My solar PV first year payback calculation

Mcfi5dhc · 25 July 2009 at 4:45PM

I've had 8 x 180w Sharp Solar PV panels on my roof for one year now.
I see a lot of questions from people asking if they are worth it, so I think it is time I created a post from someone who actually has them.

Initial Cost: £7950
Grant: £2500
Remainder to be paid by me: £5450

Units generated in one year: 1186
Units predicted by installers: 1130
Units used by house: 3870
% covered by solar panels: 30%
Amount saved off bill (assuming each unit is 15p): £177.90
Payback assuming everything stays the same: 30.6 years
Warranty on panels: 25 years
Life expectancy (albeit not all covered by warranty): 60 years

With my current setup, my meter spins backwards during daylight (assuming I'm not in the shower, or ironing/hoovering)
However, I have applied for Scottish Powers solar tariff where I get 28p for every unit I export.
This changes the numbers as follows:

Units generated in one year: 1186
% exported: 50% (estimated)
Scottish Power payment: £166.04
Amount saved off bill (for my own use of panels): £88.95
Annual saving: £254.99
Payback assuming everything stays the same: 21.37 years

From April next year, I will qualify for the UK Feed-in-tariff.
This pays 36.5 for every unit I generate (whether I use it or not)
WARNING - not all technologies qualify for the 36.5p - don't assume that if you generate electricity by another method, you get such a high payment

Units generated in one year: 1186
Feed-in-tariff: £432.89
Amount saved off bill (assuming each unit is 15p): £177.90
(You'll still be saving any electricity off your bill as in the first estimates)
Annual saving: £610.79
Payback assuming everything stays the same: 8.92 years

People often ask about maintenance on PV solar..
It is nil, absolutely nil.
Bird poo goes on, bird poo washed off by rain.
They get dusty, they get clean in the rain again.
I've not attempted to clean them, but if I really wanted to, a hosepipe would easily be able to get them from the ground.
I hope this answers any financial related questions regarding my solar PV panels, but if you have any more, please send them through.

chedder789 · 25 July 2009 at 7:04PM

Thanks for all the effort you put into this. I am sure it will help many people, even I am now tempted by solar power!

Cardew · 25 July 2009 at 7:56PM

Welcome to the forum and thanks for some interesting figures.

Are you living in Scotland?

Firstly it really is refreshing to get some accurate figures for generated electricity instead of the wild claims made by some of the cowboys who operate in the industry. 1,186kWh generated in a year is entirely believable.

I would like to make some comments on the economics.

I believe in England the maximum grant for solar instalations is £400. So assuming you could get a similar setup to yours for the same price it would cost the householder £7,550.

For £7550 invested long term, interest rates of 5% gross are easily available so that would realise £377.50 or £302 nett. That of course is compounded year on year - and with every indication that interest rates might rise in the future.

I note that you value the cost of your generated units at 15p/kWh in your savings calculations. In most of UK a figure of 10p, or less. is more realistic. - you will of course have to pay for your Tier 1 units regardless of the electricity you generate, so you can only consider tier 2 rates.

However you are quite correct about the newly announced Feed in Tariff making a huge difference. £433 pa will start paying off the capital costs.

However in any calculation of pay back time, you cannot ignore the lost interest on the capital invested.

Whilst the panels themselves might have a 25 year guarantee, I would question the validity of a guarantee for the complete system and in my experience of firms offering these lengthy guarantees, they simply cease trading every few years and start up again using a new name, and your guarantee is worthless.

It is also my understanding that panels do need cleaning to keep them operating at peak efficiency - especially in an urban environment.

The above seems very pessimistic, but IMO in strict money saving terms solar is still not a viable proposition - but the new Feed-in tariffs have brought it much closer.

yakky58 · 26 July 2009 at 10:27AM

Have you applied to Ofgem as a microgenerator? If you do and register each month the generation and export figures you will be enabled to receive ROC's (Renewable Obligation Certificates) which you can then sell and receive additional income. For example, my generation was > 2MW this year and I received 2x ROC which I immediately traded to SSE via the OFGEM website. With the solar genaration over the summer + the income from ROC's my summer bills have been zero! Yes no cost whatsoever.

Look up OFGEM microgenerators and ask for the application pack. It akes about 6 weeks to set up but after that its about 10 minutes a month to enter the figures.

By the way it is good to clean the panels 2x a year say March and September. It does make a difference to output.

Cardew · 26 July 2009 at 11:45AM

I thought that Feed in tariffs replaced ROCs?

Marsh_Samphire · 26 July 2009 at 12:18PM

Been looking into this myself and I think it depends on your energy company and tariff. Some schemes pay you for all the units you generate (even the ones you use) and they keep the ROCs, others just pay you for the units you export to the grid.

dane-katie · 26 July 2009 at 2:33PM

My partner works in renewables. Just showed him this.

The pay back is not as good as other methods of renewable energy for instance

Use an Air source heating unit, runs all your central heating, fitting costs between £3800 and £9000 for a Standard domestic System.

It can run your heating and hot water at 65 degrees C throughout the year.

Pay back is much lower than a solar panel.

As you would have no Gas bill to pay or other fuel, only electric.

Personally Air source is much more efficient than solar heating, and the pay back is much quicker

Mcfi5dhc · 26 July 2009 at 3:38PM

Hi - I've not quite grapsed out to quote people yet, so here's the answers to some of the questions:

I live in North Wales, near the border with England

As far as interest on saving goes, I didn't actually have the money up front, I financed it using a 0% 15 month balance transfer from one card to another, where the other card was used to pay for it. So for my personal payback, I need to add £120 for the balance transfer charge (I think it was £120 anyway).

When I was thinking about them, I wasn't really interested in what would financially be the best route to making money, and I am still not - however, my calculations should show, that you can at least recoup your money, in a fairly decent time.

The warranty is a manufactors warranty - I would consider it to be an excellent and trustworthy warrantee (they are the world leaders in solar panel manufacturing). The installers warranty is less (5 years from memory - I'll dig out the paperwork soon).

I think we'll have to agree to disagree about maintenance, as I was advised they don't need any, and looking at them today they are absolutely gleeming. They have Pilkington self cleaning glass on them, and we do get a lot of rain here, so I think they will be OK. But then again, I've only had them a year. They were hitting their Kilo Watt Peak performance in the really hot spell a couple of weeks ago, so mine are fine anyway.

In a dusty place (eg Mexico, or Arab countries) - cleaning would be absolutely essential, but, even if I were to clean them, this would only involve a hosepipe wash costing pennies, so I would still disregard this cost in apayback calculation.

Scottish Power take my ROCS, but I take note of the Ofgem info. I also believe that the feed in tariff will replace ROCS, hopefully April 2010.

My solar panels generate electric, not heat, so the payback times are not comparable - IMO, solar heat is useful if you don't want to use gas (for environmental reasons for example), but probably not a cost saving addition to your house.

I hope these answers help, keep the questions coming though. Thank you to everyone so far for replying.

yakky58 · 26 July 2009 at 5:01PM

SSE pay me for all units generated. I tell them every quarter what I generated. They deduct that from the bill at the same rate as I am charged. The ROCs come via the Ofgem submission.

If feed in tariff replaces ROCs but at a higher rate that seems fine by me.

Cleaning does improve the output for me... 2x a year in no big hassle.

Cardew · 26 July 2009 at 6:28PM

dane-katie wrote: »

My partner works in renewables. Just showed him this.

The pay back is not as good as other methods of renewable energy for instance

Use an Air source heating unit, runs all your central heating, fitting costs between £3800 and £9000 for a Standard domestic System.

It can run your heating and hot water at 65 degrees C throughout the year.

Pay back is much lower than a solar panel.

As you would have no Gas bill to pay or other fuel, only electric.

Personally Air source is much more efficient than solar heating, and the pay back is much quicker

Not sure I understand the point you are making.

Much as Air Source Heat Pumps are excellent(there are several threads on MSE about them) they are not renewable energy. i.e. they don't generate electricity but merely use mains electricity very efficiently.

They also will not run heating and hot water at 65C.

Photo_Stylus · 27 July 2009 at 3:27AM

Cat amongst the pigeons, How much interest would you earn on the initial £5450?

Did the installers say it could take 30 years to payback or did they say less than 10?

Did watchdog do a report on a company saying their system will pay for itself in 3 years?

Good idea but it needs to be cheap enough to pay for itself inside 5 years really.

My solar PV first year payback calculation

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