SELF-CONSUMPTION
Solar self-consumption business plan: the returns
Practical guide · ~9 min read
In self-consumption, the value of a photovoltaic project comes first not from a sale of electricity, but from a saving: the electricity produced and consumed on site avoids buying it from the grid. The business plan is therefore built differently from a full-export project.
1. Value: avoided cost + sale of surplus
Two flows make up the revenue:
- Avoided cost: each kWh self-consumed × the avoided electricity purchase price (the largest item).
- Sale of surplus: the injected electricity not consumed, valued at a feed-in tariff or on the market.
A rise (or volatility) in the electricity price mechanically improves the value of the avoided cost — a key parameter to test in sensitivity.
2. The ratios that drive everything
- Self-consumption rate: share of generation consumed on site.
- Self-production rate: share of needs covered by solar.
They depend on the match between generation and consumption (hourly profiles) and can be improved with storage (BESS).
3. Individual vs collective
In individual self-consumption, a single site produces and consumes. In collective self-consumption, several nearby consumers share the electricity via the grid according to an allocation key — the model must then split the flows between participants.
4. CAPEX, incentives and payback
The CAPEX (modules, inverters, installation) is the upfront investment; certain support schemes (self-consumption premium, surplus feed-in tariff) may apply under the conditions in force. The headline metric is the payback, complemented by IRR and NPV over the life.
5. Residential, commercial, industrial: three economics
The returns of self-consumption depend heavily on the consumption profile:
- Residential: consumption mostly in the morning and evening, little aligned with midday generation → moderate self-consumption rate without control or storage.
- Commercial (offices, retail): daytime consumption well correlated with solar generation → often the best self-consumption rate.
- Industrial: large volumes and sometimes lower purchase prices → the value of the avoided cost per kWh is lower, but scale compensates.
6. The levers of profitability
Three levers improve the business plan: sizing the installation as close as possible to needs (avoid over-producing a poorly valued surplus); shifting flexible loads (water heater, vehicle charging, processes) to align consumption with generation; and adding storage (BESS) when the purchase/resale price gap justifies it. To estimate a scenario, the ROI calculator gives a first order of magnitude (treating the selling price as the avoided cost).
FAQ
How do you compute the returns of self-consumption?
The main value is not a sale but a saving: each kWh self-consumed avoids buying electricity at the supplier's tariff (the "avoided cost"). You add the sale of the injected surplus. Returns depend mostly on the self-consumption rate and the avoided electricity price.
What is the difference between individual and collective self-consumption?
In individual self-consumption, the producer consumes its own generation. In collective self-consumption, several nearby consumers share the electricity of one installation via the grid, according to an allocation key — which changes how flows and revenue are modelled.
What is the self-consumption rate?
It is the share of generation consumed on site (vs injected). Together with the self-production rate (share of needs covered by solar), these are the two ratios that drive the value of a self-consumption project.
Does storage always improve returns?
Not systematically. A battery raises the self-consumption rate by shifting generation to the evening, but it adds CAPEX and degrades. It is profitable when the gap between the avoided purchase price and the surplus resale price is large enough to amortise its cost — to be checked case by case.
Payback or IRR for self-consumption?
Payback speaks well to decision-makers for an on-site project, but it ignores what happens afterwards. IRR and NPV over the whole life give a fuller view, especially if the avoided electricity price rises over time.
PUT IT INTO PRACTICE
Build this business plan in Wattvalio.
P50/P90 generation, offtake contracts (feed-in, PPA, merchant), debt, taxes, NAV valuation — from a single asset to the consolidated portfolio, with bankable figures.
Or estimate returns with the free calculator →Read also: Solar business plan · Storage (BESS)