Optimal Solar and Battery Allocation (Sezibwa)

[!info] Conservative, bank-facing basis (revised after independent review) Turnkey installed capex and real day-to-day weather (seeded variable-irradiance year). These are the numbers a lender should see.

Headline

This is the third and most complete case: instead of fixing the array or the battery and asking "is it worth it", it sweepsSweeping both dimensions at(solar oncesize and battery capacity) to find the allocation with the best 20-year return.return Thegives answera is clear andclear, slightly counterintuitive: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.

• No feed-in (today): about 5 kWp on the existing 8.9 kWh battery. 20-yearTurnkey NPVcapex about 13.4M6.3M UGX, payback about 1.62.2 years, IRR about 45 percent, 20-year NPV about 10.8M UGX.
• With feed-in (if net metering arrives): about 8 kWp on the same battery. 20-yearCapex about 10.1M, payback about 2.1 years, IRR about 48 percent, NPV about 21.9M UGX19.6M.
• In both cases,both, buying a second or third battery unit lowers NPV.

Method

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

Assumptions (all adjustable):

Assumption	Value
Horizon	20 years
Battery aging	usable capacity fades linearly to 50 percent by year 20 (conservative, per Aaron)
Panel aging	0.5 percent per year
Weather	seeded variable-irradiance year (real day-to-day spread)
Discount rate	15 percent (commercial)also shown at 22 percent)
Solar capex	about 990,0001.26M UGX per kWp installed (from the Rincol catalog build)turnkey
Extra battery capex	5,568,0005.568M UGX per added SR-SE10B (8.9 kWh usable)
Existing inverter + 1 battery	sunk (9.4M already bought, 9.4M)spent)
Feed-in	two scenarios: none (surplus spills)base), or surplus sold at 343 UGX per UGX/kWh

Result

The greenest cells sit on the bottom row, which is the battery NFE already owns. Moving up (more battery) turns the map redder at every solar size. Moving right (more solar) raises NPV until spillspill, or,or keeps rising with feed-in.

Investment metrics (15 percent cost of capital)

rising.

Allocation	Upfront	Payback	ROI (20-yr cumulative)	IRR	NPV at 15%	NPV at 22%
5 kWp (no feed-in, keepstoday)	6.3M	2.2 yr	723 percent	45 percent	10.8M	6.0M
8 kWp (if net metering arrives)	10.1M	2.1 yr	811 percent	48 percent	19.6M	11.3M

Findings

1. Do not buy more battery for return. At every solar size, adding a battery unit lowers 20-year NPV; two extra units go negative. The battery capex is not recovered within the horizon.
2. The reason is threefold:Why: battery is expensive per kWh (5.57M for 8.9 kWh is about 626,000 per kWh) versus solar; the conservative aging assumption (fade to 50 percent) erodes theits battery's contribution over the horizon;contribution; and the 15 percent discount rate weights the faded later years lightly.
3. Solar income is resilient to battery aging. Battery-only savings halve over 20 years, butyears; the solar cases decline onlyfar about a fifth,less, because daytime solar self-consumption does not depend on the battery at all. Only the evening-shift slice fades.battery.
4. Feed-in changes the size, not the shape. If net metering arrives, the optimum shifts to more solar (about 8 kWp) because surplus is sold rather than spilled, but the answer is still to spend on panels, not battery.

Investment metrics (15 percent cost of capital)

Allocation	Upfront	Payback	ROI	IRR	20-yr NPV
5 kWp (no feed-in, today)	5.0M	1.6 yr	1,019 percent	62 percent	13.4M
8 kWp (if net metering arrives)	7.9M	1.6 yr	1,065 percent	62 percent	21.9M

Metrics at a 15 percent cost of capital (the assumed financing rate). Payback is the time to recover the upfront cost; ROI is the total lifetime return on that cost; IRR is the project's effective annual return, and a lender funds a project when its IRR comfortably exceeds the loan rate; NPV is the wealth created expressed in today's money. Solar stays strongly positive across any realistic rate (10 to 24 percent) because the payback is so short; the discount rate mainly affects the battery-expansion case.

The one important caveat for the bank case

This model prices energy savings only. It does not price the battery's real job, which is backup and reliability during grid outages. So the honest framing for a lenderlender: is:

• Solarsolar (and the existing battery) is the return story.story, Finance itfinanced on the payback and NPV above.
above;
• Additionaladditional battery, if wanted, is a resilience decision (more hours of autonomy during outages), not a return decision. It should be justified separately, not folded into the ROI case, or the numbers look weak.

case.

Recommendation

Fund about 5 kWp of solar on the existing battery now (about 5M6.3M UGX,turnkey, payback about 1.62.2 years)years, IRR about 45 percent). Keep the case robust to policy by noting that ifIf net metering arrives, scaling to about 8 kWp becomes the better allocation. Treat any extra battery as reliability capex with its own justification, not as part of the return.

Related

Companion cases: Battery Arbitrage Economic Case (battery alone, no solar) and Solar Plus Battery Economic Case (the fixed 4 kWp case on the existing battery). Both now include the same battery-aging treatment used here.justification.

For how cheap battery must get before expanding it pays (Aaron's cheaper-battery question),pays, see Battery Price Break-Even. Companion cases: Battery Arbitrage (alone) and Solar Plus Battery.