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Once we have calculated the potential output of a system we can of course then calculate the financial rewards, or payback of that system and this is quite straightforward.

There are 3 elements that contribute to the income generated by a solar PV system:  

1. Feed in tariff (FIT) payments

• This is the amount you are paid for every kwh of electricity that is generated by your system. The FIT payments are made directly to you by your energy supplier and are tax free. They are also linked to the retail price index (RPI) which means that they will go up every year in line with inflation. These payments are made purely on the meter reading that shows the total amount of electricity generated in that quarter. 

2. Energy saving

• By generating free electricity you will no longer need to use as much electricity from your existing supplier as you previously did. The electricity generated by your solar PV panels is consumed first before being topped up with supply from the national grid. Bearing in mind that solar PV panels only generate electricity in the daytime, it may make sense to start using appliances such as the washing machine and dishwasher during daylight hours rather than at night if you want to get the maximum saving out of your PV system. 

3. Export payments

• Any electricity that your solar PV system generates but which you don’t use gets exported automatically to the national grid. You get paid a minimum of 3p per kwh for this.

Each household will have different patterns of electricity usage, but the Energy Savings Trust suggests that in terms of working out the value of the energy saving and export portions, each domestic solar PV system will be deemed to export 50% of its output whilst the other 50% gets used on site.

(link to Energy savings trust and/or DECC relevant pages)

Example based on a 4kwp system mounted on a South facing roof:

An optimised 4kwp system mounted in an ideal location will produce in excess of 3400kwh of electricity in a year.

This means that the owner of the system will be paid FIT payments for 3400 kwh, and using the assumption that 50% of the output will be exported to the grid while 50% is consumed on site, 1700kwh of electricity savings will be made and 1700kwh of electricity will be exported to the national grid at a rate of 3p per kwh.