FITs for income

40_and_2

noncom wrote: »

Except that you've stated you have to borrow half the initial capital, so there'll be interest to pay on that. And the other half which you don't need to borrow, you could otherwise invest somewhere else to get a decent return. Both of these, as well as the write off of the initial capital have to be taken out of the "profit".

Also, the FITs have been designed to give somewhere around 8-11%pa return on investment. You are calculating nearer 17%, which makes me wonder where those figures are coming from.

Thanks noncom, you talk a lot of sense. The bigger the turbine the more efficient they are, therefore, it is i think, worth stretching my finances in order to produce more, maybe not depending on the cost of borrowing that is something i need to examine more closely.

The deal maker or breaker is the tax situation on profits.

You talk of other investments, where though do you get a decent return these days? Been messing about with various things over the years and never really got anywhere, would property be a better investment in your opinion?

Ken68

Would have thought ideal for farmers, where the capital and running costs could be writtten off against the tax.

http://www.scotsman.com/business/Farmers-urged-to-check-if.6203106.jp

noncom_2

Don't get me wrong. I (unlike some others on this forum) do think it represents a good investment - in my case, Solar PV rather than Wind.

However, for my own purposes, I am comparing it with the "investment" of paying a similar amount off my mortgage. Given a lot of assumptions, then over the very long term, the FIT option works out financially better, and with the benefit of having done something I consider to be ethically worthwhile anyway.

However, it is a VERY long-term, VERY illiquid investment, and there are many risk factors which could sway the balance of the benefits one way or the other, including RPI inflation, specific energy-price inflation, tax status of FITs, mortgage rates, the effect on the house sale price if I move within the 25yr term etc etc.

On balance, I have decided to go for it, but it is not the complete no-brainer that some people will try to make out.

Good luck with your decisions.

Cardew

noncom wrote: »

However, it is a VERY long-term, VERY illiquid investment, and there are many risk factors which could sway the balance of the benefits one way or the other, including RPI inflation, specific energy-price inflation, tax status of FITs, mortgage rates, the effect on the house sale price if I move within the 25yr term etc etc.

On balance, I have decided to go for it, but it is not the complete no-brainer that some people will try to make out.

Couldn't agree more with the whole post and indeed I have reservations; but I would put it no stronger than 'reservations' in the case of Solar PV. However there clearly is an argument for and against.

I suspect at some point an investor will start to show a profit. The jury is out on how long it will take to reach that point as there are so many unknowns as indicated in the quote above; plus of course potential repair costs.

I wonder how many people would invest in other schemes where they were told that they should break even and start to make a profit in, say, 12 or 15 years?

noncom_2

I would agree with that Cardew, but I think the difference here is that many people (myself included) don't just view this as a financial investment.

In all honesty, before FITs installing Solar PV was so much of a money-loser for an individual that my "green conscience" wasn't strong enough to take that financial hit for doing "the right thing". Now with the FITs, it appears to be an investment of a similar benefit to paying money off my mortgage, maybe a bit better in the long term, maybe a bit worse, but reasonably comparable. Therefore, since installing panels will do something for the environment as well, I choose to take that line instead of the mortgage reduction. Any additional benefit from the FITs will help me to afford switching from brown electricity to a green supplier.

[Deleted User]

40 & 2,

This is my area of expertise (in so much that I have one).

I am NOT allied to any particular manufacturer or seller, but provide consultancy advice to clients.

I have spent the past 2 years researching the viability of small scale wind (that's not micro wind i.e the small turbines you install on buildings, which do not work), but the scale of turbine you are looking at c. 5kW plus all the way up to 500kW.

I have also looked at the financial viability and have established the following:

1) A good wind turbine in a good wind site can show some very very serious returns.

What is a good wind turbine? Well that is simple, its one that works, delivers on its power output promises, isn't too noisy etc etc.

You mention a 15kW turbine and immediately I am concerned. Are you looking at a Proven turbine. If so, there is only one thing to say

DONT

Please take a look at this forum, http://www.greenbuildingforum.co.uk and do a search on Proven 15 turbines, which will explain why.

If you are looking at a 6kW Proven turbine, then its fine. They are a good(ish) product although, they still fail to deliver on their power curve by a large margin.

Even more important DO NOT buy any VAWT (thats a vertical axis wind turbine). THEY DO NOT DELIVER ANYTHING CLOSE TO THEIR PREDICTED POWER CURVES - no ifs or buts on this one.

2) Wind speed is critical.

5 m/s annual mean wind speed is an absolute must, if you want the returns to stack up and even then, you will still be looking at c. 10 years plus for payback on all but the best turbines available.

If however you have c. 6 m/s or even 7 m/s (which would be possible for Scotland) then YES you can make payback in c. 6 years (even less sometimes). However, siting is everything, so you need to avoid placement next to trees, houses, bushes etc.

Hub height is important. Wind sheer (which is the increase of wind speed with height) plays a big factor.

A 15m (to hub turbine) VS a 18m turbine might see just a 3% increase in wind speed (from wind sheer), BUT because of the cubic relationship of power in the wind, that 3% increase can produce a 10% increase in the amount of energy you develop.

3) Swept Area - there is no substitute for this. Big blades (rotors) capture more wind. Its very simple and anybody who tells you differently is trying to pull the wool over your eyes.

4) Only turbines used for domestic use are exempt from TAX on the income.

If you can use energy generated from your turbine at home or to offset other energy you are using, then in effect this part (or offset) is giving you a partial tax break on that offset), but the generated element and elements that you sell back to the grid will be taxable.

If you can set up as a business though you might be able to offset some of the purchase of the turbine against Capital Allowances or Annual Investment Allowances. CA will allow you to right off 20% on a year on year depreciating basis and AIA will allow you to spend up to £100k on plant and machinery (wind turbines qualify) and you can claim 100%.

However on the basis you are stating you are a 40% tax payer this sounds like a private purchase (the question is, as already raised in this post), if you are only going for export to grid only then you are unlikely to qualify as domestic user.

SO YES< YOU MUST SPEAK TO AN ACCOUNTANT.

Lastly

For all you wind doubters,

I have seen ACTUAL installations of small scale wind turbines, generating more than 35,000 kWh per annum, which when linked to FITs (with indexation) will give payback in LESS THAN 5 years.

But, not all wind turbines are created equaly and YOU MUST DO YOUR RESEARCH.

Before you ask 40 & 2 - Sorry no, I'm not going to recommend a particular turbine to you. Choosing a turbine, is based on the siting and as I don't know your site I'm not going to recommend and as previously stated on other threads, I like to keep my independence.

Good luck and do your research and then you should make the right choice.

40_and_2

freddix, wow, that was some post.

You clearly know what your talking about. As far as I can see there are 3 contenders: the proven 15 (now 35), westwind 20 and the Gaia 11.

I have read bad stuff about the proven but they appear?? to be getting the faults ironed out

The westwind seems ok but expensive and as over 15kw FITs reduced

The Gaia seems to get a lot of good press but I have been warned that my location is too windy !!

Average wind speed 6.5m/s plus and occasional storms of over 100mph

As far as I can see my site is fine clear of obstructions etc

Go on,go on, go on recommend me a turbine

Joking aside I will need to consult an accountant and find out more about 3 phase connections etc without spending a fortune. I would appreciate impartial advise as it seems to be very hard to come by.

daytona600_2

40_and_2 wrote: »

Hi all
I am considering investing in a wind turbine, probably a 15kw. I want to try and do something positive for the environment but also see it as a good way of making money over the next 20yrs guaranteed.

My question is would i be charged 40% tax on profits as I am a 40% tax payer? I would not be using the power generated as my location is not suitable
I have read that 40% payers will "score" but don't understand why!!
I guess I need to speak to an accountant:eek:

15kwp wind turbine will be very expensive and need planning
permission , best bet pv system with higher tarriffs
and no planning £30-35,000 for pv system roof/ground
£ 40,000 - £ 45,000 installed

40_and_2

Horses for courses. My location favours wind power as it is windy and not very sunny most of the time.

Cardew

daytona600 wrote: »

15kwp wind turbine will be very expensive and need planning
permission , best bet pv system with higher tarriffs
and no planning £30-35,000 for pv system roof/ground
£ 40,000 - £ 45,000 installed

Don't forget the high rate of FIT(41.3p/kWh) for PV is limited to installations of 4kW maximum - which will cost around £20,000