Solar panels and increasing electricity bills

Lurker21

Martyn1981 wrote: »

I suspect most people would simply look for a gross ROI of about 10% (or better) so that the capital will be back in 10 years, and that leaves another 10 years of FiT, plus any extra years of leccy savings after that period.

Thanks for the reply. Hmmm. So taking capital into account the real return goes down well into single figures. Given a typical return on (say) an index tracker unit trust is going to be around 6% (including capital appreciation) this sounds like a much easier way to get roughly the same return on some capital.

And at the end of the 20 or 40 years I've got a pot of capital for my retirement rather than knackered solar panels I've got to decommission or replace.

Martyn1981

Lurker21 wrote: »

Also, does anyone have any info on whether solar panels affect a property's value? (Upwards or downwards).

Eye of the beholder I suspect.

There was a survey in the UK a couple of years back when new buyers rated PV as the number one choice for a free extra (2nd place was a weekly bin collection). Whilst this doesn't place any value on the PV, what struck me was that PV got 40% of the vote, but critically, is probably only suitable for about 20% of properties, so demand already exceeds supply. But again, note that was as an extra when comparing properties, cost didn't come into it.

A very recent report in the US said it added value:

US homebuyers willing to pay more for homes with solar panels, says report

The appraisers – which included researchers from Sandia National Laboratories – discovered that properties with a typical 3.6 kW solar system sold for around $15,000 more than a similar home without solar installed. This equates to a solar rate of approximately $4/watt installed, and the study reveals a correlation between solar panels and willingness to purchase the home.

But this sounds odd to me. US installs do cost more than in the UK (their subsidy scheme helps towards the initial cost, and such schemes tend not to encourage price reductions as much as the FiT has in Europe). But even allowing for that, the house appears to have gone up by about £9k, which is probably the full cost of the PV system, which someone buying a non PV house could get installed, so whilst it sounds promising, it also seems very odd to me.

Also remember that in the UK, you can't take your PV system with you when you move and still get the FiT, so what happens when your buyer wants it, and appreciates the income it will bring, but bluffs you by saying they don't want nor like it, and for all they care, you can remove it. Who'll blink first?

Mart.

Martyn1981

Lurker21 wrote: »

Thanks for the reply. Hmmm. So taking capital into account the real return goes down well into single figures. Given a typical return on (say) an index tracker unit trust is going to be around 6% (including capital appreciation) this sounds like a much easier way to get roughly the same return on some capital.

And at the end of the 20 or 40 years I've got a pot of capital for my retirement rather than knackered solar panels I've got to decommission or replace.

Yep, but don't confuse yourself over the pot of money issue.

If you can get an 11% gross ROI, thus balancing out the 5% depreciation and the 6% cost of capital (opportunity cost of not doing the 6% unit trust tracker) then the returns are similar.

And whilst for accounting purposes I'm deducting the depreciation and cost of capital from the gross ROI, you are still getting it, and it's rebuilding that pot, so after 20 years (and I'm oversimplifying now) but you will have the 20*6% lost interest plus the 20*5% depreciation. So the pots would be the same ....... plus you have the PV system still operating and saving you leccy.

[Again, for simplicity I'm ignoring the inverter cost, balancing it off against the annual RPI increase in the FiT and export and leccy incomes.]

Mart.

Martyn1981

Martyn1981 wrote: »

And whilst for accounting purposes I'm deducting the depreciation and cost of capital from the gross ROI, you are still getting it, and it's rebuilding that pot, so after 20 years (and I'm oversimplifying now) but you will have the 20*6% lost interest plus the 20*5% depreciation. So the pots would be the same ....... plus you have the PV system still operating and saving you leccy.

Oops! There's an error in there. If we assume that all annual income is reinvested, then whilst the 6% part of the 11% gross return would balance against the 6% increase in the tracker value when re-invested for yr2 ...... the 5% depreciation would be additional, so the interest on that received in yr2 (and the interest on the 10% (5%yr1+5%yr2) returned depreciation in yr3, and the interest on the interest from yr 2 in yr3 - strewth - and so on) would actually mean that the PV pot would exceed the tracker pot after 20 years - in this theoretical example. And again, you'd still have the PV system too!

Forget what I said about over-complicating the issue, I suspect that ship sailed long ago.

Mart.

Lurker21

Martyn1981 wrote: »

Also remember that in the UK, you can't take your PV system with you when you move and still get the FiT, so what happens when your buyer wants it, and appreciates the income it will bring, but bluffs you by saying they don't want nor like it, and for all they care, you can remove it. Who'll blink first?

Thanks for your posts - very interesting.

When we were looking to move a couple of years ago we were put off houses if they had solar panels - ugly and potential hassle. But maybe we are untypical.

All in all, think we will leave the £5K in the unit trust, put the dividends towards the leccy bill and look forward to the £5K having grown when we come to retire.

Cardew

Hengus wrote: »

FWiW, the Energy Savings Trust used to indicate that 50% of the predicted annual PV solar output would be used in the home. In truth, the average figure is much less. .

At least now the EST have recognised that, as you say, 50% used in the house is an over-estimate for most people and revised the figure down to 25%. See:


http://est2.solarjuice.com/static/downloads/est/Solar%20Energy%20Calculator%20-%20Assumptions-8ad149f761b132a1e975e4e4a020bd1629408dd7.pdf


That doesn't stop some firms* still quoting the 50% EST figure or even 100% of the generated electricity being used in the house.


* particularly the Rent a Roof companies. Or the latest scam to fit solar PV at an inflated installation prices; with the installation paid for by a high interest loan.

System

Don't forget energy savings inflation which has been quoted as high as 8.9%. I just wonder how PV Solar companies will deal with the static ( and possibly falling) electricity price?