How commercial solar fits into your energy strategy.
British manufacturers are no strangers to volatile energy costs. After years of improving efficiency, upgrading machinery and negotiating competitive contracts, many have already made significant savings.
But there’s only so much electricity a manufacturer can stop using without it affecting production.
With some of the highest industrial electricity prices in Europe, years of market volatility and rising non-commodity charges, the pressure to manage costs isn’t going away for British businesses.
Mark Coyle, Services Sales Director at Good Energy, explores how on-site solar and battery storage could help manufacturers build long-term resilience – as well as four things to consider before making the investment.
1.Understand what’s driving high energy costs in the manufacturing sector
Electricity bills are made up of more than the cost of the power consumed.
Alongside wholesale electricity costs, manufacturers pay non-commodity charges covering network infrastructure, system balancing and government policy costs. Some vary with consumption, while others are fixed or linked to a site’s agreed supply capacity.
Generating electricity on-site can help manufacturers reduce the amount they need to purchase from the grid, cutting certain costs and reducing exposure to future electricity price increases. But it won’t reduce every element of your bill.
By understanding which charges can be reduced, manufacturers can build a clearer business case for solar and make confident, informed investment decisions.
“Manufacturers have spent years squeezing more efficiency out of their operations. Solar offers an opportunity to go one step further – reducing the cost of the electricity they still need to use.” Mark Coyle, Services Sales Director, Good Energy
2. Solar or solar and battery: What works for your site?
For manufacturers that have already invested heavily in energy efficiency, generating electricity on-site offers a valuable opportunity to reduce long-term costs.
Commercial solar is particularly well suited to manufacturing. With energy-intensive processes often running throughout the day, businesses can use more of the power they generate, reducing grid electricity purchases and exposure to future price increases.
Battery storage can offer further savings, particularly for sites operating evening or overnight shifts. But even without overnight demand, stored solar electricity could help power morning start-up operations, reducing peak demand from the grid.
Whether battery storage stacks up financially depends on your site’s consumption patterns, electricity tariff and investment costs. Available roof or ground space matters too, alongside plans to expand production or electrify heating and fleets, which could increase future electricity demand.
At Good Energy, we use detailed consumption data and site assessments to model potential generation, savings and payback periods. This helps manufacturers understand the right mix of solar and storage for their business, backed by the numbers.
Case study: GW Martin
After years of investing in energy efficiency, precision manufacturer GW Martin took the next step with solar. Starting with a 50 kW installation in 2013, the business has expanded its system in phases.
The results:
- 240 kW total solar capacity
- £75,000 annual energy bill savings
- 30% of electricity generated on-sit3
3. When is the right time to invest?
Every year without on-site solar means another year of buying grid electricity that solar could otherwise have supplied. Over time, those missed savings can add up considerably.
But timing also depends on your longer-term plans. Whether you own or lease your premises, how long you expect to stay and any upcoming building upgrades or changes in ownership can all influence when it makes sense to invest.
When weighing up solar against other investments, it’s worth looking beyond the payback period to the Internal Rate of Return (IRR). This measures the annualised return, accounting for when costs and savings occur, helping manufacturers compare solar with other opportunities, such as investing in machinery or keeping capital in the bank.
It’s also worth exploring opportunities to increase the return on investment. Depending on the site and commercial arrangements, these could include revenue from battery storage providing services to the electricity market, better matching on-site generation with demand, or potential carbon credit opportunities.
Case study: Modelling the return on investment for solar
Good Energy modelled the financial impact of installing solar at a large manufacturing site, comparing the investment against continuing to purchase all electricity from the grid.
The results:
- 1,050 kWp solar installation
- £212,000 potential first-year electricity savings
- 2.8 years estimated payback period
- £3.63 million potential net benefit over 20 years
4. Knowing how to finance your solar investment
Even with a strong business case, finding the upfront capital for solar isn’t always straightforward. But there are different ways to fund an installation.
Alongside outright purchase, manufacturers can explore financing arrangements or a Power Purchase Agreement (PPA), where a third party funds the installation, and your business purchases the electricity generated at a lower price.
These options can reduce upfront capital requirements, although the long-term savings and contractual commitments will differ.
Comparing the options can help manufacturers find a funding approach that works for their budgets and delivers the best long-term financial return.
Making the right long-term energy decision
The manufacturers we speak to at Good Energy already know their energy consumption inside out. They’ve spent years finding ways to improve efficiency and reduce costs.
The next question is what makes commercial sense over the longer term. That means understanding their investment plans, their site and what solar could realistically deliver.
At Good Energy, we believe the best investment decisions start with a clear, credible business case. One that’s built around your business, backed by the numbers and designed to deliver lasting value.
Goodenergy.co.uk/business | [email protected]
Author: Mark Coyle, Services Sales Director at Good Energy.
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