Investimg retirement money in solar and battery install

m_c_s

There will probably be use cases where the ROI is reasonably good for a solar and battery install. It will be a sunk cost so that is like buying an annuity.
I looked at this some years ago and again last year. Even with the current subsidies the ROI is around 4 to 5% based on typical electrical household energy use. As others have said there is ongoing maintenance and replacement costs that you must factor in to an ROI assessment.
You will therefore most likely be financially better off investing in the stock market in a balanced portfolio (60/40) which you expect (but not guaranteed) to return typically 6 to 8% per annum over a 20 year period.
Rather than installing solar and batteries I instead invested £15k in 2012 into a balanced portfolio of investments and bonds and it has returned 8.15% annual growth significantly outpacing any returns solar panels and batteries would have returned for our consumption case (2500kWh per annum).
You can also not guarantee electrical prices into the future and it is most likely that significant infrastructure investment will be required over the next 20 or 30 years if the UK is to go fully electric. This cost will be put onto electricity prices. 
I do expect battery prices to continue to come down over the next 5 to 10 years. This is based on new battery chemistries becoming available (driven by military, car and phone/computer industries) which should improve energy densities and bring down competing costs. 
As QrizB says above you may be better off without batteries although that may depend on your consumption profile throughout the year and future energy prices. This will still probably not match ROI from other investments, notably the stock market over the long term.

MallyGirl

I chose to invest in solar panels and a battery while I was still working. Our usage is high (draughty Victorian house) and gas/elec was one of our biggest expenses. It also just felt 'greener' to go down this route. Just over a year on we now pay no net electric and partially subsidise the gas. Now that I have stopped working and won't be electrically heating my office at the bottom of the garden I expect more savings.

Pat38493

dunstonh said:

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.

Thanks all for your replies.

Good point about the maintenance costs every 10 years or so which has to be factored in.

Also - in thinking about the battery I was assuming that I would have an overnight TOU tariff and feed unused battery capacity back to the grid in winter.

One thing I am not clear about is regarding EV charging - we have an EV and a PHEV.  There are lots of posts online claiming that you can save between 50% and 120% or so of your electric bill by having solar and battery, but I am not clear whether these savings should be calculated against the electric bill excluding EV charging.

On the above point, I probably should have said "fixed term annuity" rather than just annuity, but good points about the variable price of electricity in the future etc.

Also to clarify regarding the first 2 replies - I was not wanting to hold the investment in solar panels inside the pension - it was more whether it would be a good use of money that's already outside the pension to invest this now in order to make savings over the next x years, and whether I can see the ROI savings also as like a kind of rate of return on an investment.

Pat38493

senor_naranja said:

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.

This is another question I had (in bold).  Do I take it from this that the inverter rating determines the maximum KW that can be fed from the battery / solar without drawing on the grid?

Therefore in your case if the house uses more than 6KW at any point in time, you will be drawing from the grid even if the solar and battery are available?  However we rarely draw more than 6KW unless we are charging an EV.  This should be enough for example to power an oven/hob etc.

Nick_Dr1

Yes. If your inverter cannot deliver enough power, any extra comes from the grid.

Things that limit the inverter output are the amount of solar being generated at any given point, the amount of power that can be pulled from the battery, and the maximum the inverter can deliver overall.
There will always be a bottleneck somewhere.
For example, my inverter is rated to give 3.6kW AC but can deal with a maximum of 6kW DC.
So this means it can supply up to 3.6 KW to the house as a maximum. Any extra demand then has to come from the grid.
It can however, deal with 6kW coming from the panels should they be big enough. It can still only supply 3.6 to the house. If the house doesn't want 3.6kW it can send surplus (up to 3.6kW) back to the grid.
If I have a battery then the 6kW generation from the panels can be split 3.6 to the house and 2.4 to the battery. Again if the house doesn't want 3.6 then more can go to the battery or the grid.
There's a limit here too. The battery will have a maximum charge rate which may limit the power you can put into it, and will also have a maximum discharge rate, as will the inverter.

If the panels are generating more than the inverter is capable of handling, then the inverter doesn't pull any extra from the panels, so generation is limited - you don't overload anything.

You have to size all the parts for your own use case, and there is a lot of variability due to the sun being a bit random and also shining more in the summer than the winter. The system bottleneck will move with the seasons! It all changes when you then buy an EV or install a heat pump. Time of Use tariffs then also throw in a big variable. A good general rule though is to fit more panels than you think you need day 1. I don't think anyone has ever said they've got too much solar generation.

QrizB

Pat38493 said:

One thing I am not clear about is regarding EV charging - we have an EV and a PHEV.  There are lots of posts online claiming that you can save between 50% and 120% or so of your electric bill by having solar and battery, but I am not clear whether these savings should be calculated against the electric bill excluding EV charging.

I ran the numbers for a potential EV user earlier in the year. You'll find them here:

https://forums.moneysavingexpert.com/discussion/comment/81473442/#Comment_81473442

That was for solar but no battery.