Solar panels - still worth it?

aimex

Hi

Is it still worth investing in solar panels financially? have recently moved into a house which I think would be well suited but just wondered if there was still a benefit to it financially?

x

EricMears

aimex wrote: »

Hi

Is it still worth investing in solar panels financially? have recently moved into a house which I think would be well suited but just wondered if there was still a benefit to it financially?

x

Probably ! Though I'm afraid it's one of those "how long is a piece of string ?" questions. There's plenty of info in our FAQs topic to be able to work out for yourself how many panels you can fit on the roof and looking at the PVGIS website you can then calculate how much electricity you can expect to generate in a typical year then go on to work out what FIT payments you could expect.

Then - and only then ! - should you contact a few possible installers and see what sort of price they're offering you for their systems. At the same time, you can ask them to estimate your likely annual generation and FIT payment (and since you'll have done the maths already you'll get a very good idea of how reliable they're likely to be : anyone quoting ridiculously high yields is either dishonest or incompetent or even both !).

The only step left is to decide how you're going to pay for it. If borrowing, you need to earn more than the loan repayments; if paying cash you need to compare the earnings rate with what you might get investing in something else.


HTH

Rheumatoid

According to these spammers on Facebook its a better time than ever. I'm so disappointed I didn't wait :rotfl:

http://www.solarpanelfunding.co.uk/

There is a lot of dodgy info out there.

aimex

Thank you will check the faqs and suggested sites out x

edinburgher

I'm going to come down on the other side of the fence and say probably not! We got panels installed a month before the FIT rates were cut significantly and would not have gone ahead with them if we had missed the cut off.

As it stands, it looks like it will take us c. 10-11 years to repay the capital costs of the equipment, less if you take into account reduced utilities bills (maybe 7-8)?

It was never all about the money for us (great to reduce our carbon footprint and be more self sufficient as well), but it was definitely a factor.

EricMears

edinburgher wrote: »

As it stands, it looks like it will take us c. 10-11 years to repay the capital costs of the equipment, less if you take into account reduced utilities bills (maybe 7-8)?

Is that really so bad ? Call it 11 years to repay the capital (& ignoring bill reduction) and you'll still have 9 years of 'pure profit'. But of course you'll also have a full 25 years (I'm referring to the probable guaranteed EV output life rather than the 20y length of the FIT scheme) of bill reductions - almost certainly becoming more & more significant as time goes by.

Incidentally, I'm not on either 'side of the fence' - my advice was to calculate likely returns from the scheme then compare that with the installation cost before making a decision - though I strongly suspect that it should be possible to find a supplier where the scheme would be worthwhile (along with half a dozen suppliers where they'd make all the profit leaving OP with none).

warrenb

Or you could look at it this way, £5k sitting in the bank making 1.3% interest or up on the roof with a 6 to 9% return a year. Of course with the fit reduction it is now down to around 4-6% return, but still better than sitting in a savings account.

edinburgher

Is that really so bad ? Call it 11 years to repay the capital (& ignoring bill reduction) and you'll still have 9 years of 'pure profit'. But of course you'll also have a full 25 years (I'm referring to the probable guaranteed EV output life rather than the 20y length of the FIT scheme) of bill reductions - almost certainly becoming more & more significant as time goes by.

No, I'm perfectly happy with that, but weren't FIT payments cut by 60%+ from the start of 2016?

Or you could look at it this way, £5k sitting in the bank making 1.3% interest or up on the roof with a 6 to 9% return a year. Of course with the fit reduction it is now down to around 4-6% return, but still better than sitting in a savings account.

Do you have a source for this? As with my previous comment, I thought the FIT rate was cut by 60%+, so your 'after' figures seem a tad optimistic. Also, this is MSE, I suspect that fewer than average people are getting 1.3% on their savings, we have 3-4 regular savers at 5%+ and our main current/savings accounts are paying 3-5%.

Cardew

warrenb wrote: »

Or you could look at it this way, £5k sitting in the bank making 1.3% interest or up on the roof with a 6 to 9% return a year. Of course with the fit reduction it is now down to around 4-6% return, but still better than sitting in a savings account.

IMO this is a completely flawed comparison of 'Investments'


If I invest £5,000 in a bank, I will always have that £5,000 capital plus any accrued(and compounded) interest. In a long term investment it is not difficult to get 2%pa(£100pa) so £6,100 after 10 years


'Invest' £5,000 in solar panels and you will have a system providing income, but no Capital left. That investment will very probably need repairs after ?? years. How much for an inverter? Or get someone to clamber onto your roof and diagnose a faulty/damaged panel. Health and safety require a scaffold and in a couple of years there will be a dearth of solar panel installers.


If a bank advertised a scheme where you could give them £5,000 and over the next 10 to 12 years they would only pay you back YOUR £5,000, and then you would start to earn a good rate from the investment,(provided no 'repairs' were required!); I wonder if they would have many takers?

Exiled_Tyke

warrenb wrote: »

Or you could look at it this way, £5k sitting in the bank making 1.3% interest or up on the roof with a 6 to 9% return a year. Of course with the fit reduction it is now down to around 4-6% return, but still better than sitting in a savings account.

As has been mentioned here before, you need to be very careful comparing percentages of an investment where you are sacrificing your capital for future returns against a savings account where the capital is always available. In other words the 5% estimated return has to repay the capital as well as provide an added benefit. Given that FIT contracts are now 20 years, if the return is 5% a year (per your figures) then panels are just going to pay for themselves over the 20years but the 1.3% interest (again per your figures) will be lost as there is no capital. If the FIT payments and savings were put into the same savings account as they came in then the return would be approximately half of that which would have been gained from leaving the money in the bank.

Put simply if the 5% 'return' is any where near accurate solar isn't going to pay for itself. As a rule of thumb any system needs around 9% return (including the electricity savings) to be viable.

Rheumatoid

Maybe I'm thick but I don't thoroughly understand this. A rough back of fag packet calculation shows that If I had left my £4700 in the bank and lets say I average 3% p.a interest I reckon I would have around £8.5k at the end of 20 years.

With my FiT income estimates I would have £12k in the bank if I paid all income in to an account (which is what I am doing) and that is not adding any interest earned or allowing for uplift in FiT rates. Neither does it consider any savings from reduced electricity usage which I guestimate is another 6k based on todays leccy prices. I thought the case was pretty clear for me?