The Real Financials of a Commercial 100kW Solar PV System: Costs, Savings, and Property Value Boost
Introduction:
Investing in a commercial 100kW solar PV system is more than just a commitment to sustainability—it's a smart financial decision. This post will break down the real costs of installing and maintaining such a system, the financial savings from reduced electricity bills, and the added value from improving a building's Energy Performance Certificate (EPC) and overall property value. We’ll also explore the financial benefits over a 10-year period, including financing options and asset appreciation.
1. The Installation Costs of a 100kW Solar PV System
To begin, let's look at the upfront cost of a 100kW system, which typically ranges from £75,000 to £100,000 depending on the quality of components, installation complexity, and location.
Solar Panels: Around 250-280 panels, each rated at approximately 400W, totaling £35,000 to £45,000.
Inverters and Mounting: The cost of inverters, racking systems, and electrical wiring adds another £20,000 to £30,000.
Labour and Installation: Labour and installation will typically range between £15,000 to £25,000, including design, engineering, and certification.
Total Estimated Installation Cost: £75,000 - £100,000.
2. Financing Options and Payments Over 10 Years
Commercial solar systems are often financed through green loans or leasing options. If financed over 10 years, the monthly payments will vary depending on the interest rate and loan terms.
Interest Rate: Let’s assume a 5% interest rate over 10 years.
Loan Amount: £100,000 (for a high-end installation).
Using a loan calculator, the monthly payment for a £100,000 loan at 5% interest over 10 years comes to about £1,060 per month or £12,720 annually.
Total Loan Repayment over 10 Years: £127,200.
3. Electricity Savings
A 100kW solar PV system in the UK typically generates around 85,000 - 100,000 kWh annually, depending on location and sunlight availability. The average commercial electricity price is around £0.16 per kWh.
Annual Solar Energy Production: 90,000 kWh (estimate).
Annual Savings on Electricity: 90,000 kWh × £0.16 = £14,400.
10-Year Savings on Electricity: £14,400 × 10 = £144,000.
4. Maintenance Costs
Although solar systems are relatively low-maintenance, they still require periodic inspections, inverter replacements, and panel cleaning. Estimated maintenance costs are around £1,000 to £2,000 per year.
Total Maintenance over 10 Years: £15,000 (assuming average maintenance of £1,500 per year).
5. Net Savings Over 10 Years
Now, let's calculate the net savings by comparing the total financing and maintenance costs against the electricity savings.
Total Financing Costs: £127,200
Total Maintenance Costs: £15,000
Total Electricity Savings: £144,000
Net Savings:
£144,000 (savings) - £127,200 (finance) - £15,000 (maintenance) = £1,800 net savings over 10 years.
While the savings may seem minimal over the loan term, remember that after 10 years, the system is fully paid off, and the property continues to benefit from significant energy savings without loan payments.
6. Increased Property Value and EPC Improvement
Installing a solar PV system can significantly increase your property’s value. Studies show that commercial properties with solar installations tend to increase in value by 5% to 10%.
Property Value Increase: For a property worth £500,000, a 5% increase equates to £25,000.
Moreover, improving your building’s EPC rating can reduce future energy costs and make your property more attractive to potential buyers or tenants. A high EPC rating not only enhances marketability but also ensures compliance with future government regulations on energy efficiency.
7. The Financial Benefits of Asset Appreciation
After the initial loan period, the solar PV system is fully owned, and the ongoing electricity savings will be pure profit. Over the 25+ year lifetime of the system, the savings become more substantial.
Post-Loan Savings: Assuming the same £14,400 annual electricity savings after the 10-year loan is paid off, the savings over the next 15 years would be:
£14,400 × 15 = £216,000.
Additionally, with property value increasing by £25,000, the overall financial benefit is enormous in the long run.
8. Conclusion
Installing a 100kW solar PV system for a commercial property involves substantial upfront costs, but the long-term financial benefits outweigh the initial investment. With financing options, businesses can balance their cash flow while reducing electricity bills, improving EPC ratings, and increasing property value.
In summary:
Installation Costs: £75,000 - £100,000.
10-Year Loan Payments: £127,200.
Electricity Savings Over 10 Years: £144,000.
Net Savings After 10 Years: £1,800 (plus significant savings post-loan).
Property Value Increase: Estimated £25,000.
EPC Improvement: Adds long-term financial appeal.
By the time your system is fully paid off, you’ll enjoy free electricity for at least another 15 years, alongside the increased value of your property and improved EPC rating, making it an intelligent financial and sustainable investment.
