Quote for 29.7 kW system for Community Centre

KevinG

Hi,

I am trying to get my head around a quote we have had for a 29.7kWp Solar PV system for a Community Centre. It would go on a large south-facing roof with a pitch that I estimate to be about 25 degrees. The quote includes:

Design, supply, commission and testing including all necessary DNO approvals, materials, electrical, scaffolding, materials handling plant, waste disposal, labour, project management and commissioning documentation of system including:
High efficiency 270w solar panels
G59/3 Compliant Inverters inc G59 Protection Units where necessary
MID Approved Generation Meters with remote web-monitoring facility
Specialist Mounting systems for roof/ground type
Full Installation & commissioning by accredited installation team
Full Health & Safety requirements as detailed above
10 year equipment warranty on all components
DNO & Independent G59 Test Engineer costs if required (but not DNO works)

The total cost is £26.970 + VAT, which they are adamant is 5%, although I’m pretty sure this is wrong and should be 20%, the 5% only applying to residential installations. (The centre is not VAT-registered, so this is a material difference.)

The quote sounds a little on the high side, although I have no experience with installations of this size. More of a concern is their payback calculation, which indicates a payback time of only 5 years, as follows:

30,888kWh of free to use electricity per annum
£4,112 of first year electricity savings
£1,220 estimated year 1 income from FIT's
£777 estimated year 1 export income (if applicable)
-£297 minus Operation & Maintenance Costs
£5,811 overall first year income and savings
21.55% return on investment in year 1
5 years for the system to have paid for itself
1094% total return on capital invested (over 25 years)
£318,220 potential overall net income/savings to the business
712,354 total kWh generated over 25 years
£0.0379 fixed cost per kWh of generated power (in today's prices)

They are assuming what, to me, seems an outrageous 85% self-consumption and that, being under 30kWp, the export tariff will not be metered so will be paid at an assumed 50%. The current annual electricity usage for the centre is 42,000 kWh.

Any thoughts?

Merlin139

85% self consumption usage! LOL

If the return was that good everybody would be installing Solar panels.

How much Electric does the Community Centre use? In the Good months will it ever use nearly 30 KW per hour?

42K / 365 = 115 kWh's per day.

From various quotes that people post on MSE the ones that use all of these figures are trying to justify the large cost of the project? Obviously you will need to get at least another 2 quotes. That would be the time to see if this is any good.

KevinG

Merlin139 wrote: »

How much Electric does the Community Centre use? In the Good months will it ever use nearly 30 KW per hour?

42K / 365 = 115 kWh's per day.

Electricity is not used for heating but it is used for cooking. Quite a lot of it also goes on plumbed-in water heaters (for hot drinks). Nearly all of the lighting is LED but usage will obviously be higher in winter. Usage will also be lower during school holidays, including the long summer break when generation will be high. As you say, the 85% figure cannot be right.

Martyn1981

Regarding the cost, I think it's fair to say from conversations and quotes/prices on here, that the cost of additional kWp's drops a lot once you are past a certain point and the fixed costs.

I'm not allowing for labour, but I'd suspect panels and rails and fixings wouldn't be far off £500/kWp now (or soon, if the MIP ending has hit wholesaler prices).

But, there may be additional costs, site surveys, paperwork, legislation, insurance etc etc that I'm simply not aware of that is applicable in 'commercial' situations.

But gut feeling is that the price seems pretty high, especially if a single roof.

Edit - not at all conclusive, but just been looking at PV kits online, retail prices, and £3k for 4kWp seems doable. So allowing £1k for all the AC side stuff and DC kit from panels to inverter, leaves £2k for 4kWp of PV and the fixings etc, or about £500/kWp retail.

KevinG

Thanks both. Can anyone confirm my belief that the installation would be subject to 20% VAT? It seems pretty clear from paragraph 2.16 here: https://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086

Martyn1981

KevinG wrote: »

Thanks both. Can anyone confirm my belief that the installation would be subject to 20% VAT? It seems pretty clear from paragraph 2.16 here: https://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086

Don't know. I can say that my personal reading of that, and especially the bit about "residential accommodation for students or pupils" seems to suggest a clear no as 'even' a school doesn't qualify. But this bit "homes providing care for the elderly, disabled people, or people who suffer or have suffered from drug or alcohol dependency or mental disorder" suggests wiggle room on the issue of community centre, but again appears to me to be residential, but I'm not sure how to read "homes .... ", and again suggests a level of 'seriousness' that a community center might not reach ?????????

No offence intended, and I genuinely don't know if it's a definite no, so certainly worth further inquiry given the amounts involved.

BTW, further trawling suggests PV panels of around 270Wp can be bought retail for about £100-120 each. So buying lots, and wholesale should be even cheaper. I'm growing more confident over my £500/kWp material price.

KevinG

Martyn1981 wrote: »

No offence intended, and I genuinely don't know if it's a definite no, so certainly worth further inquiry given the amounts involved.

I can't see how the Centre would qualify - the word "homes" seems to disqualify it, even though it does provide some services to the groups of people mentioned.

Martyn1981 wrote: »

BTW, further trawling suggests PV panels of around 270Wp can be bought retail for about £100-120 each. So buying lots, and wholesale should be even cheaper. I'm growing more confident over my £500/kWp material price.

Thanks. I have indicated that the quote is probably at least £5,000 too high and we need two more quotes. Obviously, time is of the essence if we want the FiT payments.

pinnks

I think 1.3 holds the key as the centre is presumably a charity. 1.3 points you at 2.1 which makes it clear that the reduced rate is applicable only to residential accommodation. Whether or not the centre is a charity it would appear not to be residential.

http://www.legislation.gov.uk/ukpga/1994/23/schedule/7A

Solar is in Group 2 and the reference to charity was removed in 2013. The reference in that Group to "relevant residential purpose" is the same as in Group 1 (Paragraph 7 - Interpretation of paragraph 6).

Does the centre fit in any of those descriptions? If not it would seem that 20% is the name of the game.

KevinG

Thanks pinnks, that's quite hard to follow but the "relevant residential purpose" definition seems the same as the link I posted and I can see no way that the Centre qualifies. It is a registered charity but, as you say, that does not appear to make any difference.

pinnks

They should both be the same as the link you posted is to the guidance that describes the legislation. If the centre is a charity then you need look no further as charities were removed from qualifying in 2013 as I read it. Only residential installs now qualify - see 1.3 of the link you posted...

"... from 1 August 2013 the reduced rate no longer applies to installation of energy-saving materials in buildings used solely for a relevant charitable purpose."

mnbvcxz

I always understood the accepted maxim was that solar does not make financial sense for business's unless they were consuming all the electricity themselves, offsetting their current usage.

Only you are in a position to know if this would be the case for you. Do you consume 30kw of electricity, during the middle of the day, in summer, when most of your electricity will be generated?

Otherwise do you value the (real) pleasure of helping the environment and boiling your kettle for free during the day? Not everything is about profit. Perhaps say 10kw of solar would also provide you with this pleasure at less cost? Perhaps the pleasure would be worth the financial loss.

If its an old building then the extra available energy for heat and dehumidifying might help the health of the building.

I agree the vat looks like 20%. Don't forget to budget for a probable replacement inverter at some point... FIT payments are for 20 years not 25 I think?

Will the electricity board be happy with accepting this much solar? Some consider themselves already overloaded. Does the building already have three phase electricity or might you need an expensive upgrade?

Absolutely get several quotes. Also consider the faint but possible outcome that they take your money and go into administration before installing the panels.


That said it is a better situation than I would have expected. Back of an envelope suggests that a 2.5% loan fixed for the first ten years with the inflation increases on the fit payment would see you paying off 30-40% of the loan in ten years without taking into account lower electricity bills. Then who knows what interest rates will be... It still leaves you probably short after 20 years but not by as much as I was expecting given the slashed subsidy payments. Unless it breaks of course and ends in tears.

If not borrowing the money no one ever takes into account the loss of capital on these quotes...