Beat My Quote....Solar Panels...Loan

Towser

I need to borrow £5000 to pay off some Solar panels over 5 years.

I would be saving/earning money eventually as they would be paid off after 5 years but I would still have the benefit of free electricity and an income from the Feed In Tariff for at least another 15 years.

I would be earning money from the Feed In Tariff straight away to pay off the loan.

LLyods bank have turned me down in the past who can I go to?

Towser

The total income I think I would receive per year is around £300.

The total saving of electricity used per year would be around £150.

The monthly loan payment would be around £100 per month or £1200 per year. Leaving a shortfall of £750 per year for the first five years.

Taking around 14 years for the system to pay for itself. Can that be right?

jackieblack

Towser wrote: »

I need to borrow £5000 to pay off some Solar panels over 5 years.


I would be earning money from the Feed In Tariff straight away to pay off the loan.

FIT payments are not going to cover the loan repayments

jackieblack

Towser wrote: »

The total saving of electricity used per year would be around £150.

Seems a bit optimistic

Towser wrote: »

Taking around 14 years for the system to pay for itself. Can that be right?

Quite possibly, does that factor in the cost of a replacement inverter during that period?

andyfromotley

Towser wrote: »

The total income I think I would receive per year is around £300.

The total saving of electricity used per year would be around £150.

The monthly loan payment would be around £100 per month or £1200 per year. Leaving a shortfall of £750 per year for the first five years.

Taking around 14 years for the system to pay for itself. Can that be right?

Sounds about right, on your figures they would take 11 years to pay for themselves without factoring in the loan. So obviously getting the cheapest loan possible is important.

But, another poster has said your figures are optimistic. And another has mention Maintenance, I don't know the working lfe of these panels but i would have to ask myself, do they make any financial sense at all?

dealer_wins

andyfromotley wrote: »

Sounds about right, on your figures they would take 11 years to pay for themselves without factoring in the loan. So obviously getting the cheapest loan possible is important.

But, another poster has said your figures are optimistic. And another has mention Maintenance, I don't know the working lfe of these panels but i would have to ask myself, do they make any financial sense at all?

No!! (especially if you take a loan to fund them lol)

Martyn1981

Towser wrote: »

The total income I think I would receive per year is around £300.

The total saving of electricity used per year would be around £150.

The monthly loan payment would be around £100 per month or £1200 per year. Leaving a shortfall of £750 per year for the first five years.

Taking around 14 years for the system to pay for itself. Can that be right?

Hiya Towser, I think there's something wrong with those income figures. You've previously mentioned a 4kWp system (£5.5k). Not sure you've given your location or orientation, but that should generate between 3 and 4,000kWh per year. So an income of:

FiT 3,000*13.88p = £416
Export 1,500*4.77p = £71

so around £500pa (perhaps £650 if south facing, no shading etc)

Leccy savings, as jackieblack (an experienced PV'er) says, £150 may be too optimistic, it depends on leccy consumption and daytime use. In the PV FAQ's I suggest using £120 (£80-£160) as a starting guesstimate.

So income wise, probably in the £600 to £750 range pa.

But if finance is unavoidable you need to get it cheap (mortgage levels) to make PV work.

Notes:
1. The Fit rate drops to 13.39p 1/4/15.
2. My leccy savings are approx £180 (3,000kWh import reduced to 1,600kWh) but I have a long/strong generation day, but at the same time, my off-south systems don't perform as well as due south panels on a kWh per kWp comparison.
3. @andyfromotley - Working life of panels 30 to 40 years. Inverter, 10 to 20 years (perhaps upto £1,000 for replacement and labour). Subsidy scheme 20 years index linked.

Mart.

Towser

Thank-you people

do they make any financial sense at all?

I think the answer is NO even if I save up not needing to take a loan.

I don't understand why people have them then? Am I missing something somewhere?

Martyn1981

Towser wrote: »

Thank-you people

I think the answer is NO even if I save up not needing to take a loan.

I don't understand why people have them then? Am I missing something somewhere?

Well, based on the numbers I gave, if you had the cash, then the gross return is between 11% (£600/£5.5k) and 13.6% (£750/£5.5k) per annum index linked for 20 years.

If you take off 5% for depreciation (lost capital), then that's still 6% to 8.6% index linked.

Mart.

Towser

Thanks Mart

You get paid / make savings of £760 per year for the next 20 years (will be more as the FIT increases with inflation and electricity costs rise each year) so a system costing £5450 pays for itself in 7 years. The remaining 13 years are profit.

andyfromotley

Martyn1981 wrote: »

Well, based on the numbers I gave, if you had the cash, then the gross return is between 11% (£600/£5.5k) and 13.6% (£750/£5.5k) per annum index linked for 20 years.

If you take off 5% for depreciation (lost capital), then that's still 6% to 8.6% index linked.

Mart.

When explained like this they do of course make perfect sense provided you can get a loan at a reasonable rate.