# Optimal Solar and Battery Allocation (Sezibwa)

> [!info] Conservative, bank-facing basis. Tariff: UEDCL Code 10.2 **Q3 2026** (666.5 / 562.1 / 429.7, configurable input). Turnkey capex, real weather. Reproducible from `nfe_solar_model.py`.

## Headline

Sweeping both dimensions (solar size and battery capacity) to find the best 20-year return gives a clear, slightly counterintuitive answer:

**The most business-optimal allocation is solar-heavy and battery-light. Put the money into panels on the battery already owned. Adding battery capacity lowers the return at today's battery price.**

- No feed-in (today): about **5 kWp** on the existing 8.9 kWh battery. Turnkey capex about **6.3M UGX**, **IRR about 42 percent**, simple payback about **2.3 years**, discounted payback about **3.1 years**, 20-year NPV about **9.8M at 15 percent**.
- With a usable export arrangement: about **8 kWp** on the same battery. Capex about **10.1M**, IRR about **46 percent**, NPV about **18.5M**. (This scenario assumes surplus is credited at **343 UGX/kWh** — a deliberately conservative, below-retail rate consistent with how net-metering credits typically pay; the real credit value under ERA's 2024 regulations is unconfirmed for this site.)
- In both, buying a second or third battery unit **lowers** NPV.

## Method

A 2-D sweep over solar (0 to 8 kWp) and battery (existing one unit, or plus one or two SR-SE10B units). For each combination the model runs the real load through 20 years and computes discounted savings minus turnkey capex.

| Assumption | Value |
| --- | --- |
| Tariff | UEDCL Code 10.2 Q3 2026 (configurable) |
| Horizon | 20 years |
| Battery aging | usable capacity fades linearly to 50 percent by year 20 |
| Weather | seeded variable-irradiance year |
| Discount rate | shown at 10 / 15 / 20 / 25 percent |
| Solar capex | about 1.26M UGX per kWp turnkey |
| Extra battery capex | 5.568M UGX per SR-SE10B (8.9 kWh usable) |
| Existing inverter + 1 battery | sunk (9.4M already spent) |

## Result

![20-year NPV over solar and battery](https://bookstack.nearlyfreeenergy.com/uploads/images/gallery/2026-08/XpSnpv-heatmap.png)

The greenest cells sit on the bottom row, the battery NFE already owns. Moving up (more battery) turns the map redder at every solar size.

## Investment metrics and sensitivity

NPV shown across discount rates so you can see which allocation survives expensive capital (metrics ranked NPV, IRR, discounted payback, simple payback, then cumulative ROI):

| Allocation | Capex | IRR | Simple / disc. payback | NPV @10% | @15% | @20% | @25% |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 5 kWp (no export, today) | 6.3M | 42% | 2.3 / 3.1 yr | 15.4M | 9.8M | 6.4M | 4.1M |
| 8 kWp (with usable export) | 10.1M | 46% | 2.1 / 2.8 yr | 28.5M | 18.5M | 12.3M | 8.2M |

Both survive a 25 percent cost of capital comfortably. (The undiscounted 20-year cumulative ROI is large, ~680 to 780 percent, but it is not a decision metric; NPV and IRR carry the case.)

## Findings

1. **Do not buy more battery for return.** At the 5 kWp anchor, adding even the first battery unit lowers 20-year NPV by about 2.3M UGX; a second and third are progressively more negative (about −6.6M and −11.5M). The battery capex is not recovered within the horizon at today's ~626,000 UGX/kWh.
2. **Solar income is resilient to battery aging;** battery-only savings halve over 20 years, the solar cases decline far less.
3. **Value, not penetration.** Beyond ~4 to 5 kWp, extra panels spill and returns diminish unless storage gets cheaper or export becomes usable.

## Battery replacement strategy

The model conservatively assumes the battery simply fades to 50 percent over 20 years. A real long-horizon plan should choose one of three strategies, and the economics differ:

- **Operate the original battery for all 20 years** (what the model assumes — the pessimistic bound; usable capacity, and so the evening-shift slice, keeps shrinking).
- **Replace once** when usable capacity hits a chosen threshold (say ~70 percent around year 10 to 12): restores capacity at the cost of a fresh battery, worth it only if battery prices have fallen (see the break-even case).
- **Augment gradually** by adding cells as load grows rather than replacing.

Importantly, the recommended allocation (solar-heavy, existing battery) is the least exposed to this: solar self-consumption does not depend on the battery, so battery replacement is a **reliability/backup** decision, not a driver of the solar return.

## The caveat for the bank case

This prices energy savings only. It does not price the battery's real job, backup and reliability during outages. Solar is the **return** story; additional battery is a **resilience** decision justified separately.

## Recommendation

Fund about **5 kWp of solar on the existing battery** now (about 6.3M turnkey, IRR about 42 percent). If a usable export arrangement materialises, scaling to about 8 kWp becomes better. For how cheap battery must get before expanding it pays, see [Battery Price Break-Even](https://bookstack.nearlyfreeenergy.com/link/139). Companion cases: [Battery Arbitrage](https://bookstack.nearlyfreeenergy.com/link/137), [Solar Plus Battery](https://bookstack.nearlyfreeenergy.com/link/136).