year!

Mr. Harpers’s returns calculated: Year 1 figures

Feed in Tariff = 22,752 kWh’s x 21p = £4,777.92 each year

At the time of registration the feed in tariff available for a 1.5kw – 15kw wind turbine system was 21p/kWh (unit). This meant for each kWh (unit) of electricity generated by the wind turbines, Mr. Harper would be paid 21p. This would be index linked to the Retail Price Index (RPI) making his returns grow in line with inflation.

Bill Saving (50% of total energy generated) = 11,376 kWh’s x 12p = £1,365.12

Based on Mr. Harpers predicted energy usage we expected approximately 50% of the electricity produced to be used directly from his wind turbines, avoiding the purchase of 11,376 kWh’s (units) of electricity from the grid each year.

Export payment (50% of total energy generated) = 11,376 kWh’s x 4.64p = £527.46

For any electricity that couldn’t be used at the time of generation, Mr. Harper would receive a further payment for 50% of the total energy produced by the wind turbines.

The export payments would also be linked to inflation for the full duration of the twenty years Feed In Tariff.

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Example 3.
Mr. Green (800 x 250 watt solar PV panels – 200kW system)

This system was installed and commissioned in August 2014. The reason for the solar panels’ installation was to provide power to the animal feed mills. The system was ground mounted at a height of 1.5m allowing for the continuation of animal grazing.

Total energy generated each year by the solar panels = 180,800 kWh’s (units)

This is enough electricity to power 40 average UK households for a whole year!

That’s 90 Tonnes of CO2 displaced each year!

Mr. Green’s returns calculated: Year 1 figures

Feed in Tariff = 180,800 kWh’s x 10.3p = £18,622.40

At the time of registration the feed in tariff available for a 200kwp system was 10.3p/kWh (unit). This meant for each kWh (unit) of electricity generated by the solar panels, Mr. Green would be paid 10.3p. This would be index linked to the Retail Price Index (RPI) making his returns grow in line with inflation.

Bill Saving (30% of total energy generated) 54,240 kWh’s x 10.04p = £5,445.70

Based on Mr. Green’s electricity usage at the mill, we expected approximately 30% of the energy produced by the solar panels to be used directly within the mill, avoiding the purchase of 54,240 kWh’s (units) of electricity from the grid each year.

Export payment (70% of total energy generated) 126,560 kWh’s x 4.77p = £6,036.91

For any electricity that couldn’t be used at the time of generation, Mr. Green would receive a further payment for 70% of the total energy produced by the solar panel system. For all systems above 30kW’s in size, an export meter must be fitted should the generator wish to claim export payments from their energy supplier. In some cases where the site is likely to use all of the energy, it doesn’t make financial sense to pay for and install an export meter. You can in some cases opt out of export payments and avoid this overhead.

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