SPP Roadshows: Maximising self-consumption the key to delivering double-digit returns

Solar installers in the UK can still offer consumers returns of around 10% by sizing systems appropriately and maximising self-consumption.

Installers and other industry professionals discussed the state of the sector during last week’s Solar Power Portal Roadshows and concluded that despite 65% cuts to the small-scale feed-in tariff, double-digit returns could still be achieved by making adjustments to how systems are sold.

The new FiT regime offers rates of 4.39p/kWh for systems up to 10kW in size and was designed specifically to offer returns of around 4.8%, a level deemed appropriate by the Department of Energy and Climate Change.

The consultation and associated impact assessment, published by DECC at the time, stated that the rates were also designed to stimulate increased self-consumption. The much-maligned Parsons Brinkerhoff report estimated current self-consumption rates to fall between 33 and 88%, whereas the consultation responses put it between 23% and 46%. DECC eventually designed the rates to reflect 45%.

As a result, self-consumption rates above that 45% threshold can deliver returns higher than 5%, and under certain circumstances as high as double that rate by delivering far greater savings to consumers than feed-in tariff income.

Speaking at the Roadshows’ first leg in Salford last Tuesday, Joju Solar technical director Chris Jardine demonstrated how returns can be calculated against the cost of install and the achieved self-consumption rates. A typical 3kWp system installed at a cost of £6,000 would deliver returns of 5.1% if the owner used just 30% of generated electricity, however the return on investment leapt to 10% if self-consumption rates breached the 70% threshold.

Achieving those self-consumption rates – more than double what typical installations had been designed for under the previous regime – will require an about-turn in the model installers have used.

Whereas before installers had looked to meet the 4kW bracket or constrained systems to roof size, speakers at the Roadshows stressed the importance of understanding a household’s consumption patterns and tailoring systems to those demands.

Griff Thomas, MD at GTEC Training, discussed the level of detail required under energy audits, which he said would be a vital tool for installers moving forward. Two weeks of consumption data from a house can be used – and extrapolated using algorithms to determine any differences over summer or winter – and then applied to determine the appropriate size of a rooftop PV system.

This system can then be optimised using additional management and storage technologies which, although costing extra, can be used to bring on-site consumption up. Thomas said that while a PV system might cost around £4,500, additional technologies and services could add a further £2,000 to the total system but result in a better return for consumers.

Thomas concluded that it was down to installers to understand how complementary technologies – including both heat and battery storage, energy monitoring and management components - can achieve added value and relay this onto households.

Jinko Solar UK country manager Barrie Davies too discussed the concept of maximising value for consumers, and the company will be conducting a free webinar on the subject later this week.

More detail and information regarding maximising self-consumption and making solar work under new market conditions will be available at the second leg of the Roadshows, which take in Nottingham, Brighton and Cardiff on the 5, 6 and 7 April respectively. Tickets are still available and are completely free. More detail, and how to register, can be found here.