Is renewable energy worth it? ROI for businesses explained

Renewable energy should no longer be viewed as a sustainability expense.

Today, many businesses see it as a long-term investment that can reduce energy costs, improve resilience and generate a tangible financial return.

Like any other function of a business, renewable energy for business solutions are expected to deliver a clear return on investment (ROI) and are increasingly able to do so.

The fundamental principle is that you invest in the technology upfront and reap the cost savings through cheap, homegrown energy over years to come.

But how long will it take for your business to make its money back on a renewable energy investment?

In this article:

• Learn about the return on investment in renewable energy technology.
• Understand how renewable energy affects business costs.
• Discover how you can maximise your renewable energy ROI.

What does renewable energy ROI mean?

In the past, the idea of making a genuine return on your renewable energy investment was virtually unheard of.

Renewables were mainly implemented by green-minded individuals determined to do their bit for the environment without truly expecting to make their money back.

Not anymore.

The cost of renewable technology has fallen drastically over the last decade due to progressive innovation, supply chain growth and economies of scale.

This means when businesses invest in renewable technology they have a clearer path to making their money back through cheaper energy produced by the sun, wind or other methods.

What factors affect renewable energy ROI?

There are two aspects to making a full return on investment: the size of the initial outlay and the effectiveness of your usage after installation.

Upfront costs

• Installation costs: The cost of infrastructure, equipment and labour to install renewable technology will set the bar for your ROI.
• Site suitability: Your specific site will determine the scale and cost of renewable technology that can be installed.
• Available grants and incentives: You can reduce the initial outlay by taking advantage of grants, incentives and tax reliefs associated with renewable energy installation.
• Exports: Sites that generate more energy than their total usage can sell units to the national grid in a process known as renewable energy exporting to continue chipping away at the initial outlay.
• Maintenance: Renewable technologies require different levels of maintenance. Solar panels don’t have any moving parts but may still require cleaning and check-ups. Wind turbines require a little more attention.

Ongoing savings

• Electricity prices: Once installed, every unit of energy generated is a unit of energy you won’t buy from an external supplier. If grid electricity prices increase over time, the savings made from every unit of energy generated also increases.
• Energy consumption: The more of your traditional supply you replace with homegrown energy, the more you will benefit and start to deliver a return on investment.

How long is a typical renewable energy payback period?

Each of the factors above will affect the length of the payback period and how long you can expect to wait for a return on investment.

Using a rudimentary example, if the initial investment costs £10,000 to install your renewable energy solution and it saves you £1,000 per year after maintenance, the ROI is 10 years.

You can see how the initial cost and ongoing rate of savings will look different for every business.

While every installation is different, many commercial solar projects achieve payback within six to ten years, depending on energy usage, system size and electricity prices.

Our Solar for All Calculator shows how much your business could save annually by installing solar panels.

Six ways to maximise your renewable energy ROI

• Reduce the investment: You can speed up your return on investment by lowering the investment itself. This doesn’t mean you should add fewer solar panels or pick the cheapest possible turbine, it means finding the right options for your specific situation.
• Explore grants and funding schemes: There are ways to access financial relief through a variety of national funding schemes and tax breaks, plus local grants. For example, battery storage systems are VAT-free until the end of March 2027. Check with your local authority for more details.
• Maximise self-consumption: If you have a product everyone else needs, it’s tempting to sell it. Don’t. Well, not at first. Before considering exports, maximise your homegrown energy usage. Every unit of energy you sell is a unit you may have to buy for a higher price from a supplier. Again, make the most of what you have.
• Utilise battery storage: Investing in battery storage is an efficient way to store excess energy when the weather conditions are in your favour - and deploy it when the sun’s not shining or wind isn’t blowing. Battery storage means you can continue to use renewable energy on those dark, still nights, or sell it to the grid.
• Find a dynamic tariff: Changing how your business uses energy in the first place can help deliver a quicker return on investment for your battery storage. If you still rely on the grid for some of your power supply, you can use cheaper time-of-use tariffs to charge your battery overnight and deploy during the day. Your battery should pay for itself over time.
• Don’t skip maintenance: It’s tempting to think you’ve already spent enough putting the panels on your roof, you don’t want to spend any more money on them. However, proper maintenance can extend the life of a solar panel beyond their typical 25-year guarantee. Each extra year of efficiency from your equipment is an extra year of maximising your return on investment.

This article continues our Renewable Energy Basics series. Now read...

How we can help

Renewable energy is helping businesses across the UK, but it's tricky to know where to start.

We get it. We can support you.

Troo exists to help businesses like yours make sense of their energy needs, simplify complex information and make smart decisions that lead to real change and reduced costs.

We are not here to sell you a quick fix. We're here to understand what matters to you, offer clear advice, and take ownership of the hard parts, so energy becomes one less thing to worry about.

Book a free energy health check today to explore renewable energy options for your business.