Free solar panel discussion

juliusceasor

Cardew wrote: »

'He could have invested that in a long term Building Society account at 5%(4% after tax). So in the first year he would make £708.80 in interest. The next year £737.15 etc etc. So he will lose about £700 over 2 years and his 'losses will be ever greater year on year.

And again you forget to add in inflation. at 4.8% meaning he will not have earn't £737.15
However his FIT payment has gone up by 4.8% why do you have selective mathematics, for bias?

Cardew

juliusceasor wrote: »

And again you forget to add in inflation. at 4.8% meaning he will not have earn't £737.15
However his FIT payment has gone up by 4.8% why do you have selective mathematics, for bias?

What is the relevance of inflation to this scenario?

He will have earned £737.15 in interest in that year, and the panels will have produced £364 income in that year.

Obviously in real terms the value of both of those sums is reduced by the inflation rate.

Are you seriously suggesting that the £737.15 is worth less than the £364 at the end of the year.

You appear to want to apply an inflation correction to one side of the equation(interest) and not the other(income)

Case A - invest £15000 in a BS and after x years(the break-even point) it is worth, say £20,000.

Case B - invest £15000 in PV panels and invest the monies saved(FITs, etc) and after the same x years it is worth the same £20,000.

Now what does it matter if inflation has been 2% over those years or 100% - both schemes have their £20,000 which are worth the same in real terms.

Instead of accusing me of bias - perhaps you should get your financial logic straightened out - it seems lacking!

Equaliser123

Cardew wrote: »

What is the relevance of inflation to this scenario?

He will have earned £737.15 in interest in that year, and the panels will have produced £364 income in that year.

Obviously in real terms the value of both of those sums is reduced by the inflation rate.

Are you seriously suggesting that the £737.15 is worth less than the £364 at the end of the year.

You appear to want to apply an inflation correction to one side of the equation(interest) and not the other(income)

Case A - invest £15000 in a BS and after x years(the break-even point) it is worth, say £20,000.

Case B - invest £15000 in PV panels and invest the monies saved(FITs, etc) and after the same x years it is worth the same £20,000.

Now what does it matter if inflation has been 2% over those years or 100% - both schemes have their £20,000 which are worth the same in real terms.

Instead of accusing me of bias - perhaps you should get your financial logic straightened out - it seems lacking!

It is a complex calculation, that's for sure.

Would be good if there was an ability to make a direct comparison. Will get back to you in 15 years with ACTUAL figures....

juliusceasor

What I am saying is you can't ignore inflation in your calculation, if you are receiving FIT payments on your capital invested index linked to inflation and tax free. One is depreciating at interest less tax less inflation, whilst one is not it, is inflation proofed and tax free.

Assuming £17k for a 4kW array at 41.3p/kw isolation in southwest at SI 997w/M2 south facing array.
3988kW/ year generation at £0.413 =£1647 Inflation linked return Plus savings against Electricity

so the array is more than doubling the interest earned or not in the savings account. In 10 years pays for itself and continues working for minimum 15 years and then some past when FIT payments cease and savings on electricity would still be made. -Assuming no changes in electricity demand etc.

Whereas the 17k in the interest bearing account is worth £15.68k after 10 years


Assuming over 25 years then the 17k in PV is worth £0 but has earn't £37.88k (allowing for simplified max degradation)

17k in the bank is now worth £13.9k

Cardew

Equaliser123 wrote: »

It is a complex calculation, that's for sure.

Would be good if there was an ability to make a direct comparison. Will get back to you in 15 years with ACTUAL figures....

The problem is there are so many unknown factors - interest rates, inflation rates, maintenance costs, Government interference etc it is impossible to predict with any accuracy when break-even will occur.

There is little doubt that if everything stays the same, it is reasonable to assume that roughly half way through(give or take a year or two) the 25 year period that FITs are payable, the PV investment will break-even and then it will be all profit.

However we tend to be seduced by the headline figures of 8% or 9% return; and we are not comparing like with like. As said above, money in a BS is available - it ain't sitting on your roof.

I wonder how many takers there would be if you were offered the opportunity to invest £15,000 and it would be locked away and in 12 years or so you would get it all back, and then start to enjoy some serious income from that investment.

Cardew

juliusceasor wrote: »

What I am saying is you can't ignore inflation in your calculation, if you are receiving FIT payments on your capital invested index linked to inflation and tax free. One is depreciating at interest less tax less inflation, whilst one is not it, is inflation proofed and tax free.

Assuming £17k for a 4kW array at 41.3p/kw isolation in southwest at SI 997w/M2 south facing array.
3988kW/ year generation at £0.413 =£1647 Inflation linked return Plus savings against Electricity

so the array is more than doubling the interest earned or not in the savings account. In 10 years pays for itself and continues working for minimum 15 years and then some past when FIT payments cease and savings on electricity would still be made. -Assuming no changes in electricity demand etc.

Whereas the 17k in the interest bearing account is worth £15.68k after 10 years


Assuming over 25 years then the 17k in PV is worth £0 but has earn't £37.88k (allowing for simplified max degradation)

17k in the bank is now worth £13.9k

Have you read what I wrote?

You can ignore the effect of inflation in the exercise to calculate the break-even point - which is what was asked. Inflation has no relevance

You really need to examine your logic.

After x years money in BS from investment + interest = £20,000

After x years money in BS from the inflation linked income from panels plus interest = £20,000

At that point what does it matter what the inflation rate has been over the years - both sets of £20,000 are worth the same.

There is no point in you obfuscating. I wasn't talking about 8/10/12 years; I was making the point that at the break even point(I called it x years) the accrued sum from both 'investments' is the same.

So how does inflation affect anything? If one sum is only worth £y in real terms after taking inflation into account, the other is worth the same £y.

Surely that is common sense!

More to the point where is the bias?

Nang

Hang on Guys!!

No Fits, I took the Fits out remember, because the article / blog / link was discussing what the system could generate without being propped up by the subsidies, and i.e what it really was worth..

Nang wrote: »

Lets say we take Max's array on my site (cos it has the most figures, almost a year), and took away the FITS and just paid him 11 pence (typical figure) for what he generated / used.

Cardew

Nang wrote: »

Hang on Guys!!

No Fits, I took the Fits out remember, because the article / blog / link was discussing what the system could generate without being propped up by the subsidies, and i.e what it really was worth..

Exactly!

Although you could of course argue that even to sell the generated output at 11p/kWh involves an element of subsidy; albeit not as generous as FITs;)

LILLYBET

Someone way back asked about Storage Heaters! Can they be set to store electricity during daylight hours instead of having E7? That way I would pay virtually nothing for electricity with 12 panels on my roof.

Cardew

LILLYBET wrote: »

Someone way back asked about Storage Heaters! Can they be set to store electricity during daylight hours instead of having E7? That way I would pay virtually nothing for electricity with 12 panels on my roof.

When you need to use storage heaters, i.e. winter the output of the panels is at it lowest, often zero for the whole day. The power generated, even on a good day, would not be sufficient to charge one storage heater. It would be the electrical equivalent of trying to fill a bath with an unreliable water pistol!!!!

A futher problem would be that if you tried what you suggest, 90% of the electricity(sometimes 100%) would come from the mains for which you would pay full price.