Recently had solar panels installed but electricity meter is still spinning fast

Martyn1981

Hi Izzyl

Ran your specs through PVGIS, and got this:

Location: 55°51'35" North, 4°15'25" West, Elevation: 23 m a.s.l.,

Solar radiation database used: PVGIS-classic
Nominal power of the PV system: 2.3 kW (crystalline silicon)
Estimated losses due to temperature: 11.5% (using local ambient temperature)
Estimated loss due to angular reflectance effects: 3.1%
Other losses (cables, inverter etc.): 14.0%
Combined PV system losses: 26.2%

Fixed system: inclination=45°, orientation=-45°
MonthEd Em Hd Hm
Jan 1.40 43.5 0.76 23.4
Feb 2.66 74.4 1.47 41.1
Mar 4.33 134 2.44 75.6
Apr 6.41 192 3.72 112
May 7.52 233 4.43 137
Jun 7.36 221 4.41 132
Jul 7.13 221 4.27 133
Aug 6.00 186 3.56 110
Sep 4.72 142 2.75 82.5
Oct 2.89 89.7 1.63 50.5
Nov 1.85 55.4 1.01 30.3
Dec 1.00 31.0 0.54 16.7
Yearly average 4.45 135 2.59 78.7
Total for year 1620 944


So your generation of 73kWh's may be a little low, compared to column Em, but not massively low. So it depends on what sort of weather you've had etc.

Regarding money and returns. Well, here's the bad news.

Optimistic earnings are probably about £800pa:
1620 by 0.433p = £701.46 (FITs generation)
810 by 0.031p = £25.11 (Export rate which assumes 50% export)
Plus somewhere between £50 - £100 in electricity savings, depending on how hard you try.

£11,000 / £800 = 14 years for capital repayment, longer if you include lost interest, and potentially a new inverter around yr 10 (hopefully it'll last longer).

FIts will go up with inflation, April rates are 45.4p and 3.2p, and inflation will push up the electricity savings. So the salesman may have used increasing returns to justify the 8 year figure. Personally, I wouldn't as the £11k is in today's money, so returns should be considered in today's money. Only my opinion. From April you could look on annual income as £761 + electricity savings, perhaps £810-£850pa.

£800 / £11,000 is an investment return of 7.27% tax free, if you are willing to exclude the lost interest (if).

However, sadly, that is quite a high price for that system size. Sorry to cause any offence.

Mart.

thenudeone

Martyn1981 wrote: »

However, sadly, that is quite a high price for that system size. Sorry to cause any offence.

I agree.

The going rate for a 4kW system was about £12k just before the announcement was made to reduce FITs late last year.

Post-announcement, some firms dropped their prices significantly (eg: down to £8.5k for a 4kW system), to maintain a good return on investment, as reported here: http://forum.moneysavingexpert.com/showthread.php?t=3599625

I know this info. won't help you, but it does shed more light on the issue.

Martyn1981

Tiny amendment.

I did say optimistic earnings, but in that case, being optimistic, most people seem to be doing a bit better than PVGIS estimates, so lowering system losses from default 14% to 'possibly' a more reasonable 10%, lifts estimated annual generation to 1,700kWh's.

Every little bit counts.

Mart.

celerity

Panels degrade over time as well, how much so is very much an unknown quantity (to me anyway), as it depends on the brand, weather conditions etc.
For my own calculations, I assumed a 1% degradation in performance per year. This will hopefully prove to be pessimistic, I think the industry standard is 80% efficiency after 25 years.

I note people are talking about "capital payback times" but for most people, you really do need to take into account the compounded interest you would have received on your original investment.
Once you factor that in, your break-even point goes up by several years (unfortunately!)

Finally, you can't really base your 25 year projections on the past twelve months, which as we've all seen have given us way over PVGIS predicted levels. We should really assume that we are going to get "bad years" which will average out the good ones.

Sorry if the tone of this post is a bit negative. I am very pro-solar - I just don't want people who are thinking about investing their hard earned money to base their decision on overly-optimistic payback times.

/\dam

don0301

A projection is just that

bit like fortune telling

I did mine for a bit of fun, of course time will tell how accurate it is

At the moment, I'm projecting a Tax free return of 17% in my first year, again time will tell how accurate that will be.

But I would love to know another investment that gets anywhere near that.

People need to do their own research, of course.

They would be silly not to.

The_Green_Hornet

celerity wrote: »

I note people are talking about "capital payback times" but for most people, you really do need to take into account the compounded interest you would have received on your original investment.
Once you factor that in, your break-even point goes up by several years
/\dam

But why should you factor that in?

Once you have committed yourself to Solar PV as an investment there is little point in comparing it to what you could have received from other investments now or in the future as once you have invested your money in Solar PV you can't change you mind, take your money out and invest it somewhere else.

If you want a safe low risk investment stick your money in a Building Society.

Martyn1981

The_Green_Hornet wrote: »

But why should you factor that in?

Once you have committed yourself to Solar PV as an investment there is little point in comparing it to what you could have received from other investments now or in the future as once you have invested your money in Solar PV you can't change you mind, take your money out and invest it somewhere else.

If you want a safe low risk investment stick your money in a Building Society.

Morning GH. As you know I'm very pro PV (and renewables). I also agree that once the decision is made to invest in x or y, and you jump, there's no point looking back at 'what you could have won'.

However, I also agree with Celerity, particularly as this is a Money Saving site, and a lot of PV sales arguments are financially based. So there is a place for comparing and contrasting if only to avoid bad practice and miss-selling.

Going in circles a little here, but trying to get a definitive financial answer is hard, as savings will be reducing in real terms from inflation, whilst FITs and electricity savings increase via inflation. Then you have to think about inverter replacements etc. Do you negate the compound interest argument by putting the FITs and leccy savings into a savings account each year. And so on, and so on. Very tricky.

In summation, I agree with Celerity that all factors should be considered. However, I'd then go with GH and say, decision made - let's forget the savings interest and enjoy the new toy and investment. No right answer I guess?

Mart.

celerity

The_Green_Hornet wrote: »

But why should you factor that in? (talking about lost interest on the initial investment - /\dam)

I would ask the reverse question, why would you not?

Once you have committed yourself to Solar PV [...] you can't change you mind, take your money out and invest it somewhere else.

True, but there could be people on here thinking about investing a considerable sum of their savings - like I was when I started reading this forum back in 2011. Thanks to posters like Cardew and zeupater I feel I made an informed decision, considering the pros and cons.

There are ideological reasons to install solar PV, but this site is primarily concerned with money saving. If people think their panels are likely to pay for themselves within say, eight years, I would urge them to consider all factors as that seems unlikely to me. If they then find out that they would be financially better off after ten years having saved the money or paid off part of their mortgage etc, they might reconsider.

Not everybody can guarantee they will be in their property for 10, 15 or 25 years after all - so the true payback period, including loss of interest, is pretty critical*.

Like I say, I'm not knocking solar panels, I invested in them myself and will be happy with a twelve year payback. From reading this forum I am pretty confident I paid a decent price at the time (April 2011) and that I am generating more than expected (I assumed £1,500 in my first year and we are already past this with two months to go). Maybe I'm just naturally pessimistic but I don't expect subsequent years to be quite so profitable.

/\dam

* There is an argument to be made that a solar PV array and FiT on a property will add to the resale value. In theory this should be true, but in practise, who can say? It all depends on market conditions when you sell your property.

The_Green_Hornet

celerity wrote: »

I would ask the reverse question, why would you not?

Simple, because payback period by it's very definition states that you should ignore the time value of money.

Now that is not to say you cannot use a different calculation method that includes loss of interest and the effect of inflation on your Solar PV investment but it certainly shouldn't be defined as the payback period.

A little picky I know but them is the rules.

celerity

I think you're arguing semantics, but in the interest of not derailing this thread I'll concede the point .
Please therefore treat any mention by me of "payback" to be "return on investment" instead.

/\dam