Investing in renewable energy is no longer just a sustainability checkbox – it’s a smart financial move. But let’s be honest, while the long-term benefits are clear, the real question is: How quickly will it pay for itself?
At its core, Return on Investment (ROI) for renewable technologies like solar PV, battery storage, voltage optimisation, and solar farms depends on how well businesses integrate them into their operations. The key to unlocking real financial returns? Maximising self-consumption – using as much of the generated energy on-site as possible, rather than selling excess to the grid at underwhelming rates.
This resource walks you through the numbers, breaking down realistic ROI estimates for key renewable technologies, explaining how to optimise their performance, and helping you make confident investment decisions.
Understanding ROI in renewable energy #
When it comes to energy investments, ROI isn’t just a buzzword – it’s the foundation of any solid business case. Here’s how we measure it:
Many ROI estimates assume businesses will export excess energy, but Smart Export Guarantee (SEG) tariffs (5p – 15p/kWh) are far lower than retail electricity prices (25p+/kWh). This means selling power back to the grid often delivers lower returns than simply using it internally.
Commercial solar PV – A smart investment for businesses #
- Installation: £600 – £1,100 per kWp*
- Maintenance: Minimal – around 2% of capital costs per year
- ROI: 12% – 50% per year
- Payback period: 2 – 6 years*
One of the biggest advantages of commercial solar PV is the reduction in energy bills. By using the electricity generated on-site, businesses can significantly lower their reliance on the grid, reducing energy costs over the long term. Solar PV also provides a hedge against volatile energy prices, ensuring more predictable operational costs.
Another major financial benefit comes in the form of tax incentives. Businesses investing in solar PV can take advantage of schemes like Enhanced Capital Allowances (ECA), VAT relief, and potential government grants, further improving ROI.
*Typical estimates based on UK-based commercial solar installations (industry reports & case studies) & data from the UK Department for Energy Security and Net Zero (DESNZ) – NOT Green Shield Group supplied systems.
Battery energy storage system (BESS) – Getting the most from your energy #
- Installation: £300 – £600 per kWh
- Maintenance: Moderate – requires monitoring and software updates
- ROI: 10% – 18% per year
- Payback period: 6 – 10 years*
Battery energy storage is particularly useful for businesses with high energy demand during peak hours. By storing energy when electricity rates are low and using it when rates are high, businesses can achieve substantial cost savings. This is known as peak shaving, which reduces demand charges and stabilises electricity costs.
Additionally, battery storage systems provide businesses with a greater level of energy independence. By relying less on the grid, businesses can reduce exposure to fluctuating electricity prices and ensure a more stable energy supply. This is especially useful for industries that rely on uninterrupted power, such as manufacturing and data centres.
*Typical estimates based on National Grid ESO case studies & reports from UK-based battery storage providers (such as Tesla Powerpack & Fluence) – NOT Green Shield Group supplied systems.
Voltage optimisation (VO) – The unsung hero of energy Efficiency #
- Installation: £5,000 – £100,000*
- Maintenance: Minimal – occasional servicing.
- ROI: 10% – 50% per year
- Payback period: 2 – 5 years*
- Savings: 8% – 12% reduction in electricity bills
Voltage optimisation ensures that a business is only using the electricity it truly needs. By reducing excess voltage supplied to equipment, businesses can cut unnecessary energy consumption, leading to lower electricity bills.
Beyond financial savings, voltage optimisation also helps protect electrical equipment from excessive wear and tear, reducing maintenance costs and extending equipment lifespan. Because of its relatively low investment cost and quick payback period, voltage optimisation is one of the most straightforward ways for businesses to improve energy efficiency.
*Typical estimates based on Manufacturer data (Powerstar, Voltis, ABB) & UK case studies on industrial energy savings – NOT Green Shield Group supplied systems.
Solar Farms – A Long-Term Play for Large-Scale Users #
- Capital investment: £800,000 – £1.2 million per MWp
- Maintenance: £10,000 – £20,000 per MWp per year*
- ROI: 10% – 20% per year
- Payback period: 5 – 10 years*
Solar farms provide businesses with long-term energy price stability. Through Power Purchase Agreements (PPAs), companies can secure fixed-rate electricity for years, reducing exposure to rising energy costs.
For businesses committed to sustainability, solar farms also offer branding and reputational advantages. Demonstrating a commitment to renewable energy can enhance corporate social responsibility (CSR) efforts and appeal to environmentally conscious customers and stakeholders.
*Typical estimates based on Government reports on UK solar farms & PPA agreements from corporate solar users – NOT Green Shield Group supplied systems.
Factors affecting ROI in renewable technologies #
Solar PV and Solar Farms: The UK has varying solar irradiation levels. Southern England receives 10–15% more sunlight than Scotland, impacting solar generation and ROI.
Battery Storage: ROI is influenced by electricity price fluctuations, which vary by region.
Voltage Optimisation: Works effectively across locations but performs best in areas with excessive voltage supply.
Rising electricity costs increase savings from self-consumption.
Exporting surplus energy is less profitable due to low Smart Export Guarantee (SEG) tariffs.
Battery storage benefits from energy arbitrage, storing electricity when cheap and using it when expensive.
Businesses with high daytime energy use benefit the most from solar PV, as more energy is self-consumed.
Facilities with demand spikes (e.g., manufacturing plants) gain higher ROI from battery storage through peak shaving.
Solar PV & Solar Farms: Minimal maintenance; panel degradation is 0.5% per year.
Battery Storage: Regular monitoring and software updates required.
Voltage Optimisation: Maintenance is low but should be monitored periodically.
Several factors influence the ROI of renewable energy investments. Location and climate play a significant role, with businesses in sunnier regions of the UK generally achieving higher solar PV yields. Energy demand patterns also impact ROI, companies with high daytime energy usage will benefit the most from solar PV, while those with fluctuating demand will see stronger returns from battery storage.
Electricity prices are another critical factor. The higher the cost of grid electricity, the more savings can be achieved through self-consumption. Government incentives such as tax relief schemes and grants further enhance the financial viability of renewable investments. Lastly, maintenance and efficiency play a role in long-term performance. Well-maintained systems operate more efficiently and deliver better financial returns over time.
Understanding these elements helps businesses optimise their investments and achieve the best financial outcomes.
Challenges and risks in estimating ROI #
1. Uncertain Energy Prices and Market Conditions
- Wholesale electricity price fluctuations impact ROI, particularly for battery storage and long term predictions.
- Policy changes may alter SEG rates and government incentives, both positively and negatively.
- Common sense analysis of current contract pricing – business who signed contracts during specific periods of time can be tied to excessively high energy rates, not representative of future pricing.
2. Regulatory Changes and Policy Shifts
- Government subsidies and tax relief schemes may change over time.
- Inclusion of any export payments should be taken with caution as changes can happen fast and drastically as demonstrated with the removal and replacement of the FIT tariff.
- ROI projections should, where applicable, include risk assessments for future policy adjustments.
3. Technological Advancements Affecting System Efficiency
- New technologies may improve efficiency but reduce the long-term value of existing installations.
- Performance degradation (e.g., 1–2% per year) should be factored into ROI calculations where applicable for certain technologies.
Need expert advice? Let’s talk. #
Navigating the world of renewable energy can feel complex, but the right investment strategy makes all the difference. Whether you’re looking at solar PV, battery storage, voltage optimisation, or solar farms, ensuring the highest return on investment requires careful planning.
If you’re considering renewable energy solutions for your business and want to maximise your ROI, we’re here to help. Let’s discuss how you can optimise your energy strategy and make renewables work for you.
