Payback time

It been over a year now since I last reviewed what return I was getting on my investment in energy smart technology – solar panels, battery storage etc – so I think an update is due. This time I’m going to take the input data from my immersun system – one year of data from start of June 2020 to end of May 2021.

Diverted – this is where the immersun sends any surplus solar electricity to my immersion heater to make hot water. In 2020/1 we diverted 1056.6 kWh to hot water saving gas at 2.82 p/kWh. However the gas boiler isn’t 100% efficient losing heat both via the flue to the outside world and also via the hot water pipes to the home rather than hot water. If we assume 80% efficiency at the tank then 2.82 p/kWh as gas at the boiler is 4 p/kWh as heat in the tank. 1056.6 kWh at 4 p/kWh saved £37.25.

Exported – this is where I’m unable to use the solar power that we generate and it overflows into the grid. I’m not paid for Export so this is worth nothing to me.

Generation – this is the energy that we generate in the solar panels. I’m on the UK’s legacy Feed-in Tariff (FiT) scheme which pays me to generate electricity. In 2020/1 I was paid 14.65 explicitly for every kWh that I generated. I also received deemed (rather than metered) Export which paid 5.5 p/kWh on 50% of the kWh that I generated (which is where the ‘deemed’ part comes from). 5.5 p/kWh on 50% is equivalent to 2.75 p/kWh on 100% of the Generation making my revenue 17.4 p/kWh per kWh generated or £693.51 on the 3985.7 kWh that I actually generated.

Imported and House – these are respectively the electricity that I buy from the grid and that which I used within the home including appliances and car charging, some of which will comes from my own solar panels. The difference between House and Imported is the electricity that I used from my solar panels which would otherwise have been bought from the grid. If I assume that each kWh that I use from my solar panels avoids buying a kWh of electricity from the grid at 16.36 p/kWh (current Energy Saving Trust value for the average UK electricity price) then I avoided buying £423.81 of electricity by using the output of my solar panels.

Diverted1056.5 kWh*£0.04=£37.25
Exported338.6 kWh*£0.00=£0.00
Generated3985.6 kWh*£0.17=£693.51
Imported4748.9 kWh*-£0.16=-£776.92
House7339.4 kWh*£0.16=£1,200.73
Total£1,154.56
Return on smart energy investment @ 16.36 p/kWh grid price

With an investment of £8,670, £1,154 represents 7.5 years to pay back the capital invested.

I’m actually on a smart tariff so my electricity cost in this period at 8.05 p/kWh was significantly less than the UK’s average 16.36 p/kWh. This lower price will arguably reduce the value of the energy generated by the solar panels for self-consumption, but equally the ability to maximize the value of a smart tariff is itself a saving.

Diverted1056.5 kWh*£0.04=£37.25
Exported338.6 kWh*£0.00=£0.00
Generated3985.6 kWh*£0.17=£693.51
Imported4748.9 kWh*-£0.08=-£382.29
House7339.4 kWh*£0.08=£590.82
Total£939.29
Return on smart energy investment @ 8.05 p/kWh grid price (excluding the tariff benefit itself)

Using my actual average energy price rather than the higher UK average grid price pushes down the return by over £200 (£929.29 versus £1,154.56). However the costs of buying the imported 4,748.9 kWh falls by £394.63 through the tariff benefit, increasing the annual return to £1,333.93, and reducing the payback period from 7.5 to 6.5 years.

Thus, had I invested in this technology at one time back five and a half years ago and shortly after we moved to this house, then we’d have been in sight of payback with 1 or 2 years left. In practice of course I’ve made the investments at different times (solar first five and half years ago, battery around a year later, smart tariff later still), so my payback will be achieved a little later.

A snapshot of the ImmerSUN diverting to hot water

Some other statistics:

  • Of solar panel output:
    • 91.5% replaced bought energy (self-consumption)
    • 65.0% replaced bought electricity
    • 26.5% replaced bought gas for water heating
    • 8.5% was exported to the grid
  • Of incoming electricity:
    • 54.4% was from the grid
    • 45.6% was from the solar panels (“green contribution” in ImmerSUN’s terminology)

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