Sola profit time frame

csae

Cardew wrote: »

Interesting!

However I wonder how the economics stack up.

If you adopted that ploy(the 0.5kWp system) and say waited 2-3 years to top it up to 4kWp the panels hopefully will have reduced in price.

However:
A. New scaffolding required.

B. New inverter - presumably?

C. Loss of FITs, electricity exported and consumed in house.

D. You have also 'used up' 2-3 years of the 25 year period(it is the latter period where the system really reaps benefits)

If you 'don't have the funds available' I would have thought that the cost of borrowing the the money - say £10k - for a couple of years would be under £1k.

Weigh that cost of borrowing against lost income and costs shown above, and it would not be 'money saving' to adopt the suggested ploy.

Once again Cardew, 100 percent behind you in your thinking, but..
Not everyone can just borrow 10k over a couple of years, me included!

A recent enquiry from a potential customer was to the effect of the above, had some money coming to them in 3 years but wanted to be involved now, on an Eco-Concious level, aswell as a financial level.
The early adoption rates figured highly in their thinking.

Our purpose on a Solar PV level is let people make their own minds up, when someone asks me if they should have it or not, I open my arms and shrug my shoulders(well not exactly, but you get my point I hope) and say it's your money, your investment, your house, ultimately, it's your choice!. If somebody asks me for my opinion, I will always say currently it looks like a sound investment financially.

As an aside Cardew, your input on this thread has been invaluable, not just for me, as a supplier of installed systems, but as a sound, reasoned debater for others perhaps thinking of Microgenerating. You have at every turn offered up facts and figures for all your input and opinions, and at no stage have you back tracked or slanted, even after confirmation of the FITS were announced.

Having said that, you haven't done it alone, input from everyone has made it possible and made this a particularly valuable portal for people to learn and educate themselves on what is a large financial commitment.

So thanks to you all and keep up the good work!..:T

CSAE

P.S When I say this thread, I meant all threads Solar PV....Sorry

csae

zeupater wrote: »

Hi

I agree and expect to see very few PMs, but at least the idea of an eight year payback has been put into context.

Regarding the buy in prices for MCS installers being £11192.87 inc VAT, I have a couple of observations .....

Firstly, and correct me if I'm wrong, but the price quoted would include VAT at the standad rate of 17.5% and an MCS installation is VAT rated at 5% .... where is the 12.5% difference accounted for in the pricing as surely there is a tax rebate available to the MCS installer on the installation ??? ...... Secondly, the wholesale prices to the UK market are obviously well inflated at the moment when compared to european typical prices, this is fully supported by trade market price research (where the latest pricing shows an 8.4% reduction in european manufactured pv panels so far this year resulting in a typical wholesale buy price of €1.86/Wp which converts to £1.55/Wp, therefore 4kWp of panels would cost £6200. Throw an inverter, some brackets and metalwork, isolation switches, cabling along with a generation meter I'd be well surprised if the total net price would be any more than £8.5k in europe resulting in an average fully installed price which is less than the UK materials list price quoted, so it certainly looks like the UK wholesalers and many installers are currently 'making hay' ... (forgive the pun) ... 'while the sun shines' .........

Regards

Hi Zeu.

You would be correct in your thinking, it is a "Golden Goose" period and will remain so for a little while yet I'd expect. Once again, I will not muddy the waters, the prices are artificially high because of the FITS, once they reduce, so will the systems. (I am no Economist, but I am a cynic).

We charge our systems plus VAT@ 5%. We have to, and most will, because let's be honest, 12.5% on those figures is not an amount to be sniffed at and lose.

We all want cheap as possible, as soon as possible, but sometimes there is a period of investment to be regained,allbeit in part, and this is that period.

There isn't a huge profit in the scheme of things. A system will take on average 2.5 days to complete. Most Systems require 3 people, An experienced roofer always comes in Handy, small Rosemary clay tiles are a nightmare!, the scaffold, different areas command different rates.
Take into consideration other associated costs such as: Transport, PAYE and NI , Insurances, (Renewables Liabilty insurance is twice the cost of Normal) Training and contingency....There isn't loads left!.

I hope that goes someway to dispelling the Myths that everyone is earning 1k a day!

Many thanks CSAE:)

Cardew

csae wrote: »

Payback is indeed a very British thing, not exclusive to us Brits though.

A 15k car is a very good example, purely a status/impulsive purchase, which, let's be honest, we all need to have one at somepoint, whether it be a car,motorbike, jetski, boat, exotic holiday, and with such purchases we know there are hideous ROI's( or lack of), but we still do it.

Solar PV, in its present form, is an exception to the above, I agree is doesn't have the same buzz/feelgood factor like a motorbike would, but it is the only thing that will "earn" it's keep if you like.

At Present Solar PV doesn't have any "labels" attached to it, but it will do in the next few years.It will have the same effect as Mobile phones have had, all be it on a lesser scale because of the barrier to entry, namely the initial investment.

Cheers Csae...:)

Despite the compliments(for which I thank you) the analogy to a 15k car is not IMO appropriate.

We need/want a car for transport in the same manner as we want foreign holidays, flat screen TVs and any other commodity.

We don't need PV panels on our roof. Apart from those who get a 'nice warm Green glow' the whole point of fitting them on our roof is as an investment; and they should be discussed in that light - especially on a money saving forum.

The equation for most people is to keep £15k in an investment that can be realised, or spend the same sum bolting panels to the roof with the realistic expectation that in 10 to 15 years you have recouped your capital outlay and will start to make an attractive profit.

I did read that on average most people move home every 7 years - another consideration?

csae

Cardew wrote: »

Despite the compliments(for which I thank you) the analogy to a 15k car is not IMO appropriate.

We need/want a car for transport in the same manner as we want foreign holidays, flat screen TVs and any other commodity.
We don't need PV panels on our roof. Apart from those who get a 'nice warm Green glow' the whole point of fitting them on our roof is as an investment; and they should be discussed in that light - especially on a money saving forum.

The equation for most people is to keep £15k in an investment that can be realised, or spend the same sum bolting panels to the roof with the realistic expectation that in 10 to 15 years you have recouped your capital outlay and will start to make an attractive profit.

I did read that on average most people move home every 7 years - another consideration?

Cardew, Appreciate your reply.


You say that we don't need Solar PV on our roof,we don't, not as yet anyway, but in the same breath, we don't need any of the other things either.

However, you seem to be saying we need a 15k car for transport, of course I know the alternatives aren't practical, but they are there all the same. And the car makes it a whole lot easier, but we still don't need the car to function as a nation.But we have allowed to be a big player in our lives.

Electricity is a commodity that we buy too,but the difference being is that we do need that, and producing electricity has costs, huge costs, so why not be part of producing our own?
So the whole point of fitting them isn't solely about the financial investment, it can be for practical, security, awareness and financial reasons.

I understand that we are partaking in a Money saving forum, but surely we are allowed to deviate slightly so we can see a bigger picture?

Let's also remember that not everyone who may want to install Solar PV, is in the position you keep reiterating that there seems to be a choice between having a system installed or living!

I wouldn't expect anyone having only 15k to spare to have one. Life costs and throws us unexpecteds when we least want them, so putting all their eggs in the Solar PV basket,without a financial safety net wouldn't be the cutest move they could make.

With regards moving house, a big factor i'd expect.If you and your neighbour both put your houses up for sale at the same point, he had PV installed and you didn't, I know which house would still be for sale long after your neighbours had gone!!

That last bit was a little joke...I expect people that wish to move will make finding a Solar pv installed house a priority and will command higher prices because of it too.

Thanks CSAE:)

zeupater

csae wrote: »

Hi Zeu.

You would be correct in your thinking, it is a "Golden Goose" period and will remain so for a little while yet I'd expect. Once again, I will not muddy the waters, the prices are artificially high because of the FITS, once they reduce, so will the systems. (I am no Economist, but I am a cynic).

We charge our systems plus VAT@ 5%. We have to, and most will, because let's be honest, 12.5% on those figures is not an amount to be sniffed at and lose.

We all want cheap as possible, as soon as possible, but sometimes there is a period of investment to be regained,allbeit in part, and this is that period.

There isn't a huge profit in the scheme of things. A system will take on average 2.5 days to complete. Most Systems require 3 people, An experienced roofer always comes in Handy, small Rosemary clay tiles are a nightmare!, the scaffold, different areas command different rates.
Take into consideration other associated costs such as: Transport, PAYE and NI , Insurances, (Renewables Liabilty insurance is twice the cost of Normal) Training and contingency....There isn't loads left!.

I hope that goes someway to dispelling the Myths that everyone is earning 1k a day!

Many thanks CSAE:)

Hi

Thanks for the candid reply.

From the reply I must assume that there is a general agreement that european component prices are applicable to the UK supply chain, so we would have a situation where a base £8.5k system spot price is possible, so allowing for £1500 to cover labour, employment costs and overheads, also assuming that the team can erect hired & delivered scaffolding with a hire cost of say £200/week we now have a total cost, before profit and VAT, of £10200 .... which leaves a considerable mark-up per day (well in excess of £1k) at current UK prices.

What needs to be remembered is that employment and social costs in countries such as Germany are far higher than those we experience in the UK and their installed guideline prices are as stated in the trade article referenced in my previous post and that there is still a healthy profit margin available for the German installers. Remember also that FiT schemes of one type or another also exist throughout most of Europe. It also seems to be standard practice to attempt to complete the install within one day in Germany using a team of three or four, this seems to also be possible in the UK for organisations who have already been through the efficiency learning curve, evidence for which is available on this forum where installations have been described as being completed within five hours.

Consideration should also be given to the panel prices referenced being market spot pricing, scheduled supply volume contract pricing which larger installers would have access to would be lower ........

Setting a pricing structure by simply doubling the component list price, which seems to be very common, might work when installing something like a consumer unit, but it's completely unrealistic considering the material to labour cost ratio for solar pv.

Regards

Cardew

We are getting at cross purposes re the car analogy.

People buy cars for £100k or have several cars. Some people spend £thousands on clothes, holidays, jewellery etc etc that is their prerogative.

Most people contemplate fitting solar PV as a an investment. If they want to fit it for other reasons that is also their prerogative.

However on a Money saving forum in a thread entitled 'sola(sic) profit time frame' what does raising the issue of buying a car for £15k contribute - why not discuss the merits of a sex change operation for £15k?

So the whole point of fitting them isn't solely about the financial investment, it can be for practical, security, awareness and financial reasons.

In what way are they 'practical'? Security? Security of what? Electricity supply? - They need mains to operate! They don't work at night! - if you want security of supply in an emergency get a £300 petrol generator.

If you are spending £15k for environmental reasons - Bravo!

Financial reasons - which is where we started this thread!


Incidentally, you might might think that PV panels on a roof might clinch a sale, however there are many who consider them unsightly and wouldn't have them on their roof at any price; and would be a deterrent. I live in a conservation area and the one planning application, that I am aware of, was not approved by the council after several objections on just those grounds.

csae

Cardew wrote: »

We are getting at cross purposes re the car analogy.

People buy cars for £100k or have several cars. Some people spend £thousands on clothes, holidays, jewellery etc etc that is their prerogative.

Most people contemplate fitting solar PV as a an investment. If they want to fit it for other reasons that is also their prerogative.

However on a Money saving forum in a thread entitled 'sola(sic) profit time frame' what does raising the issue of buying a car for £15k contribute - why not discuss the merits of a sex change operation for £15k?

My mistake, I forgot we were on this particular thread, I apologise.:o

As regards the sex change for 15k, I don't know the return on Investment figures for that, so i'll steer clear. That said, you can if you like...



In what way are they 'practical'? Security? Security of what? Electricity supply? - They need mains to operate! They don't work at night! - if you want security of supply in an emergency get a £300 petrol generator.

They are a practical way of generating your own Electricity!

Security. Securing yourself in someway against having huge bills in the future. Please don't tell me that Electricity won't continue to rise!....

If you are spending £15k for environmental reasons - Bravo!

Awareness meaning being au fait with daily useage, limiting use to the bare minimum,washing in the day, adding energy saving led bulbs etc, thus saving money!

Financial reasons - which is where we started this thread!

Of which there are many!


Incidentally, you might might think that PV panels on a roof might clinch a sale, however there are many who consider them unsightly and wouldn't have them on their roof at any price; and would be a deterrent. I live in a conservation area and the one planning application, that I am aware of, was not approved by the council after several objections on just those grounds.

Planning is required in Conservation areas if the array can be seen from the Highway. Regardless of the "Several" objections. they would not have been approved if they could be seen from the highway

Yes I fully agree with you, there are always people that spend their lives battling confirmity in one way or another, but even the tetchiest Victor Meldrews of the world would be foolish to not buy a house because their electricity was free!

I remember people saying that about satelite dishes and mobile phones....

Thanks CSAE....:)

csae

zeupater wrote: »

Hi

Thanks for the candid reply.

From the reply I must assume that there is a general agreement that european component prices are applicable to the UK supply chain, so we would have a situation where a base £8.5k system spot price is possible, so allowing for £1500 to cover labour, employment costs and overheads, also assuming that the team can erect hired & delivered scaffolding with a hire cost of say £200/week we now have a total cost, before profit and VAT, of £10200 .... which leaves a considerable mark-up per day (well in excess of £1k) at current UK prices.

What needs to be remembered is that employment and social costs in countries such as Germany are far higher than those we experience in the UK and their installed guideline prices are as stated in the trade article referenced in my previous post and that there is still a healthy profit margin available for the German installers. Remember also that FiT schemes of one type or another also exist throughout most of Europe. It also seems to be standard practice to attempt to complete the install within one day in Germany using a team of three or four, this seems to also be possible in the UK for organisations who have already been through the efficiency learning curve, evidence for which is available on this forum where installations have been described as being completed within five hours.

Consideration should also be given to the panel prices referenced being market spot pricing, scheduled supply volume contract pricing which larger installers would have access to would be lower ........

Setting a pricing structure by simply doubling the component list price, which seems to be very common, might work when installing something like a consumer unit, but it's completely unrealistic considering the material to labour cost ratio for solar pv.

Regards

Hi Zeu.

I agree with you wholeheartedly, but Solar PV isn't going to change the way pricing of new to UK market things evolve.

Whilst we have a good proportion of "Can't wait, won't wait" consumers in this country, suppliers of all things new will take advantage.

Thanks CSAE:)

Cardew

csae wrote: »

Planning is required in Conservation areas if the array can be seen from the Highway. Regardless of the "Several" objections. they would not have been approved if they could be seen from the highway

That is exactly the point I am making! They are considered unsightly!

Yes I fully agree with you, there are always people that spend their lives battling confirmity in one way or another, but even the tetchiest Victor Meldrews of the world would be foolish to not buy a house because their electricity was free!

I remember people saying that about satelite dishes and mobile phones....

Thanks CSAE....:)

You don't 'get electricity free' - you get an income from your investment in panels that pays or defrays your fuel bills. It is just an investment in something that produces electricity - that happens to sit on your roof.

If you get, say, £1500 pa from your panels(FIT/exported & used electricity) it is no different to getting £1,500 pa from investing in other schemes and paying your fuel bills from those funds.

csae

Quote:


You don't 'get electricity free' - you get an income from your investment in panels that pays or defrays your fuel bills. It is just an investment in something that produces electricity - that happens to sit on your roof.

If you get, say, £1500 pa from your panels(FIT/exported & used electricity) it is no different to getting £1,500 pa from investing in other schemes and paying your fuel bills from those funds.

Cardew. You seem to be getting a little confused!. Are you now saying that someone who bought a house with Solar Pv installed, at the previous occupiers expense, wouldn't be getting a proportion of their electricity(all if they spent their FITS income on it) for free?.

It seems that you are now starting to get a little bit too involved in the initial investment. What about after the payback period, is that not then "Free" ?

If you are now starting to base any reasoned debate on the "Aesthetics" of the panels, because the FITS have made this a sound investment, higher than property yields currently, then I feel we may have to agree to disagree.

As with all sound investments, there is a degree of investor input, we don't get anything for free in this world.