Self-consumption and payback
Simple payback from bill savings and SEG export
- where
- saving on bought-in electricity (£/yr)
- annual generation (kWh/yr)
- self-consumption fraction (%)
- import electricity price (p/kWh)
- SEG export income (£/yr)
- SEG export rate (p/kWh)
- total annual benefit (£/yr)
- simple payback (years)
- installed cost (£)
Explain this equation
Gives a simple payback period for a solar installation from bill savings and Smart Export Guarantee income.
Energy used on site saves buying it at the import price; energy exported earns the SEG rate. The fraction f splits the generation between the two. Both prices are in pence, so dividing by 100 gives pounds. The total benefit per year divided into the cost gives the years to pay back.
Payback is cost divided by yearly benefit.
Sense check: 3,500 kWh at 40% self-use, 27p import and 15p export gives about £378 + £315 = £693 a year; a £7,000 system pays back in about 10 years.
Watch out: simple payback ignores price changes, panel degradation, inverter replacement and the cost of money. Present it as a guide, not a promise.
A first-year estimate of the money a PV system saves and earns, and how many years it takes to pay back the installed cost.
Enter your values to see the result.
Good to know
Self-consumed energy saves the full import price; exported energy earns the Smart Export Guarantee rate, which each licensed supplier sets (it must be above zero). Use the customer's actual tariff and SEG offer. Generation and self-consumption come from the MCS estimate and MGD 003.
Common mistake
Valuing all generation at the import price, which ignores that exported units only earn the much lower SEG rate.
Limits
Simple payback: no price inflation, panel degradation, inverter replacement, finance cost or discounting. Not a financial forecast.
Sources
- Ofgem: Smart Export Guarantee (SEG) – licensed suppliers set their own export rates, which must be above zero
- MCS MGD 003 Issue 2.0 (April 2022): Determining the electrical self-consumption of domestic solar PV, with and without battery storage
- MCS solar PV performance estimate as submitted with a planning application (Camden): estimated annual output = kWp × Kk × SF; Kk from the MCS table; SF = 1 − 0.01 × shaded segments; shade circles for objects within 10 m
Results are calculations from the published methods and figures shown, and depend on the data you enter. Follow MCS standards, manufacturer data, BS 7671, the ENA connection rules and Building Regulations. System design and DNO applications need a competent, certified installer.