Solar Panel Guide Discussion

keith_r59

ukmopar wrote: »

Most sites, including this one, do not, in my opinion, correctly calculate the payback period on these solar panels. unless you are taking out a loan to pay for the installation, you have to include the lost interest that results from cashing in an investment or savings and spending it on the panels. At 2.4% after tax a £12k investment is worth some £10,252 and that has to be offset against the money earned by the panels. The effect is to nearly double the payback period.
Also the inverter, which converts the panel's DC current to AC, only lasts, typically, 10 years and costs some £2000 a time. The payback period is getting longer and longer!

With above average sunshine, high inflation rates and increased energy prices I find that the payback period is actually getting shorter and shorter.

Dave_Fowler

ukmopar wrote: »

Most sites, including this one, do not, in my opinion, correctly calculate the payback period on these solar panels. unless you are taking out a loan to pay for the installation, you have to include the lost interest that results from cashing in an investment or savings and spending it on the panels. At 2.4% after tax a £12k investment is worth some £10,252 and that has to be offset against the money earned by the panels. The effect is to nearly double the payback period.
Also the inverter, which converts the panel's DC current to AC, only lasts, typically, 10 years and costs some £2000 a time. The payback period is getting longer and longer!

There have been quite a few calculations made using differeng sets of figures. Don't forget to throw into your calculations the possibility of investing the money you receive from FITs payments and the savings on fuel bills. Compound interest on this income offsets some of the interest lost on the invested sum.

Inverter costs are dropping rapidly. Even after inflation the cost has dropped well below the £2000 figure that was the norm at this time last year.

Dave F

zeupater

keith_r59 wrote: »

With above average sunshine, high inflation rates and increased energy prices I find that the payback period is actually getting shorter and shorter.

Hi

Can you actually remember what above average sunshine looks like, I'm pretty sure I can't ... July wasn't all that good against target, August was awful and, so far, September's been abysmal.

Having said that we've just passed our target for today and that's the first time this week. Sunday to Thursday this week made a fraction over two days of target generation in total .... we've had the summer from hell here, hardly any sunshine and almost no rain, it was a pleasure to travel to Hampshire a week ago in order to remember what green grass and sunlight looked like ... and yes, it did rain on us whilst we were there ...

Z

Cardew

ukmopar wrote: »

Most sites, including this one, do not, in my opinion, correctly calculate the payback period on these solar panels. unless you are taking out a loan to pay for the installation, you have to include the lost interest that results from cashing in an investment or savings and spending it on the panels. At 2.4% after tax a £12k investment is worth some £10,252 and that has to be offset against the money earned by the panels. The effect is to nearly double the payback period.
Also the inverter, which converts the panel's DC current to AC, only lasts, typically, 10 years and costs some £2000 a time. The payback period is getting longer and longer!

Welcome to the forum.

There have been many posts on this subject, and whilst you are correct that some people take a very simplistic view on payback e.g. System costs me £10,000, I get £1,000 pa income thus payback is 10 years.

However there are many posts that discuss payback realistically and there are websites that have calculators that will work out payback based on your assumptions.

To work out a 'break-even' point you must invest all your annual savings year on year.

However there is still an element of 'wet finger in air' in attemting to calculate payback. You must guess:

Future inflation rates

Future electricity inflation rates

How much electricity you will use in house

Future interest rates on savings

cost of repairs(inverters etc) Roof problems.

Cleaning of panels

Degredation of panel performance.

Government intervention on FIT


As panels get cheaper, so payback periods shorten, and most of the informed comment in this thread guesses at 10 to 12 years.

IMO the best way to consider investment in PV is to treat it as an annuity.

KevinG

zeupater wrote: »

Can you actually remember what above average sunshine looks like, I'm pretty sure I can't ...

You've obviously forgotten April and May!

paul128

I have had 2 surveys so far. One installer insists if I go ahead on having a structural engineer report before he will proceed. He inspected the rafters in my roof which are 50mm wide and said that the size and position of the screws to adequately secure the brackets may cause splitting and reduce structural integrity and to avoid this they would install additional wider wood alongside existing rafters and fix the brackets into the wider wood instead of the existing rafter (This installer is relatively new but is MCS/REAL accredited and buy with confidence listed).

I've also had round a long established company (long in the context of solar - nearly 10 yrs so local council work and domestic) MCS/REAL accredited. The installer did a visual inspection and some measurement in the loft and said the installation would be fine - no structural report and no mention of any extra wood.


Whom am I to believe and what's with the extra wood thing?

paul128

Has anyone actually read the performance warranties on the panels. They all have the usual 80% at 25yrs.

I've looked at the Suntech and a Sharp warranty. In both cases the onus is on the consumer to prove a fault. The warranty if proved only covers the cost of the panels not the labour time in removing or resinstallation nor time proving your case.

In the case of Suntech you have to communicate with China or a US address (though I understand the European office is based in Switzerland and lurking about the South east there is a UK manager reporting back to Switzerland).

In the case of the Sharp panels claim have to be sent to Germany not the place of manufacture (Wrexham) and claims are subject to German law not UK law. the Sharp warranty contains a somewhat unfortunate clause that Sharp at its own option can either compensation for loss of output by supplying additional modules or repairing or replacing defective parts taking into account an annual depreciation of 4% of the original purchase price. So after 25 years rather than 80% of the purchase price still be 'operative' they have a clause that says your installation is worth 0% of purchase price.

All in all I feel the performance warranties are hardly worth anything as the consumer would find it too difficult to prove failure and the warranties only cover the cost of the panels and not removal/re-installation.

paul128

Much has been posted about returns etc.

I am a bit concerned about what happens after the 25 year period ends and FIT stops. The panels I assume will still work but probably still deteriorate at the rate say of 1% pa. Inverter replacements will still need to be paid for.

Will the mounting systems need renewal?

If I was a buyer near the end of the FIT period I would want to know if I was picking up a liability rather than as asset. So I think one should also factor in a decommissioning cost for removal of the system.

Based on the cheapest quote I have to date 4kwt system £12,495 generating initially 3268kwt a year. I estimate a tax fee return over 25 years at the rate of 1.06% compound (ie £55652 after decommissioning costs and accrual for inverter half way through its 3rd 10 year life) assuming:

Inflation at 3%pa over 25 years
Electricity inflation at 5% over 25years
Replacement inverter at today's price say £2500 (including labour) replaced in year 10 and 20 at a cost of 2.8k and 3.8k respectively.
Interest on FIT/export tariff/saved electricity consumption at 2.4% net.
Decommissioning cost year 1 say £3,000 - Year 25 £6k assuming 3% inflation.

So there would appear to be a return to be had but maybe not as much as is being banded about.

John_Pierpoint

paul128 wrote: »

I have had 2 surveys so far. One installer insists if I go ahead on having a structural engineer report before he will proceed. He inspected the rafters in my roof which are 50mm wide and said that the size and position of the screws to adequately secure the brackets may cause splitting and reduce structural integrity and to avoid this they would install additional wider wood alongside existing rafters and fix the brackets into the wider wood instead of the existing rafter (This installer is relatively new but is MCS/REAL accredited and buy with confidence listed).

I've also had round a long established company (long in the context of solar - nearly 10 yrs so local council work and domestic) MCS/REAL accredited. The installer did a visual inspection and some measurement in the loft and said the installation would be fine - no structural report and no mention of any extra wood.


Whom am I to believe and what's with the extra wood thing?

Until truss frames arrived on the backs of lorries to build a roof in the 1970's, most roofs were made on site, usually using 4 x 2 "jack" rafters at 16" centres (that is 100 x 50 @ 400 in mm), Such rafters are most unlikely to split, especially if screw holes are pre drilled.
I would suspect a charge for the extra work involved that might well be a "profit centre" in the firms accounting system.

Modern truss frames (A triangle with typically a "W" inside it) are made from narrower timber (35mm) and often installed at 24" (600mm) centres. Splitting could be a problem if large diameter screws are needed, as these timbers are connected using plates with spikes that are clamped to both opposite sides of the timber.

http://www.truss-frame.com/truss-mfg.html
http://www.perrantrusses.co.uk/roof-trusses.html

paul128 wrote: »

Much has been posted about returns etc.

I am a bit concerned about what happens after the 25 year period ends and FIT stops. The panels I assume will still work but probably still deteriorate at the rate say of 1% pa. Inverter replacements will still need to be paid for.

Will the mounting systems need renewal?

If I was a buyer near the end of the FIT period I would want to know if I was picking up a liability rather than as asset. So I think one should also factor in a decommissioning cost for removal of the system.

Based on the cheapest quote I have to date 4kwt system £12,495 generating initially 3268kwt a year. I estimate a tax fee return over 25 years at the rate of 1.06% compound (ie £55652 after decommissioning costs and accrual for inverter half way through its 3rd 10 year life) assuming:

Inflation at 3%pa over 25 years
Electricity inflation at 5% over 25years
Replacement inverter at today's price say £2500 (including labour) replaced in year 10 and 20 at a cost of 2.8k and 3.8k respectively.
Interest on FIT/export tariff/saved electricity consumption at 2.4% net.
Decommissioning cost year 1 say £3,000 - Year 25 £6k assuming 3% inflation.

So there would appear to be a return to be had but maybe not as much as is being banded about.

Are your decommissioning figures high? In 25 years time I would think the technology would be cost effective and replaced by new panels? Otherwise it would be a matter of cutting the connection, unbolting the mounting brackets and sliding the panel down the roof?

Personally I would put general inflation at 5% (as the government tries to devalue the debt) and electricity at 10% as we all pay for "the second grid" and the subsidies required for the new "green" technologies.

keith_r59

paul128 wrote: »

Replacement inverter at today's price say £2500 (including labour) replaced in year 10 and 20 at a cost of 2.8k and 3.8k respectively.

If you really believe that you are going to have to spend £6.6k in replacement inverters then you might as well pay for an extended 25 year warranty from the outset which, at current prices, would be less than £3k. (See SMA web site for details).

But then why do you think that your inverter will break down and be beyond repair after 10 years? Modern day inverters are designed to last over 20 years. (See SMA web site for details).