Investimg retirement money in solar and battery install

Pat38493

This is a bit of a weird question and maybe should be on energy board (?), but I was wondering, if I decide to use some of my retirement money to invest in solar and battery for the house, is it valid to see this as an investment just like a fund or ETF?

For example if I figured out that a £10K system, would save me about £1K per year, is this the same/similar as buying an annuity with a 10% return?  Looked at this way it seems like a reasonable option (especially as the return is actually more than 10% as the savings will continue after the investment cost is covered).

DRS1

I doubt any pension scheme would go for that.  It is not really an "investment" that would fall inside any scheme's investment powers.

El_Torro

You can spend your money however you please, if you want to look at it as an investment that's fine too. As DRS1 says though I don't see how your ISA provider or pension provider or wherever your retirement money is would see it that way. 

MarlowMallard

Pat38493 said:

For example if I figured out that a £10K system, would save me about £1K per year, is this the same/similar as buying an annuity with a 10% return?  Looked at this way it seems like a reasonable option (especially as the return is actually more than 10% as the savings will continue after the investment cost is covered).

Yes if you're doing it with your own money it's a bit like a 10% annuity, only better because no tax on the £1k.  Advantage: if you die young, it will presumably add some value to the house for your inheritors, while the annuity is gone.  Possible disadvantage: if it goes faulty and the company has gone bust, the warranty may be useless and you have a repair bill. This is less likely with an annuity.  

MX5huggy

I think DRS and El_Torro have missed the point. You’re looking holding you PV and Battery system in investment account but can you compare it to an investment which you of course can. Remember the system is basically worthless once fitted (its capital value is near zero because no one buys second hand PV panels or batteries for anything like their new cost and I don’t believe they really add value to house price) which you note is the same as an annuity. You’re taking a bit of a punt on future electric prices but they aren’t going down anytime soon. The system has a design life but expect it to last longer. You don’t pay any tax on income or the savings it generates. You can crunch some numbers but I did it 11 years ago and it’s all gravy (admittedly on the old overly generous FIT payments). I had my first serving cost this year because of a fault it trips out if it is very wet installer advised waiting till it’s a permanent fault else it’s hard to trace. 

dunstonh

but I was wondering, if I decide to use some of my retirement money to invest in solar and battery for the house, is it valid to see this as an investment just like a fund or ETF?

No.   Because the installation has a finite life before you need to replace inverters and panels, etc.   A lot fo your saving would need to be put aside to cover future outlay.

For example if I figured out that a £10K system, would save me about £1K per year, is this the same/similar as buying an annuity with a 10% return?

No.   An annuity would pay you every year for the remainder of your life.   Solar would reduce your outlay every year for a finite period before you need to spend a lot of what you have saved all over again.

It may well still be viable depending on the numbers, but many people who look at the scenario miss two points.
1) loss of return on the money spent.
2) the need to spend again every 20 years.

QrizB

Solar PV man-maths get debated every so often over on the Green and Ethical sub-forum, or less often on Energy.

Breaking this down:

Panels. These fail rarely, and are likely to be good indefinitely. In principle they might also be warranted for 20+ years but in practice the labour cost of getting someone in to replace a panel on your roof will outweigh the cost of the replacement panel itself.

Inverter. I'd plan (financially) on replacing the inverter every decade or so. My original inverter failed after 11 years. On the plus side, inverters are relatively cheap and easy to replace.

Battery. batteries might also have a 10-year life and are somewhat more expensive than inverters. For a typical domestic system, the battery is about half the total system cost. (I don't know what a battery will cost in a decade; they've fallen in price by 70% in the last decade but that might not continue).

So, at current prices, you're looking at a new inverter (£1k) and battery (£5k) every decade. That brings your return down from 10% to 4%.

Have you thought of fitting the PV but without the battery? You'll generate almost as much return, but from a system costing half as much.

Gary1984

From similar discussions in the past I think the consensus was that panels are worth it but the battery is not. Most people use more energy during the day when the sun is shining and adding a battery is a big expense for minimal gain.

leosayer

I can't think of any other investment where the initial investment is lost and the return is based on unknown maintenance costs and the future offset of wildly variable costs.

It may be best to look at such an investment as insurance against both higher energy prices in the future as well and the miserly behaviour that seems to afflict pensioners in my family at least.

It will give me enormous pleasure to known that my fridge, TV, washing machine and (if I ever own one) electric car will be powered for free. For that reason, I am consideration adding solar when we have other building work done to the roof next year.

senor_naranja

Gary1984 said:

From similar discussions in the past I think the consensus was that panels are worth it but the battery is not. Most people use more energy during the day when the sun is shining and adding a battery is a big expense for minimal gain.

Speaking from practical , real life experience I find that battery extremely useful BUT you must have a tariff that provides cheaper overnight  electricity which you use to charge your battery (and electric vehicle) which you then use to power your house during the day , this is particularly true on those dark winter months and as long as you correctly size the batttery then almost all your power (below your inverter Rating , mine if 6Kw) is then at the low rate of what you paid for in charging the battery overnight. 
Ensure you also get a feed-in tariff so you can sell back to the grid as if your consumption is low during the day you could dump the battry back to the grid. For me this menas buying overnight at 7p/kW and selling back at 15p/Kw. ensuring of course that I have suffucient battery to power the house till my next 7p rate.
So far since November 2024 I have save £1700 since the till end of July compared last years electricity bills. We have 3 electric vehicles that are all charged at 7p overnight rate.
My battary and solar consists of 2x 10KW batterys and 14 x panels  7 of which face directly north and 7 directly south. the North facing have surprisingly been very active during the April to about now from sunrise BUT even on clioudy days its the North panels that play their part due to diffused light. My system cost £15K on a 0% green loan from Nationwide which aligns with my mortgage to end by Oct 2026. For me it been a no brainer. So maybe consider a Green Loan for your hard earned cash on Solar and battery BUT get a decent company that lots of local people have used on recomendation or Octopus if you are with them as the rates are good for Consumption ad feed-in.

dunstonh

Gary1984 said:

From similar discussions in the past I think the consensus was that panels are worth it but the battery is not. Most people use more energy during the day when the sun is shining and adding a battery is a big expense for minimal gain.

In my case, battery is more viable than panels.   Mainly as I get 5p kWh overnight