wind turbine versus solar panels

woodstoke

Hi, we have a 1.5kw wind generator and also we purchased our own solar system but they run independent of each other both with separate inverters and separate meters so i have to give the power company two meter readings both on registered as two different accounts with them no problems at all....

EricMears

Equaliser123 wrote: »

Yes but I would think that taking debt to fund what is ultimately an investment is a very risky way forward.

The whole of industry would collapse if entrepeneurs stopped borrowing to fund investment !

Current mortgage rates are perhaps 4 or 5%; %ROI for new solar panels is still a lot more than that.

Ectophile

EricMears wrote: »

The whole of industry would collapse if entrepeneurs stopped borrowing to fund investment !

Current mortgage rates are perhaps 4 or 5%; %ROI for new solar panels is still a lot more than that.

You need to carefully do the maths - solar panels are a depreciating asset.

With most investments, you hope to get a return (e.g. interest or dividends) and you can cash in the investment at the end.

Solar panels will gradually deteriorate over time, and the inverter won't last forever. So you collect the income from the electricity generated, but eventually the kit wears out and becomes worthless.

That's not to say that solar is a bad investment (I bought some). But simply comparing the interest rate on a savings account with the rate of return from solar panels is misleading.

Martyn1981

Ectophile wrote: »

That's not to say that solar is a bad investment (I bought some). But simply comparing the interest rate on a savings account with the rate of return from solar panels is misleading.

TBF Eric's example wasn't based on diverting savings, but on investing financed monies. Personally I find such methods scary, but as was pointed out, most entrepreneurs operate in this fashion, and banks rely on such borrowings to make their money, and in turn to offer attractive savings rates (well not lately!).

This is not a recommendation, just some number crunching, but if you had a good location for a large PV system, but no monies, then:

£8k additional mortgage borrowing (perhaps 4%), and additional income of £900 (21p rate £800 gen/ exp + £100 leccy savings).

Annual - Interest £320, debt repayment £580.

Repayment approx 11 years (with interest falling as debt reduces each year after payments, but ignoring any inflationary rises in income or falling PV efficiencies).

So using someone else's money, could give 14 years of 'free' PV.

16p rate will be harder, but I did choose a high(ish) install price. Edit: interestingly, I just re-tried it with £6,500 and £750 (3,600 units at 16p (4.5p exp) + £100 savings). That actually worked out at 9 years repayment. Hmm, wasn't expecting that.

Mart.

EricMears

Ectophile wrote: »

You need to carefully do the maths - solar panels are a depreciating asset.

Indeed, and of course I did.

In this instance it would be misleading to use the resale value of the panels as an indicator of their depreciation since they have a guaranteed output and a guaranteed payment for that output.

Probably reasonable to use the 25 yr FIT contract length and (coincidentally ?) 80% guaranteed output life to assign a 4% depreciation rate. Even with that 4% subtraction from the headline %ROI, SPs will still outperform any currently available savings plan.

Inverters wearing out is often quoted as a 'likely' event. However: they may keep going forever, they might need some relatively inexpensive repair or their complete replacement in 10+ years time may be rather better value than today's models. But even two complete new inverters at today's prices (worst possible scenario over next 25 years) wouldn't swallow all the profits.

Bound to be some inflation over the next 25 years though impossible to forecast exact level - but any inflation could well produce more benefits than disadvantages.