How do you guys keep track of ROI on your panels / battery?

Magnitio

Just checked after 20 months and expect payback of just under 7 years, so similar to others. Would probably have been less without batteries, but I do prefer the flexibility they provide.

caprikid1

Hi all, How long does a solar system last and what is the depreciation rate to be used ? 

Every time I see Solar system calcs I seem to see people comparing it to having the money in the bank, reality is these solutions I suspect have no value after 15-20 years.

Has anyone work out the return assuming the install is worthless in say 20 years time ? Would the interest on say £20K sat in the bank now make a solar system savings - depreciation struggle to make sense ?  ]

If I had £20,000 invested at 5% PA I would have £54,000 in 20 years time.

Typical cost of electricity is currently £1700 per annum if prices rise at 5% Year on year (They are high now). 

That would be a total spend of £64,000, so £10,000 worse off if the install cost £20K and the panels and batteries are worthless, how long to the batteries last ?

Anyone got the figures over 20 years as I assume there is positive revenue from the panels every year ? So I guess over 20 years you could be £10K better off ? Obviously no idea of the levels of FIT tarrif either ?

anyone done the 20 year maths ?

EricMears

caprikid1 said:

Hi all, How long does a solar system last and what is the depreciation rate to be used ? 

Every time I see Solar system calcs I seem to see people comparing it to having the money in the bank, reality is these solutions I suspect have no value after 15-20 years.

Has anyone work out the return assuming the install is worthless in say 20 years time ? Would the interest on say £20K sat in the bank now make a solar system savings - depreciation struggle to make sense ?  ]

If I had £20,000 invested at 5% PA I would have £54,000 in 20 years time.

Typical cost of electricity is currently £1700 per annum if prices rise at 5% Year on year (They are high now). 

That would be a total spend of £64,000, so £10,000 worse off if the install cost £20K and the panels and batteries are worthless, how long to the batteries last ?

Anyone got the figures over 20 years as I assume there is positive revenue from the panels every year ? So I guess over 20 years you could be £10K better off ? Obviously no idea of the levels of FIT tarrif either ?

anyone done the 20 year maths ?

I haven't "done the 20 year maths" but don't really need to.  I fully recovered installation costs in seven years and - barring accidents - expect to double that in another five and hopefully collect a further two lots in next twelve.

If I'd left my £12.5k in its ISA in 2011 I'd have carried on earning approx 2%pa and it would have taken until this year to get anywhere near 5%.  Had I extended mortgage to cover cost I'd have been paying a lot less than 10%pa on the debt and still wouldn't have got up to that level.

I'd be happy to regard my present installation as 'valueless' tomorrow but more realistically a couple of broken panels could be claimed on house insurance or even paid for myself to avoid prejudicing NCB.  Original inverter has lasted twelve years and counting but I'm not seriously expecting it to last another twelve;  replacing it would be less than £1k or repairing it possibly even less.

Raxiel

QrizB said:

1961Nick said:

The original costings I did for solar & batteries now look ridiculous with interest rates 8x & electricity prices 4x the figures I was using. 

And we collectively need to keep that in mind when proselyting about solar PV.

"Yes you should get solar, it'll pay for itself in five years" might be true when PV is £1/watt and electricity is 30p/kWh import, 15p/kWh export. If prices go back to 15p /5p the costings are less immediately persuasive.

Anyone who installed solar before 2022 and thinks they're a moneysaving genius just because the energy market went crazy when Russia invaded Ukraine should ask themselves whether they knew that would happen when they signed their PV installation contract.

(Sorry to be a party pooper!)

I knew that prices would probably drop, (although I don't think we'll ever see 15p/5p again, the inflation is pretty well baked in across the board). Our rationale was that not getting PV would hurt more if prices did stay high, than the financial pain of getting it and then prices dropping.

Then there was the knowledge we were reducing our carbon footprint, which is hard to quantify but still valuable to us.

Anyway, with a couple of weeks until the anniversary of our installation, we're a hair shy of 16% back on the capital (calculated as export payments + saved import). Next year may be less, but while we didn't plan on the system adding a huge amount of value to the house, what it does add reduces the break even point a bit to around 60-70% direct RoI.

Even if we sell up in 3 years, I don't think I'll regret the decision to get it.

 

Martyn1981

caprikid1 said:

Hi all, How long does a solar system last and what is the depreciation rate to be used ? 

Every time I see Solar system calcs I seem to see people comparing it to having the money in the bank, reality is these solutions I suspect have no value after 15-20 years.

Has anyone work out the return assuming the install is worthless in say 20 years time ? Would the interest on say £20K sat in the bank now make a solar system savings - depreciation struggle to make sense ?  ]

If I had £20,000 invested at 5% PA I would have £54,000 in 20 years time.

Typical cost of electricity is currently £1700 per annum if prices rise at 5% Year on year (They are high now). 

That would be a total spend of £64,000, so £10,000 worse off if the install cost £20K and the panels and batteries are worthless, how long to the batteries last ?

Anyone got the figures over 20 years as I assume there is positive revenue from the panels every year ? So I guess over 20 years you could be £10K better off ? Obviously no idea of the levels of FIT tarrif either ?

anyone done the 20 year maths ?

Hi, I think a depreciation over ~20yrs is probably fair. Hopefully the batts will last ~15yrs(?) and the PV 30-50yrs, though with panels getting ever more powerful, and cheaper, it may be economical to replace with 'better' ones.

Not exactly what you asked, but my sister got PV 2yrs ago, just beating the price rises for installs, as a result of the massive demand post leccy price hikes. So I worked out a cost of generation for her. In order to account for cost of capital (opportunity cost of lost savings) I worked it out like a 25yr repayment mortgage at 2% interest rate. I also added a new inverter (+£1k) after yr 12, just in case.

Based on £8,600, 10.3kWp, and 10,500kWh pa, the figure came to 4.55p/kWh. So based just on their export rate of 5.5p/kWh, they are making money. Savings against import prices are of course better.

Since then, interest rates have gone up, but so has the cost of leccy. But switching to 4% cost of capital, the generation cost becomes 5.56p/kWh, and reducing to 20yrs, it's lifted to 6.39p/kWh.

Mikeyboy01443

Reading some peoples replies on here, does anyone do anything now without running it through a spreadsheet first? Is everyone a bean counter now? Would any of you buy a ferrari just because you want to, even if you would lose money on it?
I know my solar will pay for itself fairly soon so at that point it's moot anyway if you would have been "better off"

paul991

its best to keep a eye on your generation incase of a fault  with panels  inverter ect and its nice to be able to  shoot  down the luddites with facts 

1961Nick

With inflation running at slightly more than the best savings interest rates the actual return is still negative. 

gefnew

My original quote and calculations for the system installed November 2011.

QrizB

caprikid1 said:

Hi all, How long does a solar system last and what is the depreciation rate to be used ? 
...
anyone done the 20 year maths ?

You're asking for Internal Rate of Return?
https://en.wikipedia.org/wiki/Internal_rate_of_return

In which case yes, I have run the numbers. (Thanks are due at this point to @Exiled_Tyke who prompted me to build the spreadsheet.)

I bought my panels in early 2012. Break-even was in late 2018, when my IRR became positive. IRR to date is about 11%, forecast to reach ~16% at the end of my 25-year FIT.

This all assumes a NPV of zero for the panels etc. - so they're already written off.