Sola profit time frame

csae

Cardew wrote: »

That is an excellent summing up of the situation, that nobody who with a reasonable appreciation of solar PV and even 'back of an envelope' economics should be able to dispute.

My biggest objection is the terminology of an x% return on your investment.

If I invest £15k in a bank at 4%, at the end of a year I have £15,600 that I can spend.

Invest £15k on solar PV and you will have, say, £1,500 in the bank to spend and some panels on your roof that will earn you money in future.
years.

If you want to advance from 'back of an envelope' economics - consider this:

You spend that £15,600 on, say, an extension to your house then you obtain that extension at 2011 prices.

If you wait until, say, 2021 to extend your house(when your savings from solar PV might be £15,600) how much will the extension cost?

You have of course made you wife happy with the extension and it has enhanced the value of your property.

Noncom, lucid and fair, perfectly put down in words...:)

Cardew, you make very valid points, but at the risk of splitting hairs and for the purposes of clarity for the "scan readers" and "financially challenged" on here, lets bring a little realism to your quoted figures, I appreciate they are just hypothetical examples, but they are skewed somewhat in favour of the Non-PV'ers.

Firstly, your example of 15k in the bank with a 4% return that gives you readies of 15,600 after a year, that you can physically spend.
Looks like a no-brainer to me in terms of investment, but the reallity is, those figures aren't acheivable or offered on such a short term basis in normal risk situations.

Onto the next example,the extension. If someone had the choice of Solar PV or the extension they desperately need, the extension would win hands down, it would with me, without a doubt.

However, the likelihood of someone getting a worthwhile, purposeful extension for 15,600 is bordering on impossible. You would need at least twice the amount, so the situation is save the money for 10 years and still not have enough because 2020 prices are here now!.

So whilst I understand you examples and theories, the realities are they don't add up , even in the hypothetical form that you have offered.
We also have to remember that not everyone is on the "make", some people do things because they can and because they want to.

I also suspect that most adopters won't be the type that you have "pigeon-holed", the type that have 15k and it has to be invested one way or another.

I tell you what, it would be fantastic if someone who wasn't financially challenged, could rustle up a table/graph of similar investments and show the "real" figures. It would be a boon and probably put the debate to bed, once and for all.

Have a good day all....Thanks CSAE:)

Cardew

csae wrote: »

I tell you what, it would be fantastic if someone who wasn't financially challenged, could rustle up a table/graph of similar investments and show the "real" figures. It would be a boon and probably put the debate to bed, once and for all.

I take it you have seen this calculator?

http://www.reuk.co.uk/REUK-Feed-In-Tariff-Calculator.htm

The problem with any of these calculators is that you have to guess inflation rates, interest rates, and this one makes no provision for repairs, cleaning or degradation of panel output over the years.

csae

Cardew wrote: »

I take it you have seen this calculator?

http://www.reuk.co.uk/REUK-Feed-In-Tariff-Calculator.htm

The problem with any of these calculators is that you have to guess inflation rates, interest rates, and this one makes no provision for repairs, cleaning or degradation of panel output over the years.

Morning Cardew. Yes I have seen it and in some instances, point clients to it. However, it offers only money in the bank as an alternative, I would like to see one that offers 2 or 3 alternatives because ultimately cash in the bank will be favoured by most but more options may open minds a little more.

smartn

This has been a really good thread with some interesting points put forward. My feeling, looking at it as investment (ignoring the environmental bonuses) is that a payback of around 11 years is perfectly acheivable. The comparison with putting money in the bank is the only valid investment alternative other than paying off the mortgage due to the risks associated with other forms of investment.

The real bonus I can see is the FIT's are inflation proofed so after year 11 it really comes in to its own. Personally, I wouldn't borrow money to do it, I would pay down my mortgage and any other debts in preference but once you have done this, Solar looks a pretty solid long term investment to me without the risks of stock market investment etc.

Personally, I actually see this as an investment towards my pension aims hence a long term approach can be taken.

zeupater

smartn wrote: »

This has been a really good thread with some interesting points put forward. My feeling, looking at it as investment (ignoring the environmental bonuses) is that a payback of around 11 years is perfectly acheivable. The comparison with putting money in the bank is the only valid investment alternative other than paying off the mortgage due to the risks associated with other forms of investment.

The real bonus I can see is the FIT's are inflation proofed so after year 11 it really comes in to its own. Personally, I wouldn't borrow money to do it, I would pay down my mortgage and any other debts in preference but once you have done this, Solar looks a pretty solid long term investment to me without the risks of stock market investment etc.

Personally, I actually see this as an investment towards my pension aims hence a long term approach can be taken.

Hi smartn

I think that you'll find that that's the way that most people will look at it.

Referring to the 11 year breakeven point you'd probably need to allow for a major repair to, or replacement of, the inverter at around that point in time to be fair, so 11 years suddenly becomes 13(ish) on a large 4kWp system installed for a price at the lower end of what's currently available.

Whilst thinking on this, I recently replaced a gas boiler which had a list price of something like £1200 (even though typical buy prices are around £700) on which initial quotes received averaged around £2200, so double the list price. This definately raises the question of what a replacement inverter would actually cost installed. I've seen 'open & honest' information in sales literature which mentions that an inverter is likely to fail and an allowance of £1400 should be made for replacement, however, as the unit cost, for example, of a SunnyBoy 3800 or Fronius IG40 is likely to be well over £2k, I'd love to see a fitted replacement cost so we know what to allow in our calculations (bet it's not £1400!!) ....

Any nice MCS people able to enlighten us ?

Z

smartn

zeupater wrote: »

Hi smartn

I think that you'll find that that's the way that most people will look at it.

Referring to the 11 year breakeven point you'd probably need to allow for a major repair to, or replacement of, the inverter at around that point in time to be fair, so 11 years suddenly becomes 13(ish) on a large 4kWp system installed for a price at the lower end of what's currently available.

Whilst thinking on this, I recently replaced a gas boiler which had a list price of something like £1200 (even though typical buy prices are around £700) on which initial quotes received averaged around £2200, so double the list price. This definately raises the question of what a replacement inverter would actually cost installed. I've seen 'open & honest' information in sales literature which mentions that an inverter is likely to fail and an allowance of £1400 should be made for replacement, however, as the unit cost, for example, of a SunnyBoy 3800 or Fronius IG40 is likely to be well over £2k, I'd love to see a fitted replacement cost so we know what to allow in our calculations (bet it's not £1400!!) ....

Any nice MCS people able to enlighten us ?

Z

I received my quotation today from the Green Project and less the MSE discount it's £7775. That's for a 2.12 kWp output with a Fronius IG20 and 9 sharp NU series 235w panels. I very much liked the upfront way they suggested within the quote you budget £1500 for a new inverter after 12-15 years. Based on this I hope for payback between years 10 and 11 and even allowing for a new inverter would hope to be in profit by year 12. This would even allow for an occasional clean etc..

smartn

On the subject of inverters cost, I can't really see the replacement fitting cost being that high, it's mainly going to be the component cost. Green Project reckon my entire system can be installed in a day or so and I guess an inverter swapout would only take a couple of hours (I wonder if csae would care to comment on this?). I would also like to think the cost of these will come down over time as the market becomes bigger (does anyone know what price decreases/increases there have been on inverters over the last few years?)

csae

smartn wrote: »

I received my quotation today from the Green Project and less the MSE discount it's £7775. That's for a 2.12 kWp output with a Fronius IG20 and 9 sharp NU series 235w panels. I very much liked the upfront way they suggested within the quote you budget £1500 for a new inverter after 12-15 years. Based on this I hope for payback between years 10 and 11 and even allowing for a new inverter would hope to be in profit by year 12. This would even allow for an occasional clean etc..

So by the Green Projects reckoning, you will have paid off your investment a good few years before you should "need" a replacement inverter?. So why would you budget for a replacement within your payback years?. Surely by the time you "need" one, the panels are into profit and any expenses thereafter are just part of maintaining your system, much like servicing a car.

No-one would ever buy a car if you had to allow for maintenance beyond the time it takes to pay it off and the warranty expires!

I do think far too much of this inverter "Issue" is being made.

Surely every tangible investment needs some upkeep over it's lifetime?. I know my house does ,and my car, and my boiler!.

I didn't refrain from investing in any of the above because at some point they may have needed a bit of maintenance.

Thanks CSAE...:)

csae

smartn wrote: »

On the subject of inverters cost, I can't really see the replacement fitting cost being that high, it's mainly going to be the component cost. Green Project reckon my entire system can be installed in a day or so and I guess an inverter swapout would only take a couple of hours (I wonder if csae would care to comment on this?). I would also like to think the cost of these will come down over time as the market becomes bigger (does anyone know what price decreases/increases there have been on inverters over the last few years?)

.

Hi there. Swapping the inverter would take a couple of hours, taking into account testing etc( and tea drinking, with a few biccies).

At present, it is inverters that cause the hold ups in any installation, supply isn't keeping up with demand.But you can bet your bottom dollar that in 12 years time, they are less than 500 quid fitted!.

Thanks CSAE...:)

smartn

csae wrote: »

So by the Green Projects reckoning, you will have paid off your investment a good few years before you should "need" a replacement inverter?. So why would you budget for a replacement within your payback years?. Surely by the time you "need" one, the panels are into profit and any expenses thereafter are just part of maintaining your system, much like servicing a car.

No-one would ever buy a car if you had to allow for maintenance beyond the time it takes to pay it off and the warranty expires!

I do think far too much of this inverter "Issue" is being made.

Surely every tangible investment needs some upkeep over it's lifetime?. I know my house does ,and my car, and my boiler!.

I didn't refrain from investing in any of the above because at some point they may have needed a bit of maintenance.

Thanks CSAE...:)

Many thanks for your reply and I can see where you are coming from. On this thread I'm looking at this purely from an investment point of view hence all costs are relevant and I usually like to take a pessimistic view with these sort of things. If your break-even is in year 11 only to be hit with an inverter cost of £1500 in year 12 it puts the breakeven back a bit. Either way I tend to agree with your other comment that an inverter will probably be less than £500 fitted in 12 years time. I'm hopefull of a 10 year payback but will not be disappointed if it turns out to be 12.

To me this looks like a very good LONG TERM investment.