Cold called re free solar panels.

KeenToMakeSavings

InVestor wrote: »

My valuation was done by an independent Surveyor. The estate agents I spoke to prior to fitting my panels 2 years ago all said no added value, and one said maybe less as 'people may be put off'. But I would think that a lot of that was because they didn't understand the value of them.

I'm sure with time (and electricity bills rising higher than inflation) more and more people will appreciate solar panels and FiT payments.

When I showed her my spreadsheet, and projections, she was very impressed, and the final report gave a value £20,000 higher.

I had our home valued 2 years ago by 4 different local estate agents for inheritance tax planning. I asked all of them if adding 4 kWp of solar PV panels and also a solar hot water system would improve the property's value. All four said it would make no difference but one added that it might make the property a little easier to sell.

When I pointed out that if I were a buyer, I would be willing to pay more rather than have to use my own capital to have a system fitted, and that I didn't see any difference in principle between this and paying more for a well-insulated property with full double-glazing and a good Energy Certificate rating because both are a way of saving money, there was no change of attitude towards the valuation. I had the feeling they thought I was probably a slightly foolish exception.

zeupater

Martyn1981 wrote: »

... @ Zeup and Eric - you've got me pondering now on returns. If the entire install cost is written off as an immediate loss, then I suppose you do have to refill the pot (including a cost of capital element) before profits. But has the install cost been lost?

A taxi driver wouldn't put the full cost of a new car down as a loss in year one, instead the annual cost would be depreciation plus loan/cost of capital.

Surely the PV install retains value, even if only the locked in FITs rate. I was asked a while back for suggestions on valuing a PV system for a house sale (it was on original FITs). My suggestion was to compile a spreadsheet for the potential buyers showing repayments on a 80% mortgage over 25 years. Then to compile a second spreadsheet adding £10k to the mortgage, but deducting the original mortgage payments and the FITs+export+leccy savings. After including 0.5% annual performance reduction, 3% inflation increases, and £1k for inverter after year 10, the compounding effect knocked 4 years off the mortgage term!

[Edit: A better suggestion than mine, and far easier, was to tell potential buyers that they (effectively) wouldn't have to pay council tax for the next 23 years!]

So I think a system retains 'some' value, and profits are made when annual costs are covered, rather than when the full replacement of original cost is covered.

Appreciate that finding the retained value is not easy, but last year I personally think we saw a huge change in peoples thoughts on PV, and general acceptance by householders and potential householders, that must have had some positive effect on value.

Mart.

Hi M

I pretty much agree, however, my post was simply to demonstrate that initial annual losses in a 'green deal' purchase are no different to loss of capital in a self-funded install.

What needs to be remembered is that the 'green-deal' install should be considered as being a 'liability' until the loan has been fully paid ... it's a little complicated, but the best way to consider it as not being an 'owned' asset in conventional terms as it belongs to the 'property', not the 'property owner' ... it only becomes 'owned' when the 'liability' has been fully discharged ...

Views on effect on property values are in post #29.

HTH
Z

KeenToMakeSavings

zeupater wrote: »

Hi

What seems to have been missed is that if the system was to be fully funded from savings, there is no return at all until the capital has been returned - the loss of interest on the sum 'invested' needs to be considered too ....

Of the £6000 loan repayment of ~£79.50/month at 5.9%APR, the initial interest would be ~£29.50 (6000*.059/12), the £50 difference being capital repayment, and of course, the outstanding balance will be reducing and attracting less interest in subsequent months/years ....

If you are looking at solar pv simply from a moneysaving point-of-view then you need to look at the long-game, this being the case however it would be funded .... using the same logic as used in the referenced post, anyone who has purchased their system is currently showing a loss of £thousands so there's no real difference ....

Looking at the figures used, it would be more realistic to base your energy savings as being somewhere closer to £100/year so as not to overstate any benefits ... if you achieve more then see it as a bonus ...

Taking the above into consideration, it would be far more appropriate to simply add the total interest payable over the loan period to the initial cost of the system and see what the returns would be over the total FiT payment period. There will be a point at which the loan repayment of £79.50 minus the FiT income and import energy savings are in balance, so maybe it would be an idea to also establish where this crossover point is and consider whether it's affordable & worthwhile to accept a negative cashflow position until this point is reached and benefit from a positive cashflow from then on ....

HTH
Z

I hadn't overlooked the question of capital repayment but I believe that the view one takes of this depends on one's individual circumstances. In my case, I was referring to having spare capital which would not be needed for anything else so could be converted into a solar PV system which would earn around 15 - 18% per annum on the capital employed compared with a bank savings rate of around 0.2 - 3% or an ISA at around 6-10%, thereby generating more savings or income than any of these alternatives. The capital would not be lost - merely converted into a form where it earned more on a continuous on-going basis.

Only if it is important to recoup the capital in the shorter term does its pay-back then need to be considered and the effect of this on the annual return.

Regarding the long term view mentioned by Zeupater, in my case, and I believe in the case of many others who are living on the limit of their income, a break-even has to be achieved from the first year in order that there is no increase in regular out-goings - an increase which cannot be afforded. So having no surplus monthly income means that person is deprived of ever being able to use solar PV to reduce their out-goings or contribute to the government's emision targets. A back-to-front principle in my opinion.

zeupater

KeenToMakeSavings wrote: »

You are absolutely correct, and we are told the levy will progressively increase so those who can't afford solar PV will continue to fund those who can at an increasing level, making the level of unfairness even greater.

I despair at the thought process (or their lack of) of politicians and civil servants who put these sorts of policies together without appearing to think though their consequences. How can it ever be called reasonable to expect those who can't have to fund those who already can have?

Ian

Hi

The levy relating to solar pv has helped the cost of pv installations fall by 2/3 in two years .... this year's increase in levy funding will therefore accomplish 3 times the generating capacity increase per £ than two years ago ...

As well as the FiT payment now having been reduced to ~1/3 of that available to early adopters, the period of the FiT payment has also been reduced from 25years to 20years ... therefore the total 'through-life' support now available is now around 26.5%(0.33*.8) of what it was.

When a 4kWp pv install cost £25000 (~3years ago), only those who could afford £25k could afford them .... when they cost £15000 (~2years ago) that opened the market up to thousands more who could afford them, at £10000 a year ago thousands more saw them as affordable ... prices are now at £6000 and still falling (£4.5k next year ?) with the added benefit that we're starting to see a situation where absolutely no capital outlay is required for those with no ready capital ....

It's clear that each and every penny of the levy used for funding new installs is purchasing generating capacity at an ever increasing rate of efficiency. Couple this to the effect that renewables is starting to have on moderating energy price increases in other countries (German prices falling !!), it could be said that the "politicians and civil servants who put these sorts of policies together without appearing to think though their consequences" have actually had the foresight to do something which will actually make a difference in the long-run through decoupling delivered energy prices from the market pricing of carbon-based fossil fuels, which has been the case even for non-carbon nuclear energy and is probably the reason for so-many fossil-fuel generating companies withdwawing from the next generation of UK nuclear-build ... they all wanted a slice of the pie when there was a fixed capital investment and income was linked to a 'controllable' commodity price, but fixing it to the capital investment, as should be the case with renewables & nuclear, they simply walk away ....

History may record the moderation of energy pricing through the encouragement of renewable energy and microgeneration causing the decoupling of pricing from fossil-fuels as being one of the major socially progressive moves that there has ever been .... if so it will eventually benefit the 'poor' more than the 'rich', especially so if the 'rich' are shareholders in the current, highly profitable, energy providers ...

HTH
Z

EricMears

KeenToMakeSavings wrote: »

So having no surplus monthly income means that person is deprived of ever being able to use solar PV to reduce their out-goings or contribute to the government's emision targets. A back-to-front principle in my opinion.

Having no surplus monthly income clearly shows that the person is not aware of "Micawber's Rule" !

There are far too many temptations in our modern world to spend all your income and borrow some more. It does indeed lead to misery.

EricMears

KeenToMakeSavings wrote: »

How can it ever be called reasonable to expect those who can't have to fund those who already can have?

Ian

Put as baldly as that, then of course it cannot.

However, in spite of what you may read on these pages it is not just the poor who are having to fund FIT payments. They come from a levy on everybody's electricity bills - including the bills I get for my night-time usage. In general, rich people tend to use more electricity than poor people so are making a bigger contribution to the FIT fund.

It's also not just the poor who are denied the chance of installing solar panels. Some very rich people who live in listed buildings could also be missing out as indeed could anyone who didn't have the foresight to choose (or build) a home with an unshaded S-facing roof.

Martyn1981

grahamc2003 wrote: »

I'm not sure anyone's saying systems on the max fit rate are not a good investment for the owners are they? But as for society as a whole, they are undoubtably a terrible investment - so you have to be careful to understand exactly what is being criticised by those who take a societal view, rather than a personal view.

Unless those doing the criticising, are only doing so due to a complete failure to appreciate the long-term gains to society that investment in renewables will bring.

Since FITs and all other renewables schemes are designed to bring long-term benefits, I think flipping your statement gives a far more honest look at such measures:

"But as for society as a whole, they are undoubtably a [STRIKE]terrible[/STRIKE] great investment - so you have to be careful to understand exactly what is being criticised by those who fail to take a societal view, rather than a personal view."

For someone that is such a huge fan of nuclear, to criticise subsidies for renewables, is hypocritical on a scale almost unimaginable.

Mart.

grahamc2003

EricMears wrote: »

Put as baldly as that, then of course it cannot.

However, in spite of what you may read on these pages it is not just the poor who are having to fund FIT payments.

Could you supply a quote where anyone has said it's only the poor who pay - because I've never seen anyone say or imply that, and I can't see how anyone could even think that that was the case.

I've seen several posts just like yours though - seemingly 'clarifying' that all bill payers pay, and not just the poorly off. I've always wondered why they've posted a 'clarification' when there never was any doubt anyhow.

The (obvious) point about the fits is that it is those on fuel poverty who are affected badly by any increase in bills, and it is that group who the concern is, or should be in a caring society, for. Those not in fuel poverty, and who aren't placed into fuel poverty by green additions to bills, aren't going to be affected in any life changing manner.

zeupater

KeenToMakeSavings wrote: »

I hadn't overlooked the question of capital repayment but I believe that the view one takes of this depends on one's individual circumstances. In my case, I was referring to having spare capital which would not be needed for anything else so could be converted into a solar PV system which would earn around 15 - 18% per annum on the capital employed compared with a bank savings rate of around 0.2 - 3% or an ISA at around 6-10%, thereby generating more savings or income than any of these alternatives. The capital would not be lost - merely converted into a form where it earned more on a continuous on-going basis.

Only if it is important to recoup the capital in the shorter term does its pay-back then need to be considered and the effect of this on the annual return.

Regarding the long term view mentioned by Zeupater, in my case, and I believe in the case of many others who are living on the limit of their income, a break-even has to be achieved from the first year in order that there is no increase in regular out-goings - an increase which cannot be afforded. So having no surplus monthly income means that person is deprived of ever being able to use solar PV to reduce their out-goings or contribute to the government's emision targets. A back-to-front principle in my opinion.

Hi

I think that politics is getting wrapped up with economics here, so all that needs to be done is look at the maths involved and set a target price for the system to financially 'break-even' in year1 .

Let's say that the known variables at current values are ...

FiT & Deemed export = £600/year
Household energy savings = £100/year
10 Year loan APR = 5.9%
Repayment on a £6000/loan would be £79.50/month.

... This gives a conservative £700/year income, which is £58.33/month, so the price at which you would be in a profit from year1 with a 10year 5.9% loan would simply be £4400((6000/79.5)x58.33) ...

... Of course, there is another way of looking at the same problem .... In a previous post (#20) it was established that in year1, of the monthly payments of £79.50, £29.50 would cover the interest leaving the balance of £50 to repay capital, therefore you can deduce that moving to a 15year term at 5.9%, the initial interest would remain the same and the capital would change to approximately £33.33((50/15)*10), a total of £62.83, a new shortfall of around £54/year ((62.83-£58.33)*12), which simply means that your target annual in-house energy savings move from £100 to £154. At your current price of 13.611p/kWh that's a target energy reduction of 1131kWh/year, which would be a self consumption rate of around 30% of total generation, which is very possible if someone is home during the day.

Of course, there's the possibility of repairs or replacement inverters to consider, but that's down to money management of the value of the energy savings and FiT income, but hopefully any expenditure would be outside the major component guaranty period and therefore likely after a 10year loan has been repaid ...

There are many ways to slice this cake and most work in the favour of someone who is not totally risk-averse or politically motivated, it's just about looking at the figures, understanding what they are saying, setting targets, planning, making decisions and most importantly sticking to the targets & plan ...

HTH
Z

spgsc531

grahamc2003 wrote: »

The (obvious) point about the fits is that it is those on fuel poverty who are affected badly by any increase in bills, and it is that group who the concern is, or should be in a caring society, for. Those not in fuel poverty, and who aren't placed into fuel poverty by green additions to bills, aren't going to be affected in any life changing manner.

DECC stated green taxes on fuel bills was £20 a year in 2011. That's 38p a week. That's 5p a day. Hardly life changing.....

DECC calculates that its policies will add £48 to bills by 2020 (compared with its £20 figure for 2011), but it argues that its overall push for renewables and energy efficiency will lead to a net decrease in energy bills.