Solar vs Annuity

2nd_time_buyer

I was thinking that, in some ways, solar panels are pretty similar to an annuity in terms of a pension product:

- They require a lump sum invested for a (almost) guaranteed return.
- They are index linked. 
- They are worthless when the owner(s) pass away 

So comparing a similar annuity rates vs solar
 
Solar, £10k would buy a system that could generate in the region of £1000 per year savings (income)
Annuity, £10k would buy you a  index-linked annuity with spousal benefits paid from 65 of £350 per year. 

There are obviously a number of differences 
- Solar panels are paid for from taxed income but savings are effectively tax free. Whereas pensions are generally tax-free on the way in but taxed on the way out.
- Solar savings are not fully guaranteed
- Solar is only index-linked to energy prices 
- The system performance might not be as predicted for the next 25 years
- You might move 

None the less, it seems to stack up quite well as an alternative 'pension'

Martyn1981

Hiya, I've always thought that. It also applies to insulation and similar. My dad asked me where he could get a better return on his investments about 15yrs ago, and I suggested low energy lightbulbs!

Swan_Valley

As previously mentioned on here, investments in companies on Abundance can have the similar results, but also the possibility of returning your investment.

They can be a good way of "compensating" for the CO2 from imported electric.

(Not investment advice, as all investments carry a risk)

jimjames

Can you actually get a system that pays income now with the FIT removed from new installs?

Spies

jimjames said:

Can you actually get a system that pays income now with the FIT removed from new installs?

Yes, SEG pays for export

gefnew

If the owner passes away the contract period still stands mine is 25 years, just change owner of fit payments.
Plus does not affect benefit claims as is tax free for the term of contract.
The best 9500 pounds invested in 2011. Average generation 3675 kw a year over that period.
happy days.

Magnitio

In the last few years I paid extra into my pension and received tax relief on the payments. Last year I received a tax-free cash lump sum on taking my pension. Part of this is now being invested in solar to help reduce on-going costs as well as reduce our co2 output. Certainly makes sense to me.

JKenH

Solar was a good investment when FiT rates were available, perhaps less so from 2019 onwards but with increasing electricity prices it seems attractive again. 

When investing, diversification is desirable and solar offers another investment category. Annuities are out of favour at the moment but 15 years ago were very attractive. Times change and with them different investments appear more or less attractive. 

I do have a SIPP from which I draw an income but I also have an annuity in the form of a final salary pension. I had the option at the time to take a cash free lump sum and/or convert that to a SIPP but decided to leave it all where it was and take the index linked annuity. I would probably have done better to take the money but I have the security of the annuity if I am lucky enough to live a long life, immune from the vagaries off the stock market. 

We decided to go for solar panels in 2018 having finally decided to stay in our current house after years searching, fruitlessly, for the perfect building plot on which to design and build our last house. I don’t regret purchasing the panels (I would have more if the DNO would let me) but the panels have  returned nothing like the money would have done in my ISA. Maybe they will though in 2022.

If you are settled where you live and see no prospect of moving in the next 20 years I would go for solar.

Edit: I should add that my solar panels currently only generate around 90% of what they did when new in 2018. I know there is a problem but the specialist I got in couldn’t work out what it was. (I suspect water has got into a connection somewhere on the roof). Last year losing around  10% of output was costing me around £60pa (I can’t consume all I generate in summer) but this year it will probably be closer to £100 lost. I’m not aware of anyone else on this forum who has had similar problems but the potential exists for things to go wrong and they will be expensive to fix if scaffolding is needed. 

jimjames

JKenH said:

 I’m not aware of anyone else on this forum who has had similar problems but the potential exists for things to go wrong and they will be expensive to fix if scaffolding is needed. 

That's worrying to hear, hope you manage to get to the bottom of it. Our panels are now over 10 years old and no significant or discernible reduction in output in that time. I think the variation of solar over the year is more than the reduction in output from what I've seen so far.

arty688

The return on solar largely depends on how much of the generated solar you can use. Eg 4000kwh generated and none used is about £200 and 100% used £800 @20p or £1200.  @30p . 

2nd_time_buyer

That is true. However batteries and octopus Go. Or no batteries and Octopus agile export are changing that a bit