Solar Panels - Are they worth it?

Prycop

OK, need facts to decide please. I've done some homework and we have a decent sizes roof south facing 160 degrees roughly with a 45 degree pitch. A 4 kw system would fit easily. Located in NW Wales.

Electric use is fairly low with oil heating, water and cooking, though showers and immersion could override water heating.

Bottom line is that we would need a loan for the system payable over 5 years probably. Repayments over 60 months of £220.
The fit payments seem too good to be true. Will they last? How often and how are they paid in ie to off set the loan?

Would anyone with a solar system recommend that we install it or are there pitfalls that i havent considered such as running costs?

Any help appreciated.

Cardew

There are literally hundreds of posts on the pros and cons of solar PV.

Your savings in the house are really 'small beer' compared with the FITs

The consensus of opinion seems to be that it will be a good, but long term proposition. Depending on the interest rate you pay for the loan, the system will pay for itself in 10 to 12 years depending on inflation rates etc. After that it is all profit.

noncom_2

Ditto the above.

Plus: Only you can do the maths for the payback calculations, taking into account all the personal factors such as the price you are quoted for your system, the cost of your loan etc; and the global factors affecting the viability of the system, such as your best guesses as to future RPI/CPI (FITs are index linked), electricity price inflation specifically (affects how much you save by using free energy), maintenance costs etc. It's not easy to do, but for me it fell into line pretty much with what Cardew suggests - best case it's profit after 8 years, worst case after 16, most likely after 11. Also consider that since I bought my 3.96kWp system, the costs of buying the gear have fallen dramatically and the FIT hasn't, so that makes it even more sensible now than it was when I did it almost a year ago.

So far, we are on course to generate a little more than was predicted annually, and we have a less than ideal setup, with one set of panels being significantly shaded. So if you have no shading issues, then you should (don't hold me to that) exceed the standard prediction installers have to quote you.

Will FITs last? No-one has a crystal ball, so you are taking a risk for sure. But there seems little incentive for the Govt to scrap them, since they don't pay for them - the money comes from the energy companies themselves (via everyone's bills). So whilst they may at some point stop FITs for future installations, I can't see what they have to gain by scrapping FITs for people who've already invested.

They are paid quarterly (providing you submit your generation meter reading on time). Your FIT payer doesn't have to be the same company that you buy your electricity from. We just get sent a cheque.

There are no running costs, and no noise to speak of. What you must factor in is maintenance - will your panels ever need cleaning (from bird droppings or tree sap which the rain hasn't washed off). Will your roof need replacing or repairing in the next 25 years, in which case there will be additional cost in removing and replacing the panels. Inverters don't last for ever, and you will probably have to replace it at least once in the 25 years (although, these too are becoming cheaper). Also don't forget to declare them on your house insurance (this did not change the quote in my case).

HTH
Andy

Prycop

Thank you for the full and frank replies.
Your answers suggest that it may be worth considering further - i need to do some more homework and maybe get someone over to assess the roof etc.

grahamc2003

I personally wouldn't consider borrowing to invest. That goes for solar panels as well as buying shares in the Next Big Thing. Just my personal view, and no implied criticism of anyone else's actions.

In your situation, I would possibly look into Eon's offer (at least I think it's Eon), who have a reasonable buyout clause built into the contract. So you can defer buying the panels for, say, 5 years, at which time not only will your upfront costs be lower, but the fits would be greater. You'd get 'free' panels on your roof, and Eon would collect the fit until you bought them out. Not sure if this appeals to you, but it looks attractive to me if I were in your situation.

NotSoWise

Another thing to consider: will you be in your house for 25 years? Is there any likelihood that you may move? Also how old are you - may seem silly question but 25 years is a long time (even 12 years if you are over a certain age.....)

noncom_2

@grahamC above:

In a sense, we also "borrowed to invest". We could have taken the £15k our system cost and reduced the mortgage by that amount instead.

Doing the sums very carefully, we compared how well off we would be having either a) taken £15k off the mortgage, or b) bought the solar panels.

Our calculation of the "payback" time (8-16 yrs, most likely guess 11) is the point at which the Solar Panels become a better investment than reducing the mortgage.

So it is possible that "borrowing to invest" is a wise decision - it all depends on the numbers.

We also factored into this any potential impact on the house price if we need to move within this time frame (we don't plan to, and I'm young enough hopefully to see out the FITs!). Worst case, we sell the house and get no additional money for them; best case, the potential buyer fully recognises the value of the £1500+ per year income they will get and the house price is higher accordingly. Again, the truth probably lies somewhere in the middle.

vialdana

The FIT payments have been agreed by all potential government parties, and are guaranteed for 25 years. There are a couple of things to remember though if you're looking at doing this.

1 - if you go above a 4kWp system then you will earn LESS per kW produced from the FIT payments.

2 - it's not just about FIT payments - you will also make savings on the amount of electricity you have to buy, and as prices increase which lets face it they will, you'll save more and more.

We're at the same stage (roughly) as you, but we've decided it's well worth doing. We should be able to purchase a 2.1-2.5kWp system for around £8-9k with our roof situation and the size of the system we should be able to produce somewhere in the region of 2000 units per year, which means we should be able to earn around £900-1000 a year from it at the current payment rates of 43.3p per kW produced. Obviously this means that any money we borrow (assuming the full amount is borrowed), will be paid back within 10 years and at the same time we'll still save on our electric bill. From that point on, we'll be making money.

Oh, and the FIT amount is index linked, so that 43.3p will go up and should therefore keep roughly the same buying power every year.

House value increase seems to be something of guesswork at the moment with people guessing it will add 9% which is quite a lot, or that it will add very little £10 per 50p saved on bills, so best to do this if you're planning on staying put for at least long enough to recieve enough from FIT to cover your outlay.

Cardew

vialdana wrote: »

The FIT payments have been agreed by all potential government parties, and are guaranteed for 25 years. There are a couple of things to remember though if you're looking at doing this.

1 - if you go above a 4kWp system then you will earn LESS per kW produced from the FIT payments.

2 - it's not just about FIT payments - you will also make savings on the amount of electricity you have to buy, and as prices increase which lets face it they will, you'll save more and more.

We're at the same stage (roughly) as you, but we've decided it's well worth doing. We should be able to purchase a 2.1-2.5kWp system for around £8-9k with our roof situation and the size of the system we should be able to produce somewhere in the region of 2000 units per year, which means we should be able to earn around £900-1000 a year from it at the current payment rates of 43.3p per kW produced. Obviously this means that any money we borrow (assuming the full amount is borrowed), will be paid back within 10 years and at the same time we'll still save on our electric bill. From that point on, we'll be making money.

Oh, and the FIT amount is index linked, so that 43.3p will go up and should therefore keep roughly the same buying power every year.

House value increase seems to be something of guesswork at the moment with people guessing it will add 9% which is quite a lot, or that it will add very little £10 per 50p saved on bills, so best to do this if you're planning on staying put for at least long enough to recieve enough from FIT to cover your outlay.

I think your figures are a little optimstic.

If you borrow £8k to £9k, you are looking at initially paying something like £500pa in interest.(@6%) So that doesn't mean that you will 'obviously' pay off the loan in 10 years. - especially if you have any repairs needed.

How on earth can people 'guess' that solar PV will add 9% to house values? Houses vary in price from about £50k to many £millions. I believe the average is around £170k - so people are 'guessing' that a £8k to £9k system will add £15k+ to the house vaue????

There is a perfectly valid argument that solar panel will deter some house sales.

or that it will add very little £10 per 50p saved on bills,

What does the above mean please?

beedydad

Mmmnnn

It is now becoming much clearer that solar PV is solely an investment choice either for people with an existing pot of money or as above whether to borrow. With only 40,000 installations so far it is only for a select few.

Perhaps this subject should be moved to financial advice/products as really it is now nothing to do with "green/energy saving/production issues".

"Rent a roof" maybe a different issue and done to death - I think it should be revisited ina years time when those with these will be able to see much more clearly when genuine data comes out as to what they have actually consumed - not generated.

Cardew

beedydad wrote: »

"Rent a roof" maybe a different issue and done to death - I think it should be revisited ina years time when those with these will be able to see much more clearly when genuine data comes out as to what they have actually consumed - not generated.

It isn't that easy to see what you have shaved off your electricity bill.

IMO many will simply 'not want to know' and the capacity for self-delusion is astounding.