Solar installation – what you should know
Peter Cole
Mar, 01 2023 5 min readInstalling solar on roofs was a popular option for farmers and domestic properties pre 2015 when the Government’s Feed-in Tariff was available. After 2015, when the subsidies fell away, the cost of installation resulted in a low return on investment and the popularity faded away.
Fast forward 8 years and the technology in solar panels has improved, increasing their output and reducing their cost. With the currently high electricity prices, we have found a spike in interest to retrofit solar panels onto rooftops and are regularly asked if this is the time to invest in them.
Farm businesses in particular are interested. They are seeing a massive increase in variable costs, including electricity, and a reduction in subsidy payments. Therefore, any effort to try and stabilise these price fluctuations should be supported. The purpose of this blog is to set out the process and likely returns on investment to install solar panels on commercial buildings, including farm buildings.
Preparation
Solar developers are overwhelmed with interest, therefore developers have become reluctant to engage with landowners over speculative sites. Our advice is to prepare the following information before contacting developers:
- A record of three years electricity consumption
- Location of nearest meters, providing reference numbers.
- Photos and plan of land/buildings where solar would be located.
If landowners still have no luck, then we recommend going to an independent building surveyor to review the information, provide an appraisal and help with a tender process.
What Works Are Required?
The installation from start to finish is around 7 months and there are a number of possible hurdles to overcome, which are as follows:
1. Planning
Regulations introduced in April 2015 deem most non-domestic solar installations below 1 MW as permitted development, provided there are various criteria for the size and location of the panels on the roof. Permitted development does not apply:
- If the installation is on a listed building, or on a building within its curtilage, or on a site designated as a scheduled monument
- If the building is on Article 2(3) designated land and the equipment is not installed on a wall or a roof slope that fronts a highway
- If there is more than one ground mounted system within the curtilage
2. District Network Operator
You will need to apply to the local District Network Operator (e.g UKPN or SSE) for a connection if the installation is over 3.68 kWp (on a single-phase supply) or 11kWp (on a three-phase supply). Sometimes the District Network Operator will allow the connection to proceed, subject to certain additional costs to enable them to upgrade the grid (transformer or cables) in the area or using an export limiting device.
3. Upgrading the Grid
If the District Network Operator identifies additional work to the grid or if a three-phase connection needs to be installed on the property, this is likely to add anything from six weeks to many months to the timescale, depending on the speed of the operator.
4. Structural Report
The final hurdle to overcome for roof mounted installations is the structural report, to confirm that the roof can take the additional loads imposed by the panels. Additional strengthening work may be required following this report, typically for concrete and timber purlins. If the work is not major, it can take place at the same time as the panel installation. It can be hugely expensive to create the structure for this within agri buildings, in-roof is more suited to domestic buildings.
Consumption and Return on Investment
We have had a number of clients (especially residential owners) who are looking for a long-term sustainable solution and are not prioritising a good return on investment, but this should be an important consideration. For this blog, we have assumed a scenario where the hurdles above have been overcome and there are no overly onerous costs.
- The cost to build a 200kW system would be approximately £200,000. This is on the assumption there is a three-phase supply, and no roof reinforcement works are required nor any District Network Operator upgrades. The roof space required is approximately 680m2.
- With the price of electricity being at approximately 40p/kWh for commercial rates, we have assumed a best-case scenario of 30p per kwh.
- For the past three years, the building’s average KWh consumption is 350,000 per annum which would create a cost of approximately £120,000 per annum + VAT.
- A 200kW system could create savings of approximately £60,000 per annum. This would create a return on investment of 25%.
Therefore, we would suggest that if you have buildings that are consuming on average over 100,000 kWh per annum, you would be able to get a good return on your investment between 15% and 30%, subject to installation costs.
Finally, it should be considered that this cost may form part of a farmer’s capital allowance and we would recommend speaking to an accountant about this.
Whilst the focus of this blog is non-domestic solar panel installation, at Ceres Property we can advise on a number of other renewable energy technologies and off grid systems. Please get in touch if you are considering such an installation and we will be happy to provide our expert counsel.
