Solar #10: 12 month ROI Sept 2025 (100% with a smart meter)

 

Introduction:

The smart meter was fixed in Sept 2024 and has now been in operation for 12 months...

…so now we have full 12 months on Octopus Flux tariff and the inverter/battery schedule has been somewhat optimised for this tariff.

 

So what return are we getting?

 

I have used the same ROI calculation methodology as in my previous post Solar#13:12 months ROI

Octopus Flux Tariff

 

This changed each quarter during the period.

 

	Period	Oct-Dec 24	Jan-Mar 25	Apr-Jun 25	Jul-Sep 25
Buy 'Peak' (p/kWh)	4pm to 7pm	35.017	35.498	39.103	39.103
Buy 'Day' (p/kWh)	Outside peak & flux	25.012	25.355	27.931	27.931
Buy 'Flux' (p/kWh)	2am to 5am	15.007	15.213	16.758	16.758
Standing charge		49.983	49.983	49.623	47.341
Sell 'Peak' (p/kWh)	4pm to 7pm	26.197	26.557	29.254	29.254
Sell 'Day' (p/kWh)	Outside peak & flux	12.871	13.047	10.333	10.333
Sell 'Flux' (p/kWh)	2am to 5am	4.593	4.656	4.656	4.656

 

Baseline Tariff: "Flexible Octopus" (what I would have paid without solar)

	Oct-Dec 24	Jan-Mar 25	Apr-Jun 25	Jul-Sep 25
Buy (p)	23.49	24.15	26.65	26.65
Standing charge (p)	0.476	0.476	0.4789	0.4789

 

Schedule:

This was fixed through the year except for:

 

• One charge parameter - %age charge at the 2am to 5am cheap rate. See section below on weather and seasonal parameter adjustments.
• Discharge duration - see section below.

 

I adjusted these a few times over the year:

 

• AC 1 Charge  Upper SOC% Limit: 100% in winter, 20% in high summer (start and end times of 2am to 5am were fixed)
• Discharge 1 setting, Discharge 2 Setting - Start Time and End Time  (Lower SOC% Limit was fixed at 4% to avoid disabling the battery - see section below on 'Discharge Duration') - total discharge time between 30mins (winter) and 90mins (summer) of discharge

 

Unfortunately GivEnergy do not provide a manual that describes how these charging parameters function. In summary:

• Outside of charging and discharging I used ECO mode
• The battery was set to use the full range from 4% to 100% and to charge and discharge at the maximum rate.

 

Weather and Seasonal Parameter Adjustments:

With the Octopus Flux tariff it is important to set the overnight/cheap rate charge %age based on the next day's expected solar generation:

 

Why?

If you charge too much at cheap rate:

If you fully charge the battery at the cheap rate and sun shines you can end up exporting to the grid during the day time rate, you have in effect bought electricity 15p/kW/h lost around 10% in the battery and the re-sold at 13p/kWh

If you don't charge enough at cheap rate:

If you do not charge your battery fully at cheap rate ahead of a gloomy day and so end up with <100% charge at the start of the peak rate you miss the chance to export ie you could have bought for 15p/kWh, lost around 10% in the battery and then sold for 27p/kWh

 

In other words it is worth getting the level of overnight charging right based on the forecast for the next day.

 

Unfortunately, while the GE inverter does include a solar generation forecast in the cloud app this is not integrated with the scheduling function. I tried 2 approaches:

• Manual adjustment each evening of the "AC Charge 1 Upper SOC% Limit" parameter. For a predicted gloomy next day this should be 100% and for a sunny summer day this could be just 20% (just enough to power the house from 5am through to the decent solar production, say, ~9am in summer)
• Seasonal adjustment: just keep an eye on  the battery charge at 4pm
• if this is frequently more than 100% then the cheap rate charge should be reduced toward a minimum of (in my case 20%)
• If this is frequently  below 100% then increase charge at night toward 100%

After a few attempts at the daily manual method I gave up - it was just too time consuming and error prone (eg me adjusting the wrong parameter or the weather forecast being incorrect). I settled on the seasonal approach with:

• Winter: 100% charge at night
• Spring (around the spring equinox on 21st March) decrease to 60%
• Around May decrease to 20%
• Around autumn equinox (21st Sept) increase to 60%
• Around November increase to 100%

While this could probably be optimised, I used this for around 11 months and it seemed to work reasonably well and did not require too much effort.

 

Discharge Duration:

The GivEnergy systems behaves counterintuitively and makes it impossible to get a robust, optimum discharge schedule for Octopus Flux. 

The issue is what the inverter/battery does on discharge when the "Lower SOC %Limit" is reached. Consider these situations:

1. At 4pm the battery is fully charged, we are out during the entire peak rate with a fairly steady 300W is being consumed by the house
2. After a gloomy winter day, despite, a full charge the night before, the battery is at 50% charge by 4pm and we now are cooking lasagna in the electric oven and various other electrical devices, say 1.5 kW average consumption.
3. The same gloomy winter day and 50% charge at 4pm. We are out and come back at 6pm and stuff needs doing (dishwasher, oven, ironing) - we can easily max out the 3kW of the battery output.

When I was first attempting the schedule the inverter/battery I had assumed it worked like this:

 

My assumption for discharge state logic:  when end time or lower %SOC is met it returns to ECO

 

There is no manual and this operation seems intuitive and logical to me!

 

This would allow a series of, say, 9 x 20min discharge periods with progressively lower %SOC limits. If this were the case then in situation (a) the battery would progressively discharge through peak rate. However, in cases (b) and (c) the 1st few discharge periods would be skipped as they would be at the lower SOC% limit and then jump straight back to ECO mode. This would be very simple and robust to both the weather/SOC% at 4pm and also to in house consumption during the 4pm to 7pm peak rate period.

 

Unfortunately this mode of operation is just my dream. I have discovered by experiment (and confirmed with GivEnergy) that the operation is like this:

 

Actual discharge state logic:  if the lower %SOC is met then the battery is disabled before returning to ECO mode at the end  of the discharge period

 

What this means, is that, if I set the lower %SOC limit to anything above 4%, then I risk disabling the battery at peak rate - exactly what I don't want.

 

The answer (& it is not a good answer) is to do time based scheduling. One thing in our favour is the Octopus Flux tariff does help with robustness to some extent:

• If we have charge remaining at 7pm and use this in the house then we save importing at 25p/kWh
• If we had a more aggressive discharge schedule and exported this electricity at peak rate, then we would have been paid 26.197p/kWh

Ie, while it is slightly better to export the electricity at peak rate, it is super-important to have enough battery capacity to last through to the end of peak rate AND, even if we are away for the night we will use ~300W for 7hours before cheap rate starts (~2.1kWh), so not too much of an issue to use some remaining charge after peak rate. We just want the battery to be at or close to 4% by 2am so that we can buy as much as possible at the 15p/kWh cheap rate for the next day.

 

Summary: when setting up time based discharges then the discharge slot(s) should be biased to the end of the peak rate period and the level of discharge can leave up to ~26% (2.1kW/9.5kW + 4%) in the battery for late evening consumption, after 7pm, without significant penalty.

 

Quarterly Costs

The figures below are calculated from my Octopus bills.

 

I have then calculated what my costs would have been without solar and on the Flexible Octopus Tariff. For this I have assumed 10.18kWh consumption per day (as previous post)

 

Result

 

	Oct-Dec 24	Jan-Mar 25	Apr-Jun 25	Jul-Sep 25	Total
Estimated home consumption without solar (kWh)	936.4	916.0	926.2	936.4	3,715.0
Actual import with solar (kWh)	1,233.7	1,205.9	551.1	682.8	3,673.5
Actual export with solar (kWh)	529.4	781.5	1,743.6	1,221.1	4,275.6
Estimated cost without solar and on Octopus Flexible (£)	£280	£277	£305	£294	£1,156
Actual cost with solar on Octopus Flux (£)	£124	£98	£-160	£-75	£-13
Return in £'s	£156	£180	£465	£369	£1,169

 

Return as a paybackperiod: 11.7 years, but this is not a very useful figure. More useful is theequivalent return that I would get from a pension fund - around 7.9% return (see Solar#13: 12 months ROI from May 2025 for methodology).

 

The annual return has improved from 6 months earlier (6.6% to 7.9%) - this is to be expected as the smart meter has now worked for a whole 12 months and the period April through May 2025 was remarkably sunny…

…I will keep tracking this and see how we get on next year.

 

Note on Scheduling For Octopus Flux

The April 25 rates have made a subtle difference to previous rates:

 

Charge Battery Too Much at Cheap Rate:

• On a sunny day you end up exporting during the day
• Pre-April 2025: buy at 15p/kWh, lose 10% in the battery and sell at 13p/kWh: 3.3p loss for each kWh of charging that ends up adding to a solar export during the day
• Post-April 2025: buy at 17p/kWh, lose 10% in the battery and sell at 10p/kWh: 7.5p  loss for each kWh of charging that ends up leading to a solar export during the day

Charge Battery Too Little at Cheap Rate

•  Alternatively, on a gloomy day, if you do not charge your battery enough at cheap rate and so end up with <100% charge at the start of the peak rate you miss the chance to export:
• Pre-April 2025: buy at 15p/kWh, lose 10% in the battery and sell at 26p/kWh: 8.6p profit that you could have got from each missing kWh of charge
• Post-April 2025: buy at 17p/kWh, lose 10% in the battery and sell at 29p/kWh: 9.6p  profit that you could have got from each missing kWh of charge

In other words, for our system, before April 2025 it was best to be biased towards fully charging the battery. Only in the summer was it worth thinking about reducing the overnight charge to gain 3.3p/kWh as opposed to the risk of loss of 8.6p/kWh for not charging enough. In April 2025 this became more finely balanced at 7.5p/kWh loss for charging too much and 9.6p/kWh loss of profit for charging too little.

 

Improving on the Native GivEnergy Scheduling

My view is that the GivEnergy native scheduling capability is not optimised:

• Battery disabled on discharge
• No weather forecast feature to optimise cheap rate charging.

I have discussed both of these above. The latter point was made more challenging by the changes in the Octopus Flux tariff in April 2025, that makes the penalties (lost opportunity) for over and under charging about the same.

 

I am also considering buying an EV; EV tariffs add new opportunities and scheduling challenges that are further beyond the capabilities of GivEnergy native scheduling.

 

I see two possible solutions for this:

• Home Assistant installed on a single board computer; while there does not seem to be an off the shelf solution for this there are plenty of enthusiasts who seem to make a success of this approach.
• Wonder Watt: Cloud based scheduler for various inverters, including GivEnergy

Spoiler alert: I have recently got Wonder Watt up and running; once it has been running a little longer I will write up my experience and early results.

 

Conclusions:

In this same year I have had some better performing, but volatile, pension investments (eg S&P 500 tracker - 24.7% return in 2024) and some less volatile, but lower growth investments (eg Royal London Short-Term Money Market Fund - 4.56%)

 

but overall my pension investments have given a better return this year than the solar system (a bit more than 10%, after charges).

 

However, I am also told that a stock market downturn is expected. Perhaps the most comparable investment that I have is a UK government gilt that matures in 2034. If I keep this to maturity then the UK government guarantee that I will be repaid with an overall return of 4.79% per year. So with this as  a baseline the solar investment does look OK (but of course the risks and liquidity are not identical).

Solar#9: 12 months ROI

Introduction

I have discovered that calculating the Return on Investment (ROI) for a solar system is easier said than done.

 

The first question is how much electricity would I have used without a solar system? The GivEnergy app does give a home consumption figure, but in my view it overstates this as it clearly includes some losses from the solar inverter. I explain below my method for estimating what I would have paid without the solar system.

 

Then we need a comparison with an alternative investment - typical comparison parameters are listed below:

 

	Financial investments	Solar System Investment
Interest Rate	Most give an annual rate	This requires calculation - see below for my approach
Risk	Often give a premium for high risk (& often confuse risk with volatility)	Solar systems come with their own risk - see Solar#2: Solar Panels Investment Case for my view of these risks
Volatility	often give a premium for high volatility	My view is that volatility is low, but I will need to wait a few years to have data to demonstrate this.
Liquidity	Good liquidity often gets a lower rate of return	As discussed in Solar#2: Solar Panels Investment Case, this is poor.
Tax	There are a range of tax incentives (eg in the UK with SIPPs and ISAs)	For UK domestic solar system, the savings on a utility bill are not taxed (May-25)

 

Often a solar investment analysis gives ROI as 'payback time' - I will discuss if this is a reasonable approach.

 

Health Warning:  this post is just my views on investments and is not intended as investment advice.

 

But first - how much have we saved in the first 12 months?

 

How many £s have we saved by having our solar system installed?

 

This was harder to work out that I would have thought. It is easy to see our electricity bill for 12 months:

• Imported electricity: £819 (3888kWh)
• Exported electricity: -£765 (3891kWh); I used the "-" to show that we were 'paid' by Octopus

So the net electricity bill was £54 (ie a net cost to us over the year). I will repeat this analysis in September when our smart meter will have been working for 12 months (I hope - see post SmartMeter #3: My Smart Meter Journey Part 2). My suspicion is that this will show a lower net cost for 12 months (and perhaps even negative ie Octopus pay us!).

 

But what would our consumption have been (kWh) without the solar system and what would be the charge (£) be for this consumption? I used the same methodology as for the post InterimROI Figures - 1st 6 months:

• I assumed that we would have used 10.18kWh/day*
• I used the rate quoted by Octopus when I asked for the regular (flat) tariff each quarter (standing charge and price per kWh)
• I added 5% VAT onto this calculation
• This came to £1,107 - my estimate for what we would have paid without a solar system.

 

So the total saving, over the period 1st April 2024 to 31st March 2025 was:

 

£1,107 - £54 = £1,053

 

*This is 3,715kWh/year, the average consumption for a few years before the solar system was installed when our electricity consumption was pretty stable. This is  a little less that the home consumption given by the GivEnergy App for the same period (3,967kWh - see post Solar#8: 12 Months Review), as the home consumption includes losses from the inverter that are not shown (as opposed to losses from the battery that can be calculated from the numbers given by the GivEnergy app)

 

Payback Time - an Absurd Example.

Our investment (excluding the new roof) was £13,647 and this has earnt us £1,053 in the last year. If I assume that this payback goes up with inflation (ie the cost of electricity rises with inflation) at 2.5%/year, then we will have paid back £13,647 during year 12.

 

However, my view is that this type of analysis has limited value.

 

If our objective was simply to get our money back then a building society would be a better place to keep our money - we can have our money back at any time that we like, eg you might quote payback as "1 day" with a building society.

 

However, our objective is to make a profit from our investment. We understand that it is a long term investment and that there is only a limited ability to get the original capital invested back (even if we sell our house then this is not certain - see post Solar#2:Solar Panels Investment Case). While the investment in solar does give us a warm fuzzy feeling of helping the environment, we do want it to be reasonably profitable as a primary objective.

 

Comparing Investments

So a more reasonable (& usual) comparison between investments is interest rate. Business investments will typically look at Net Present Value (NPV) or Internal Rate ofReturn (IRR) - in effect what interest rate would we need to get the same return over the same period. We can do something similar/simpler here - what rate of interest would we need to earn if we invested the money (eg in an ISA) so that we match the return we get with a solar system.

 

How I have Calculated the Equivalent Rate of Return

I want to understand the %age rate of return that I need from a financial product that will match a solar system. For this case I will assume that the returns of the financial product are also tax free (eg a UK ISA or SIPP)

 

I set up two columns in a spreadsheet:

1. Invest £13,647 in a solar system & this saves £1,053/year. I have assumed that:
1. The saving increases by inflation at 2.5% each year
2. At year #12 the battery and inverter breakdown and that I invest a further £5,050 in replacements and their installation.
3. The solar system ceases to function/has £zero value at 25years
2. Invest £13,647 in a <financial product>:
1. I use this investment to pay the additional electricity bill each year (ie the saving that I get with the solar system)
2. At year #12 I add £5,050 into the investment fund (ie the amount I assumed is required to repair/replace the inverter & battery at year #12
3. The investment grows at a fixed annual %age rate that gives it £zero value at 25 year.
4. I assume that there is no tax to pay on this interest (eg a UK ISA or SIPP).

 

By trial and error I set the %age return on the <financial product> so that the value at 25 years £zero.

 

This gives a return of 6.6% for the <financial product> to match the solar system ROI/savings.

 

Discussion

I have most of my pension invested in a SIPP in various funds and bonds. My sense is that 6.6% is in the spectrum of long term returns that I might expect elsewhere, eg

 

• low risk gilts UK 0.875% government bond, maturing in 2029, I calculate a yield of 4.6% to
• A more sporty indexed fund based on the US S&P 500, where I calculate an average 13.3%/yr over the last 10 years.

 

Both of these have their downsides, eg the S&P 500 has been quite volatile in the early months of the new US presidency in 2025 (some might say that it had the 'yips') and while the gilt is low risk if I hold it to maturity in 2029, if I want to cash it in earlier then the market decides our return.

 

The risk for solar is different. It is not impacted by the stock market nor the vagaries of the UK gilt market, but if we had to sell our house (eg due to a new job, ill-health or death) then we would likely lose much of the capital invested. In my view, our solar investment adds more diversity to our investment risk (& the literature says that this is good)  and has a reasonable, mid-range, rate of return.

 

Other Comments:

While there is some effort involved in setting up and managing a pension/SIPP, for me, the effort involved in installing a solar system and then learning how to operate it efficiently was far greater. 

 

On the plus side the solar system does give us a the warm and fuzzy feeling of helping the environment and with the battery addon has me feeling that we am doing our bit to minimise peak demand and so reducing the need for new grid and power station infrastructure.

 

Is it Possible to Split out the ROI from the Battery Vs the Solar Panels?

It is reasonably easy to get a 1st pass estimate from the GivEnergy app. If I had the same system, but no battery then I would have 3 energy figures for the year:

 

Solar only Energy flow	Estimate from solar with battery data	My estimate of Energy for the last 12 months
Solar to Home	Solar to Home	1153kWh
Solar to Grid	Solar to Grid + Solar to Battery	3355kWh
Grid to Home	Grid to Home + Battery to Home	2814kWh

 

Note: there are some errors in this:

• The above assumes the GivEnergy ECO mode and so may not be true during the Octopus Flux peak rates when the battery is discharging (eg in the summer when we are still generating solar power in  the evening).
• While the calculation does remove the battery round trip losses, it maybe that a solar only inverter would have different losses that a solar + battery hybrid inverter.

 

I can also convert this to £'s using the Octopus flat rate tariff - again this is an estimate as I do not have the tariff costs recorded for all quarters:

• Solar to Grid: 15p/kWh (source: Octopus website 14 May 25 https://octopus.energy/smart/outgoing/)
• Grid to Home: average of 24p/kWh and a standing charge of 47p/day plus 5% VAT (source averages of figures that I recorded over the 4 quarters)
• Savings from 'Solar to Home' calculated as Grid to Home above

 

Note: there are some additional errors here:

• I do not have perfect records of Octopus flat rate tariffs for all quarters

 

This gives the following:

	Energy (kWh)	Energy Cost (£) (ie what I would expect to see on an Octopus bill)	Saving (£)	Energy Cost(£) with no solar
Generation to home	1153		+£287	+£287
Generation to grid	3355	-£503	+£503
Grid to Home	2814	+£882		+£882
Total		£379	£790	£1,169

 

However, given all the errors in this calculation I am pleased that the estimated bill, with no solar comes within £62 (6%) of the £1,107 from my estimate above (derived from average consumption prior to the installation of our solar system). My assumption is that much of this error is down to inverter losses that I have not been able to derive from the data provided by the GivEnergy app.

 

I pro-rated this error across solar and battery savings, so that the solar only system saving reduces from £790 to £748.

 

So, in summary, my estimate of the split between ROI of battery and ROI of the solar panels and inverter is:

 

	1st year saving	Initial investment	Assumed repair cost at year #12	Assumed capital value at year #25	%age equivalent pension annual growth (after charges)
Battery + solar	£1,053	£13,647	£5,050	£0	6.6%
Solar only	£748	£10,047	£1,450	£0	7.3%
Battery add on	£305	£3,600	£3,600	£0	4.8%

 

Note: As well as the errors noted above, there are further errors here:

• Repair costs at year #12 may be high for the battery (I used the full addon at installation cost and I understand that battery prices are likely to come down)
• The initial investment for a solar only system may be high - I would not need a fancy hybrid inverter capable of supporting a battery.
• This still factors in a 6 month period where our smart meter was only intermittently functioning and so does not include the full benefit of the battery - this should raise both the ROI of the 'Battery + Solar' but will have no impact on the Solar only line and, so, a disproportionate impact on the 'Battery Add On' line. I hope to correct this error in October with a full 12 months of a working smart meter - see post Smart Meter #3: My Smart Meter Journey Part 2)
• Over the first 6 months of use I was still some experimenting/fine tuning and making errors in the scheduling.

 

Discussion: Battery & Solar ROI Split

Initially it surprised me that the battery addon ROI is, in effect, dragging down the system ROI, ie from a pure ROI perspective, based on this 1st 12 months of operation, it would be better to have bought a solar only system with no battery.

 

I can see two reasons for this result:

• The mid-life 'repair' cost of the battery is proportionately much higher. This all depends on battery performance over 25 years, but if I do need a new battery at 12 years, and battery prices have not reduced (which they might do), then this makes sense.
• The non-functioning smart meter meant that we were not fully charging the battery last summer - buying energy from the grid and then re-selling it makes no sense on a flat rate. So I do expect the £1,053 ('Solar + Battery saving') number to increase a little in October, an I expect that this would mostly transfer to the  'Battery Add on' saving/ROI  - we will see!

 

Based on the last point, only a £60 additional saving would raise the battery add on ROI from 4.8% to above 7.25%, so I suspect that any concern that the battery ROI is not 'pulling its weight' is premature.

 

I also have another theory, that value of a battery storage will increase over time:

• More solar installations will mean lower prices for (sunny) daytime electricity.
• Installing electric (heat pump) heating means that we will want to consume more electricity when the sun is not shining (evening/winter), so buying at cheap rates becomes more important...

...just a theory, but maybe we will be extending our battery capacity in the future.