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Estimating Electricity Generation And Cost Savings From Solar Panels

By Edited Jul 27, 2015 0 0

Estimating the feed-in tariffs

This article will help you to estimate electricity generation and cost savings from your solar panels.

Free Solar Panels To Generate Electricity For Your Home
 Do not blindly trust online calculators. These are often designed to inflate your potential savings in order to sell you a solar panel array. Estimating electicity generation and cost savings from photovoltaic panels is fairly straight-forward to do. Why an estimate? Solar energy generation depends on a large number of factors which we cannot control such as the weather. For simplicity, we'll also be excluding inflation, solar panel degradation and increase in electricity prices. You won't need them to come up with a good enough estimate to decide on whether to buy solar panels or not. The largest benefit of solar panels is the feed-in tariff. Feed-in tariff can be claimed for each unit of electricity produced and is on top of any energy saving or payment for export back into the grid.

What do you need?

You'll need the following information about your (proposed) solar panel array to perform the calculations:

  • The power associated with the solar array. This will most likely be expressed in terms of Watts (W or kW) or Watts power (Wp) - I'd expect this to be between 2 kW and 10 kW for most domestic photovoltaic arrays.
  • Your current electricity rates. You can get these from a recent bill or online.

Estimating the electricity output of a solar array

The calculations will be shown step by step. I've included an example of a 4kW photovoltaic array covering an area of 25 square metres. Over 25 years, solar panels will degrade and loose 20% of their annual output compared to when they are installed.
  1. For the calculations, the power of the solar panel will need to be recorded in Watts. 
    1 kW =1000 W=1000 Wp 
    So for our example, the power is 4 kW or 4000 W.
  2. Estimate the yearly electricity output. 
    For this, we'll need to account for any losses, the number of hours daylight, angle and position of the solar panels. This makes things very complicated but generally, a simplified formula will give adequate results for an estimate.

    Yearly electricity output = (1153 x 0.8 x Power of solar panels)/1000
    For our example: yearly electricity output = (1153 x 0.8 x 4000 W)/1000 = 3690 kWh
  3. That's it. You've estimated your yearly energy produced by your solar panels.
    In my example, I'd estimate my solar panel array to generate 3690 kWh of electricity per year. 

Estimating the cost saving of a solar array

So now we know how much energy your solar panels are likely to produce, how much will this affect your bills? The following calculations will show you. The cost of electricity is likely to increase annually so the savings will likely be larger as the years go on.

Do you have a battery for storing electricity generated by your solar panels? If the answer is yes then follow these calculations:

  1. Determine how much your electricity costs per kWh
    If you have a single rate (night and day are charged at the same amount), then take the average of your tier 1 and tier 2 rate.
    If you have a different night and day tariff then we'll assume you'll use half of your electricity at night rate and you should add your tier 1 and tier 2 rates together and divide by 2, then add your night rate and again divide by 2.
  2. Estimate your savings
    We have previously calculated our yearly power output and now we also have our electricity rate. All we have to do now is multiply both together to get your savings. As you have a battery, you'll most likely be using up all of the electricity generated by the solar panels. 

If you do not have a battery for storing electricity generated by your solar panels then use the following calculations: 

  1. Determine how much your electricity costs per kWh
    Take the average of your day tier 1 and 2 rates if you have a different night and day rate. If you only have a single rate then take the average of your tier 1 and tier 2 rates. 
    For my example, my tier 1 rate is 22.455 p/kWh and the tier 2 rate is 10.431 p/kWh giving an average of 16.443 p/kWh.
  2. Estimate your savings
    As you don't have a battery, you won't be able to use all of the electricity generated. At night, when your demand is highest, you'll be using electricity from the grid. During the day, your demand will be much lower than what your solar panels are generating. In an average year, I'd estimate you'd be using 35% of the electricity generated by the solar panels. Therefore multiply the yearly power output by 35% and your electricity rate. In our example this means 3690 kWh 35% x 16.443 p/kWh giving 21236 pence or about £212 per year.

Estimating the feed-in tariffs

Feed-in tariffs (FIT's) will only be available to those owning their own solar panels and if the solar panels are installed by an MCS certificated solar panel installer. Unfortunately the FIT's are not available if you have free solar panels installed. Feed-in tariffs are index linked so your FIT tariff will increase year after year in line with inflation.

  1. Determine the FIT rate that applies to you
    For systems completed between 15 July 2009 and 31 March 2012, the FIT's in the table will apply. The rates will decrease each year for new entrants to the scheme. You can check the current FIT tariffs here (non-referral link). FIT's are garanteed for 25 years at the level of entree to the scheme.
    FIT tariffs(55548)

    For our example, the solar PV was a 4 kW retrofit system. From the table we can see this give a FIT tariff of 43.3 p/kWh for 25 years.
  2. Determine the FIT income produced by your solar panels
    To determine the FIT income from your solar panels, simply multiply the yearly output by the FIT tariff. For our example, this becomes 3690 kWh x 43.3 p/kWh giving £1598.

Export of solar electricity to the grid

The current value of electricity exported to the grid is 3 p/kWh. It is possible to come to a different agreement with your energy provider and get a higher rate. If you have free solar panels, you will have to check your agreement to determine whether you'll be receiving the export income or whether the installer will receive it.

In our example, 3690 kWh x 3 p/kWh gives £111 per year. However, not all of the energy generated will be exported. If you don't have a battery, you'll most likely be exporting 75% of your yearly electricity output. In our example this would be £83. If you do have a battery, you are most likely to use more electricity than your solar system generates and wouldn't be exporting any electricity back into the grid.


If you are interested in knowing more about solar panels then why not read my article on Free solar panels to generate electricity for your home.



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