Why solar is still the way to go

Why solar is still the way to go

Joju’s Head of Engineering James Page makes a compelling case for why Solar is still a sound investment.

FIT Misconception

It’s a common misconception that the FIT subsidies for solar have been and gone. We hear this a lot and it’s not true. Five years ago, FIT income comprised around 60-70% of the financial benefits of investing in solar. Now, it is nearer 20-30% and is decreasing slightly each quarter. However, the price of electricity is currently rising and solar costs are dropping. So, although FIT income has dropped the financial benefits are still good provided most of the electricity generated can be used on site.

One size does not fit all

The key to a good rate of return is, therefore, how to size the solar system correctly. The installation needs to be large enough to take advantage of economies of scale, but not so large that too much unused electricity spills on to the grid without recompense for the customer. The good news is that most buildings have room for an array that gives a return that exceeds today’s bank loan rate (even 4% for personal loans), and many will provide a return of 10% per year or more.

There are, of course, other ways to increase the proportion of energy used on site. Storing the energy produced in home batteries, like Tesla Powerwall, is becoming popular. Alternatively, the solar electricity produced can be shared with neighbouring flats and buildings to form a local ‘microgrid’. The energy bills are then shared between users, depending on their usage. Clearly the metering arrangements are best sorted at the construction and design stage.

The right time of day

Another trend we think we’re likely to see is consumers installing for a closer match to their time of day usage. Even residential customers are now being offered electricity tariffs that vary throughout the day, in particular with higher prices in the evenings. West facing solar arrays are, therefore, becoming a more attractive option for customers.

Matchmaking at Joju

For many though, cutting carbon and lowering their environmental footprint is still the main reason to install solar panels. In cities like London we still encounter challenges that are particular to the city. This is one reason why London’s new Mayor is working on a strategy (due in Spring this year) to help out, especially on public sector buildings.

Despite financial returns for private building owners normally being well over 10%, they often have other priorities and opportunities in a rising market and therefore solar may struggle to compete as an investment especially if the it is only ever viewed in terms of the financial gains. If, however, businesses see the long term reputational and environmental benefits to their companies or just want to hedge against rising electricity prices then they should seriously consider investing in solar on their own buildings.

More often than not at Joju we find ourselves playing solar PV matchmaker as we can connect and mediate between the building user, the capital for investment, and finding the perfect match with the right roof. Luckily there is no shortage of potential matches.