Solar panels - still worth it?

Cardew

Rheumatoid wrote: »

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.

Even at the lower end of 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?

Warren B quoted a 4%-6% return on panels costing £5k in post#7; and that prompted the response from myself and 'Exiled tyke'


At 4% that is an annual income of £200, 5% = £250, 6% =£300.


Taking the mid-point of 5% as 'exiled tyke' did in his post then in simple terms 20 x £250 = £5,000.


You state you are 'not adding any interest earned or allowing for uplift in FiT rates. Neither does it consider any savings from reduced electricity usage'


So to get to £12,000 after 20 years using the above criteria you are getting £600pa i.e. a return of 12.8% on your £4,700. Also not factoring in any allowance for repairs.

Neither does it consider any savings from reduced electricity usage which I guestimate is another 6k based on todays leccy prices.

At today's 'leccy prices' that implies a saving of £300 pa on reduced electricity spending - around 2 to 3 times the average figure.

EricMears

Rheumatoid wrote: »

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?

That certainly works for a 2015 (or earlier) install. What the OP actually wants to know is how it would pan out for a May/June 2016 install. And of course there are far too many variables for any of us to comment on until the basic investigation has been done (and reported).

Rheumatoid

EricMears wrote: »

That certainly works for a 2015 (or earlier) install. What the OP actually wants to know is how it would pan out for a May/June 2016 install. And of course there are far too many variables for any of us to comment on until the basic investigation has been done (and reported).

Sorry, missed the bit about a current install - told you I was thick

Martyn1981

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.

Hiya. 6% is probably the lowest starting point, as this will allow for depreciation over 20 years (5%) or 25 years (4%), plus about 1% for lost interest, assuming a cash ready account. So a breakeven position if the system lasts longer.

Of course the money may have been earning a higher interest rate, but then so will the annual returns reinvested, and the inflationary uplifts help to offset the interest.

So, can we do better than 6%, probably, and if households were offered the same level of support as nuclear is to get, it would be easy at around 10p/kWh, but we're down to 6.8p/kWh now.

That's still not too low, but you need everything to be reasonably good, a good size install, good price, good orientation, minimal shading.

A 4kWp install at £5k with 4,000kWh generation would still bring in approx £400pa in income including leccy savings, so 8% gross.

Allowing for 5% depreciation, that's still a net return of 3%, and if higher than the lost interest, then an instant profit when comparing the investments. Probably worth assuming another 1% in costs to cover any maintenance/inverter replacement.

So 6% maybe, but 8%+ better.

Hopefully the system will actually be generating for 35 years or so. Plus of course, there's also the green and ethical side too.

Mart.

EricMears

Martyn1981 wrote: »

Of course the money may have been earning a higher interest rate, but then so will the annual returns reinvested, and the inflationary uplifts help to offset the interest.

Perhaps even more significantly, the price of the electricity you'd be saving will also be subject to inflation. That has of course been low (or even negative) for the last couple of years but as soon as we start paying squillions for the new nuclear plants then electricity prices are likely to shoot up.