Solar Panels for Dummies

Screwdriva

Apologies in advance for any ignorance, but are you suggesting investing £6K in PV and saving/ earning ~£1K annually tax free for 20+ years (assuming energy prices do not correct), can be bested by a similar risk profile, capital investment opportunity?

wiggers

If you really are earning £1k/yr then you probably will see a return. On the spreadsheet I set up with figures from Energy Saving Trust, for an outlay of £6k you'd need to be using 4000kWh/pa to get the £1000pa return. The NPV is £7,635 over 25yrs.

Investing £6k at 5% for 25yrs gives you £20,318.

Martyn1981

wiggers said:

If you really are earning £1k/yr then you probably will see a return. On the spreadsheet I set up with figures from Energy Saving Trust, for an outlay of £6k you'd need to be using 4000kWh/pa to get the £1000pa return. The NPV is £7,635 over 25yrs.

Investing £6k at 5% for 25yrs gives you £20,318.

Looking at that £20,318 figure, why not do the same for the PV? Take the £1,000 saving each year and invest that at 5% instead.

So end of year 1, you have £1,000 saved.
End of year two you have the £1,000, plus 5% interest plus another £1,000 saved = £2,050.

By end of yr 25 you have £47,727. [Edit - the PV savings overtake the £6k account in yr 8.]

wiggers

The NPV calculation takes that into account. The year N returns are reduced by the discount rate, compounded.

wiggers

You can download the spreadsheet and play with the numbers here:

https://energyd.ie/npv/

It's in euros but that can be easily changed.

wiggers

I have set up a crude spreadsheet to illustrate the effect of ignoring the time value of money. I've entered the figures quoted to me by the Energy Saving Trust and assumed a 5% interest rate. They suggested the "pay-back time" would be 11yrs, but as can be seen from the graph it would be over 20yrs.

wiggers

Here are the same figures entered into the NPV spreadsheet:

You can see that after 25yrs the NPV is less than the initial investment by £2,353, so this would actually lose me money. (Ignore the euro symbol.) I have adjusted the "Year 1 Electrical Savings" figure to take account of the Export payments @ 12p/kWh and give the same year 1 return of £595.

Martyn1981

Thanks, that's interesting. Can I ask what generation figure you are starting with (before adjusting for an offset/export level)? For £7k I'd be expecting something in excess of 4,000kWh to 5,000kWh gross, but Screwdriva would know better.

Also fun to see the ~1.5% degradation rate. I recall a large study from over a decade ago, when panel degradation was worse suggesting ~0.4%pa for post 2000 (installed) mono-Silicon panels. Personally after 13yrs I'm yet to see any noticeable degradation*, though a forum friend with Tellerium thin flim panels has about 5% degradtion after 13yrs, but was expecting about ~15%.

*By noticeable, my spreadsheets don't show any change (outside of annual weather differences checked against the Met Office anomaly maps) in generation (yet) which is a pleasant surprise. Looks like the rough rule these days is ~0.5%pa, but more in sunnier climes, and less in ...... well UK like climes.


Edit - @Screwdriva - any thoughts on degradation? Just seems too low, but I've asked people on here and other forums, and all seem to be struggling to notice noticeable (IYSWIM) levels. I did start out assuming a 1% level just in case, but that hasn't happened, and of course EST advice is as good today as it was back in 2010.

Screwdriva

Martyn1981 said:

Thanks, that's interesting. Can I ask what generation figure you are starting with (before adjusting for an offset/export level)? For £7k I'd be expecting something in excess of 4,000kWh to 5,000kWh gross, but Screwdriva would know better.

These days, £7K gets you 6500-7000kWh per annum, depending on the roof. And that's including optimizers! At a blended .18p per kWh via Octopus Flux, you're looking ~£1200 per annum return on that £7K.

Martyn1981 said:

Edit - @Screwdriva - any thoughts on degradation? Just seems too low, but I've asked people on here and other forums, and all seem to be struggling to notice noticeable (IYSWIM) levels. I did start out assuming a 1% level just in case, but that hasn't happened, and of course EST advice is as good today as it was back in 2010.

Depends on the panel brand, location, weather etc. Chinese panel brands degrade disproportionately higher as evidenced by this NREL study, not to mention anecdotal experience, but the more reputed brands (like LG, Panasonic and Mission Solar in the study) barely do. 

Martyn1981

Thanks Srewdriva. Just playing Devil's Advocate, assuming not the best deal, and not ideal generation (maybe off south or some shading), do you think ~5,000kWh's is reasonable?

Regarding degradation, any thoughts on UK levels? As I mentioned, I haven't seen any, and seem to get the same answer from other PV'ers on here and several RE forums. I'd be happy with 1%pa, so I'm very surprised to see pretty much nothing after more than a decade. [Another bonus is that my early panels had a -5%/+5% of nameplate rating, whereas now they typically seem to come with 0/+5%, but of course that wouldn't alter comparisons over time of the same panels. Just nice to get a few more Wp's on your roof than you thought.]

Appreciate your concerns about Chinese panels, and of course we can open up a can of worms regarding warranties, but these are often now around 10% to 15% total over 30yrs. I think an old NREL study had pre-2000 panels at ~0.8%pa and post 2000 ~0.4% - certainly looks like things are improving steadily this century.