Solar Power PV Costs

When is comes to solar power, the energy from the sun is free and a renewable source of power to capture and convert it to electricity that can be used to power electrical equipment takes the installation of a solar PV (photovoltaic) system. This will include solar PV panels, inverters isolators and potentially energy storage in the form of a battery set.

As the market and demand for PV installations have grown, and governments have introduced financial incentives for energy consumers to install solar energy systems, equipment costs have dropped (by as much as 30% according to recent UK Government figures). Manufacturers have also developed newer, more efficient and less expensive materials and products.

However you look at solar installation costs, installing a solar PV system should be considered a long-term project. Payback, when it comes, will be considerable but it won’t come overnight. In terms of return on investment (ROI), most domestic solar PV systems pay for themselves within 8 to 12 years. However, from day one of the installation having been completed, consumers will start to enjoy the benefits of cheaper electricity, payment from their energy supplier for exported electricity (exported to the grid supplier under the FITS – Feed-in Tariff scheme) and the satisfaction that comes from knowing they are doing their bit for the environment by utilising renewable energy.

Let’s face it, whether you are a commercial or domestic energy consumer, if you want to invest in renewable energy, the only way to have control over it is to do it yourself and install a solar PV system on your house or office building. Otherwise, we are all at the mercy of our energy suppliers and their decisions (or not) to invest in renewable energy sources.

In terms of solar energy costs, it used to be that the cost per Mega Watt hour (MWh) of solar energy, versus nuclear and coal, were considerably higher (almost four times higher). That has changed as the cost of renewing the UK’s out-of-date nuclear energy plants are soaring and the cost of installing solar energy systems is falling.

A typical domestic PV installation is around 2.5kWp in size. Each kWp will probably generate around 800 to 850kWh per annum (if ideally placed and not shaded). Perfect placement is generally accepted as South facing with a tilt of around 30-50degrees. Solar PV panels are usually connected together to form an array. A typical solar roof array will generate 1200 to 2400kWh per annum (depending on how large it is). An average domestic home uses 4000kWh of electricity per annum on lights and appliances so it is likely that top up energy will be needed from a utility supplier.

The FITs (Feed-in Tariff) scheme for solar electricity installations, introduced by the UK Government in 2010, enables energy consumers to connect to the National Grid via their energy supplier and export unused energy from their solar electricity generation system. The scheme enables consumers to get paid for the electricity they generate from their solar PV system and guarantees a minimum payment for all electricity generated, alongside an additional payment for electricity exported to the grid. This is in addition to savings made on energy bills from using the solar electricity generated onsite.

Currently, energy consumers with PV installations (installed using new equipment after 15th July 2009) will get paid for exporting 50% of the total electricity they generate from their system regardless of how much of that they end up exporting to the grid. Both the system and the installer must be registered under the Microgeneration Certification Scheme. An average domestic solar PV renewable power system will cost around £12,500 and could pay for itself within 8 to 12 years.