FEED IN TARIFFS Vs PENSIONS/ ISAs

darrenogden

Having recently been quoted £11,300.00 for a solar P.V. installation at my house, and with estimated savings/ returns of £1000.00 p/a, how does this stack up against investing the cash in an ISA or pension.
Can someone provide figures as an example?
Can i find a simple site to compare them?:

reeac

Looks like 8.8% tax free compared with the current 3% at best from a cash ISA. Stated like that the choice is a "no-brainer" particularly as there's no immediate prospect of an increase in interest rates but remember that once you've bought the PV panels you are committed and can't get your money back whereas with cash ISAs you can so they aren't comparable investments. Incidentally, is that quote for a 2.2kWp system as we've been quoted £9945 for that size.

MillicentBystander

I think you would also have to factor in maintenance costs. As far as I'm aware, no such costs arise with an ISA.

grahamc2003

darrenogden wrote: »

Having recently been quoted £11,300.00 for a solar P.V. installation at my house, and with estimated savings/ returns of £1000.00 p/a, how does this stack up against investing the cash in an ISA or pension.
Can someone provide figures as an example?
Can i find a simple site to compare them?:

There's nothing to be gained by comparing the returns from fits with the returns from an isa.

The closest comparison can be made with an annuity, but even then there are big differences. The risk with an annuity is extremely low (i.e. they'll pay what they say), whereas I'd assess the risk with fits as larger (they may get decreased or chopped altogether, or not last as long as promised. I take it you know how to tell when a politician is lying). Also, your return is an estimated return, not guaranteed like an annuity, and as somone else mentioned, there are currently unknown costs over the next 25 years.

The fit return was obviously designed to be attractive and, subject to a few risks, it probably is. But I decided it wasn't attractive enough for me. I wouldn't consider it unless you are certain you won't need the cash (for a cruise, car or a year at uni for someone etc etc) in the future.

darrenogden

The quote was for 16 panels, they didn't mention the size.
The returns are index linked and as electricity costs increase, as they have to do over the next 10-20 years, i think the investment is sound.The fact the cash isn't there any more is a downside against an ISA, but then again its the same with pensions as i understand it.
I think the more self sufficient you can be, the better in the coming years!

macman

MillicentBystander wrote: »

I think you would also have to factor in maintenance costs. As far as I'm aware, no such costs arise with an ISA.

There are no obvious ongoing maintenance costs with a solar PV system. The panels should have a 10 year guarantee and are self cleaning. The inverter should have at least a 2 year guarantee, some may have 5. If properly installed the whole system should be trouble free.
The panel output theoretically declines slighty year on year, but I've had mine 3 years and there has been no measurable drop-any fluctuation is probably down to weather variations.
The main risk is that if you move house then it's not easy or cheap to take them with you-however they should add value to the property as electricity prices continue to rise.

MillicentBystander

macman wrote: »

There are no obvious ongoing maintenance costs with a solar PV system. The panels should have a 10 year guarantee and are self cleaning. The inverter should have at least a 2 year guarantee, some may have 5. If properly installed the whole system should be trouble free.
The panel output theoretically declines slighty year on year, but I've had mine 3 years and there has been no measurable drop-any fluctuation is probably down to weather variations.
The main risk is that if you move house then it's not easy or cheap to take them with you-however they should add value to the property as electricity prices continue to rise.

So, in year 11 you could be faced with replacing them all at your own cost. Similarly the inverter after 2 years. All I was suggesting was for higher returns the risks will be higher. Buying solar panels to get a higher return on capital invested is no different in that respect.

macman

I'm not getting involved in the ISA vs FITS debate-too many variables on both sides for my liking.
Yes, you could have to, there is always some risk. But generally the panels just sit there for many years and do what they're supposed to. Similarly, inverter failure is pretty rare.

Equaliser123

MillicentBystander wrote: »

So, in year 11 you could be faced with replacing them all at your own cost. Similarly the inverter after 2 years. All I was suggesting was for higher returns the risks will be higher. Buying solar panels to get a higher return on capital invested is no different in that respect.

I'm sure you wouldn't have to replace all the panels!

My understanding is to assume a replacement inverter within 10 years but that the panels being maintenance free with no moving parts will keep on going with minimal degradation - hence the confidence in providing long warranties.

macman

I was prompted to recheck my own warranty which is:
20 years (not 10) on the panels.
5 years on the inverter.
2 years on the installation (cabling, grid connections etc).
That's enough to give me peace of mind.
NB: a 16 panel system is probably going to output around 3.36 kWp, On mine (6 hybrid panels), the rated output is 0.210kWp per panel.
But do remember that that is a theoretical figure, in reality around 90% of that is what you will get in optimum conditions.

rhiwfield

As stated above solar pv array may need some maintenace and inverters will have shorter life (probably) than panels. But the return is not only tax free, it is index linked, a very big advantage.