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How does Generating your own Electricity Help you to Beat the Market?

By 23rd May 2014 No Comments

Paul Millican

Posted by: Paul Millican

Last week I talked about investor funded schemes where businesses consider leasing out roof space for solar panels as a cost management measure. But what’s the math involved in such matters? As with any cost management strategies, the numbers need to be crunched to make sure it’s an effective solution.

The solar panel scheme enables investors to fund installation of the panels, generating electricity which can then be sold back to the business at a much reduced cost. The most obvious saving here is the cost of installation: businesses don’t have to fork out a single penny to implement the scheme and everything after that is potentially a saving.

‘But what are the exact potential savings?’. Well, as an example, an average rate for electricity is 10p per kWh. On an annual usage of 500,000 kWh’s the total expenditure would be £50,000. However, electricity generated by funded Solar PV schemes can be sold back for as little as 4p per kWh or a total cost on the same consumption of £20,000 per annum. That means a potential saving of £30,000 per annum – undercutting the market price by up to 60%. Now those are numbers that should make your overheads happy!

But it doesn’t stop there. The scheme is delivered over a 20 year period on index linked pricing, so – using this example – the ongoing savings could be far in excess of £500,000 against the choice of doing nothing. That’s quite the reduction on your electricity costs, you’ll agree.

With a rise in popularity for the solar PV schemes, they’re becoming a popular form of cost management – one which any business may be tempted to look into. The question now is what other forms of renewable energy are going to end up helping businesses save money on their utilities? Only time will tell!

If you’d like your business costs reviewed (not just your electricity bill), enquire about a Business Health Check.