Free solar power system. Is it a scam?

Jon_Tiffany

zeupater wrote: »

Hi


Let's now analyse "esp. for making a quick profit". If you or I were to have a 4kWp system fitted it would like cost a nominal £15k, which is highly inflated by current high industry mark-ups in the UK. In more mature european markets the equivalent cost would be nearer to £10k, a level at which there is still a profit available for the installers, or they would simply not be doing it. Let us therefore assume that the 'true cost' of a system to a high volume installer is £7k-£8k for materials and a nominal £500 to fit, the resultant payback to scheme operators based on FiTs alone would be around 6.5 years, whilst the payback based on all factors to you or I would be, at best, 11 years ..... looks like they would be in profit very quickly at that rate of return, so definately "making a quick profit".

Regards

I think you have under estimated the costs of installing a system. Guys up on the roof, scaffolding, electrician, survey costs etc. I reckon these companies will get a pay back in around 8 to 9 years.

So a profit in around year 9 or 10. That's hardly a quick profit! Can you imagine going on dragons den with that proposition, no one would invest in that business!

Gizmosmum_2

Jon_Tiffany wrote: »

I think you have under estimated the costs of installing a system. Guys up on the roof, scaffolding, electrician, survey costs etc. I reckon these companies will get a pay back in around 8 to 9 years.

So a profit in around year 9 or 10. That's hardly a quick profit! Can you imagine going on dragons den with that proposition, no one would invest in that business!

Yep, cheapest you can buy the kit for before scaffold, admin, labour and marketing is 10.5k so there's no quick buck to be made. £500 fitting :rotfl:

Jon_Tiffany

Gizmosmum wrote: »

Yep, cheapest you can buy the kit for before scaffold, admin, labour and marketing is 10.5k so there's no quick buck to be made. £500 fitting :rotfl:

Exactly - the guy who did mine had to pay £500 just for the electrician!

K4blades

"they're simply taking advantage of a current loophole in existing legislation, however, they are actually utilising the same strategy as a confidence trickster would, that being offering a high return for little investment hence "a confidence game" could be argued to be applicable."

Are you mad.
ASG in this case have made a multi-million pound investment and brought on banks aswell, which isn't easy in the current climate. And they won't be in profit for quite a few years, as someone else said, go to the Dragons with that propostion you would be laughed at. And the home-owner takes NO financial risk.

And as for loopholes. What loopholes, did you write the legislation. The scheme was drawn up to kick start solar panel generation, irrespective of who the micro-generator is, not to specifically benefit home-owners. If one of the benefits of the scheme is that a local business has developed and hiring lots of people at the expense of the foreign owned EDF, et al, whats your problem.


On another note, just listened to Martin Lewis. Full of errors, maybe he should have researched his own site. However, he did get one thing right, he suggested that schemes such as ASG are a good option but stay clear of the schemes that involve a payment from the home-owner, with a possible profit in the future, ( a type of loan scheme).

zeupater

Jon_Tiffany wrote: »

Exactly - the guy who did mine had to pay £500 just for the electrician!

Hi Jon

The £500 fitting can be justified as being labour for three on site, say most installs are one per day, with a few being two per day (this is supported by posts on this thread), converting this to labour and including an overhead allowance would result in a recovery rate of between £40k & £50k avarage per man/year when you're busy (which the installers seem to be at the moment), which is not insubstantial if you are using you own installers (and probably scaffolders). Other supporting evidence is available on this and other forums which suggests that large organisations are sub contracting (or attempting to subcontract) installs at around the £500 mark. German installs are in the region of £10k and they are not a low cost labour market and they're not in business to make a loss ..........

I agree that 6.5 years is at the bottom end of the range, but if you consider the purchase volumes involved along with the use of cheaper brand far eastern panels at around £1.35/Wp, 4kWp of panels would cost around £5.5k, add the inverter and all the extras and stack this up agaist a FiT payment of £1300/Year (based on 3200kWh), then 6.5 years represents an £8500 installed cost and the two sides of the equation balance.

Of course, there is always an argument that there is a financing cost, but this also applies to individuals who invest. Also, regarding the tax position for companies operating these schemes, the start-up costs will be classified as capital investment and therefore be subject to capital investment tax allowances. You can also be quite confident in assuming that any potential 'paper' profits are ploughed back into capital items in order to minimise any corporation tax liabilities whilst the scheme grows ......

As a side issue, I'd love to see the capital asset depreciation model which these organisations would be using to write off the investment .... wonder if it's anywhere near 25 years ??? :rotfl:

Regards

Gizmosmum_2

K4blades wrote: »

"


On another note, just listened to Martin Lewis. Full of errors, maybe he should have researched his own site. However, he did get one thing right, he suggested that schemes such as ASG are a good option but stay clear of the schemes that involve a payment from the home-owner, with a possible profit in the future, ( a type of loan scheme).

I was dissappointed too - I thought we'd get a bit more of a steer from Martin rather than a regurgitation of the EST info. Was that Professor brought in towards the end a "mad" professor!!! Replacing the panels after 10 years - yeah that's why they have a 25 year, insurance backed guarantee, need cleaning and maintaining every couple of years - what for .... Gizmo, Professor from University of Life!

zeupater

K4blades wrote: »

"they're simply taking advantage of a current loophole in existing legislation, however, they are actually utilising the same strategy as a confidence trickster would, that being offering a high return for little investment hence "a confidence game" could be argued to be applicable."

Are you mad.
ASG in this case have made a multi-million pound investment and brought on banks aswell, which isn't easy in the current climate. And they won't be in profit for quite a few years, as someone else said, go to the Dragons with that propostion you would be laughed at. And the home-owner takes NO financial risk.

And as for loopholes. What loopholes, did you write the legislation. The scheme was drawn up to kick start solar panel generation, irrespective of who the micro-generator is, not to specifically benefit home-owners. If one of the benefits of the scheme is that a local business has developed and hiring lots of people at the expense of the foreign owned EDF, et al, whats your problem.


On another note, just listened to Martin Lewis. Full of errors, maybe he should have researched his own site. However, he did get one thing right, he suggested that schemes such as ASG are a good option but stay clear of the schemes that involve a payment from the home-owner, with a possible profit in the future, ( a type of loan scheme).

Hi

I have many friends who actually consider that I am a little mad and in the main I actually agree with them .....

Regarding .... "brought on banks aswell, which isn't easy in the current climate" ... the banks obviously see the great potential in the business model, very small operating costs and a great return which is obviously low risk ......

Regarding .... "The scheme was drawn up to kick start solar panel generation, irrespective of who the micro-generator is, not to specifically benefit home-owners" .... not actually correct as there are other schemes for large scale renewable investment such as windfarms etc. The FiT scheme was specifically designed to encourage individuals to take renewables on-board and the FiT payment was set at a level to recoup the initial investment, including finance costs, at a typical installed price to the consumer at a point in time. The loophole is that large organisations were not precluded from benefiting from the scheme within the wording of the legislation. I believe that this will be addressed at a point in time in the future and that any commercial organisation receiving payments from multiple microgeneration sites will be subjected to a different tariff scheme, thus closing the current loophole ....

Regards

Cardew

K4blades wrote: »

And as for loopholes. What loopholes, did you write the legislation. The scheme was drawn up to kick start solar panel generation, irrespective of who the micro-generator is, not to specifically benefit home-owners. If one of the benefits of the scheme is that a local business has developed and hiring lots of people at the expense of the foreign owned EDF, et al, whats your problem.

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Without dispute the scheme was 'drawn up to kick start solar panel generation'

However the scheme has a scale of subsidies that reduce progressively as the size of the PV system increases. Large scale commercial firms get a much lower subsidy.

The less than 4kWp stipulation for the highest FIT rate is clearly intended for individual houses.

By any measure ASG are a large scale commercial firm with thousands of 3.3kWp systems. If they had erected their thousands of panels on factory roofs in a brown field site, as a 'solar farm' the efficiencies are obvious.

Instead they have exploited a loophole where they erect thousands of systems on thousands of roofs and claim for all at the highest rate of FIT.

So we, the consumers, are directly paying a levy on our electricity consumption that goes straight to the coffers of a commercial firm. Please don't make an analogy along the lines of 'we all pay tax for schemes from which we gain no benefit'. This is different, we all pay money directly to a commercial firm who have found a way to exploit the system.

Now of course loads of other firms are going to cash in on this loophole.

I understand one MP is going to raise this issue after representations and personally I hope that they retrospectively reduce the FITs for these companies by treating their gross output from all systems as a single system.

Gizmosmum_2

I can't decide whether it was a deliberate loophole or not. I know that sounds odd but I talk fairly regularly with people in the industry and it seems they think that what Homesun ISIS and ASG were planning was acknwlodeged within the then labour government before the Fit came in.

Don't know what the Coalition are thinking but they've committed to being the greenest gov't yet and there are going to be thousands of jobs needing to be created to fill the gap left by the public sector. If ISIS etc stop doing what they are doing then individual punters aren't going to get the economies of scale and subsequent reuced panel costs and there's going to be a gap in green employment.

Roll on 20th October - at least we'll know what we're dealing with by then!

Larnsky

So what you're basically saying is if you get offered a free system and don't want to make the initial investment for the panels then you had better take it because at best the free systems will be around until April 2012.

I must be like hundreds of other people across the country, I love the thought of generating free/clean electricity, but for a number of reasons don't want to invest in the panels on my own now. If someone is offering to install the panels for free on my roof (which is doing nothing and never will do anything) then I see it as a good deal for me. As you correctly say I paying for it anyway in a levy on the bill so I might as well claim something from it, there's lots of other things that I pay for indirectly through taxes that I will never use or benefit from.