Is solar PV worth it?

Tycoed

Hi.

I'm a long time lurker. Time to dive in.

Having trawled the forum and done some other research I'm not sure of the cost benefit of a PV system. Perhaps someone could comment on my thoughts.

The energy Saving trust calculator estimates the total instal cost for a 4kWp system as £7080, and the total earnings ofer the lifetime of the system as £14069.

If I put £7080 into an account earning 3% for 25 years I'd end up with £14824.

Assuming some maintenance costs, including possible replacement of inverter, I wouldn't appear to be better off financially, and I would also have access to my capital if needed by simply keeping the cash.

Perhaps PV systems actually last longer than 25 years, in which case the benefits would increase. On the other hand, if interest rates rise then keeping the money in an account would be preferable.

Of course, electricity cost is rising, so that is a factor. And what if the feed-in-tariff is reduced or abolished, another risk factor to consider.

As you can see, I'm on a see-saw at the moment. Installing a system seems like a lot of work for relatively little benefit. I must be missing something!

I would appreciate any thoughts on the matter.

Of course, I haven't mentioned the green issue, but I'm really only thinking finances at the moment.

Thanks for any help. Phil.

WestonDave

Its a difficult calculation because of the number of factors to bear in mind.

Firstly you appear to be measuring 20 years FiT income against 25 years interest - you need to firstly compare 20 with 20, and also factor into the FiT income the fact that you'd have £700 per year cash to invest at 3% which would also build up interest over the period.

You rightly point to the potential for interest rates to rise, but FiT payments are index linked (as is the export element) and energy prices are tending to rise faster than inflation whereas 3% of £x will always be the same even if we have ten years of 5% inflation.

My own view is that is the FiT regime doesn't change then there is more than enough return in PV panels, and the uncertainty over whether it might just be altered is offset by the growing uncertainty over energy shortages and price increases. To me it may not make absolute clear cut financial sense but in the same way a fixed rate mortgage makes sense to some even though the rate is higher, buying a means of lower exposure to future energy price risk has value in itself.

Martyn1981

Tycoed wrote: »

Hi.

I'm a long time lurker. Time to dive in.

Having trawled the forum and done some other research I'm not sure of the cost benefit of a PV system. Perhaps someone could comment on my thoughts.

Phil.

Hiya Phil, as Dave pointed out, compounding the income makes a big difference.

Just run the numbers for 20 years with £7k investment, £700 income and savings, 3% savings rate, 3% inflation rate, 0.5% annual panel degradation. Results:

1. Savings account - £12,642
2. PV income (and savings) - £17,854
3. PV income (and savings) re-invested, and £1,200 deducted yr12 for new inverter - £21,851

To be honest, before you can go much further, you'll need to start getting quotes so that you can get a good idea on prices. £7k is probably near the top for a 4kWp system and £5k near the bottom, so target price around £6k or less.

Any idea what size system will fit on your roof? Have you had a go at calculating annual estimated generation for your location?

From generation estimate you can guesstimate income and savings, then compare those returns to your quotes.

Regarding system life, will depend on the quality of modern systems, but the older ones should be good for 30 to 40 years. I can only cross my fingers and hope mine are still going in the late 2040's. (Even if I'm not)

Mart.

PS Current tariff (15.44p) is safe till 31/7/13. M.

The_Green_Man_2

I also think you should look at the ethics of where you invest. You could either invest your £7000 in an ethical stockmarket fund, such as the FSE4Good index, etc. which have made more than your 3% annual return in a single quarter:

http://www.ftse.co.uk/objects/csv_to_table.jsp?infoCode=NGF4G&theseFilters=&csvAll=&theseColumns=MCwxLDIsMyw0&theseTitles=&tableTitle=FTSE4Good Index Series Values&dl=&p_encoded=1

Or you can invest in Solar where some of the return from FiTS come from the energy bills of poorer people.

Tycoed

Thanks Guys.

WestonDave -
The energy saving trust calculator gives a total earnings value based on 20 years fit plus 5 years without.

Thanks for pointing out a big error - I'd overlooked being able to reinvest the annual income of £700. The figures look much more appealing now!

Mart -
Glad to hear that the panel life should be more than 25 years.

I can't have panels on my roof, but do have space in the garden to erect a frame for the panels. it can be south facing, with nothing to cast shadows, and as large as necessary (I live on top of a hill in West Wales).

I'm hoping that being floor mounted should enable me to keep the panels clean and maintained more easily than if on a roof.

I'll do some more research and calculations as you suggest and report back.

By the way, I only picked an account with 3% as an example - I would hope to find somewhere better to invest. Cash or S&S Isas as a start.

Thanks to both of you - I'm feeling inspired again.

Fruit_and_Nut_Case

The_Green_Man wrote: »

Or you can invest in Solar where some of the return from FiTS come from the energy bills of poorer people.

You are George Monbiot and I claim my £5.

spgsc531

The_Green_Man wrote: »

I also think you should look at the ethics of where you invest. You could either invest your £7000 in an ethical stockmarket fund, such as the FSE4Good index, etc. which have made more than your 3% annual return in a single quarter:

http://www.ftse.co.uk/objects/csv_to_table.jsp?infoCode=NGF4G&theseFilters=&csvAll=&theseColumns=MCwxLDIsMyw0&theseTitles=&tableTitle=FTSE4Good Index Series Values&dl=&p_encoded=1

Or you can invest in Solar where some of the return from FiTS come from the energy bills of poorer people.

As of Dec 2012 average annual electricity bill was £531 according to Ofgem.

Have a wild guess how much of that is for all Feed in Tariffs per year?

spgsc531

Tycoed wrote: »

I can't have panels on my roof, but do have space in the garden to erect a frame for the panels. it can be south facing, with nothing to cast shadows, and as large as necessary (I live on top of a hill in West Wales).

Might want to check on the rules for that. I thought there was something like a 3m² limit for domestic? Not sure of the rules, but would advise to check it out first.

Martyn1981

spgsc531 wrote: »

Might want to check on the rules for that. I thought there was something like a 3m² limit for domestic? Not sure of the rules, but would advise to check it out first.

I think you're right, or about 3m by 3m so 9m2 (approx 6 panels), after that you need planning permission.

I'd hope LA's would be 'kind' to ground mounts, but I guess planning rules are always fun.

Mart.

EricMears

spgsc531 wrote: »

Might want to check on the rules for that. I thought there was something like a 3m² limit for domestic? Not sure of the rules, but would advise to check it out first.

One of my neighbours had two tracking arrays fitted in his garden at approx same time as ours went on the roof and fitted by same company. Each array is 8 x 250W panels

AIUI, he could have fitted one tracking array as a 'permitted development' but needed PP for the second.

tunnel

EricMears wrote: »

One of my neighbours had two tracking arrays fitted in his garden at approx same time as ours went on the roof and fitted by same company. Each array is 8 x 250W panels

AIUI, he could have fitted one tracking array as a 'permitted development' but needed PP for the second.

If its the one i saw last year on the edge of a wood then its certainly a nice piece of kit,my parents have a massive garden and were considering panels on one of their garages but they're all E/W split. I suggested a floor mount but didn't realise that planning would be involved,very handy to know.

I've also mentioned to my dad about a wind turbine as one of his neighbours had one so couldn't see much objection to him having one too,not even looked into planning on them though.

If the OP is "on top of a hill" and would need planning it may be worth considering wind to solar(generate at night too)...just a thought.