How long do school solar panels take to pay back?

The sum

Simple payback is the installed cost divided by what the array is worth in a year. What it is worth is the electricity the school uses itself, valued at the price it would otherwise pay, plus the electricity it exports, valued at the export rate. The share used on site matters more than anything else, because a kilowatt-hour used on site is worth several times one exported.

The inputs, and where they come from

Three worked examples

A 50 kW primary school, no battery, using 55% on site. It generates about 43,750 kWh a year. The 24,063 kWh used on site are worth about £5,809 and the 19,687 kWh exported about £984 — £6,793 a year in all. At £50,000–£63,000, simple payback is about 7.4–9.3 years. If a small battery lifted on-site use to 65%, the value would rise to about £7,630 and payback to about 6.6–8.3 years, before the cost of the battery.

A 100 kW secondary school, using 70% on site. It generates about 87,500 kWh. The 61,250 kWh used on site are worth about £14,786 and the 26,250 kWh exported about £1,313 — £16,098 a year. At £100,000–£126,000, simple payback is about 6.2–7.8 years.

A 150 kW boarding school, using 85% on site. It generates about 131,250 kWh. The 111,562 kWh used on site are worth about £26,931 and the rest about £984 — £27,916 a year. At £150,000–£189,000, simple payback is about 5.4–6.8 years.

How much location matters

The same 100 kW secondary-school array pays back in about 5.9–7.4 years in London (920 kWh per kW) and about 6.7–8.5 years in Manchester (807 kWh per kW). The difference is real, but it is smaller than the difference between a school that uses most of its generation and one that exports half of it.

What shortens payback, and what lengthens it

• Shorter: a year-round load (boarding, a pool, wraparound care), a battery on a term-time site where the numbers support it, higher electricity prices, and competitive quotes.
• Longer: a high export share, shading, a north-facing or low-yield roof, roof repairs that have to be paid first, and a supply upgrade.
• Over the life of the panels: output falls slowly — a median of 0.5% a year in a widely cited review (Jordan and Kurtz, Progress in Photovoltaics, 2013) — and the inverter will usually need replacing at least once.

What about “cash-flow positive from year one”?

That phrase comes from advice built around an interest-free, savings-repaid Salix loan. There is no such loan for English schools, so a school paying from capital has a payback period like any other investment. A power purchase agreement is the route with no upfront cost: the school saves from the first day, but the saving is smaller than owning the panels, because it pays the PPA provider for every kilowatt-hour. See solar panels for schools grants for every funding route.