Green investment - funds vs solar system

Newbie_John

Heedtheadvice said:

You have ( carefully?) listed many of the unknowns for both 'investments' I.e the financial perpective but, as has been pointed out, the value of the solar system is ulikely to be 0 in ten years time.

It may well be that the sale value is minimal but the value is in part surely related to the 'dividend' that is generated to the owner, is it not. That divi does not fall off a cliff at 10 years so neither does it's worth to the owner.

You also seem to be ignoring one of the main best methods of investing i.e. Diversification.

Why not do both?

You can rightly claim you have some diversification in your funds (but that is very limited) and a solar system even more limited so you should maybe add in property insulation and the direct social green benefit ( less use of fossil fuels  lower fumes and emissions) at point of use, I.e. where you are?

I'm not ignoring diversification, quite the opposite I've listed multiple funds so you can invest in wind turbines, solar, batteries, in UK and abroad.

My main issue with solar on the roof is that in my case the return would be at least 20 years (low usage in summer 5kWh a day, high in winter up to 40kWh a day, mostly when the sun is out). 
And every person who showed me their calculation of how it paid till itself quicker didn't do it correctly.

If most here agree solar keeps its value for long time, why haven't you invested in solar funds like Octopus Renewables, Bluefield Solar, NextEnergy solar?

phlebas192

Newbie_John said:

If most here agree solar keeps its value for long time, why haven't you invested in solar funds like Octopus Renewables, Bluefield Solar, NextEnergy solar?

Turning that question around, why are you interested in investing in them? If you just want to make a positive return then there are much more reliable ITs around than renewable based ones. If you want to support the adoption of solar then you are doing very little by buying shares in the secondary market (you are just buying shares from someone else, not investing in actual solar farms).

If you want to contribute to new solar and don't want your own panels then you probably want to look at community schemes which raise funds to install solar on local businesses / school roofs etc. Previously you could have gone with Ripple but that didn't exactly work out too well.

masonic

Newbie_John said:
If most here agree solar keeps its value for long time, why haven't you invested in solar funds like Octopus Renewables, Bluefield Solar, NextEnergy solar?

There's a huge difference between investing in the shares of a company producing something, vs consuming that product. The value of a company's share capital is decoupled from the utility of its goods and services. Likewise, a company generating an income stream from another company's product or service cannot be relied upon to make the same return on investment as a private individual doing so for personal use. A business will have overheads and other hurdles that an individual will not. In the case of energy, the business will be selling the product at wholesale rates, whereas the individual will be consuming at retail rates.

I wouldn't overweight renewables tech in my investment portfolio, but it's not because I don't believe that the products of that industry won't have a long working life.

wmb194

Newbie_John said:

jimjames said:

Newbie_John said:

Sure there can be other reasons, but I've asked on the "investment" section just to get some thoughts from investment point of view.

If we take into consideration 10 years window.
- solar system will have negligible value
- electricity demand will only go up with time
- interest 

I don't think you're correct assuming zero value after 10 years. Panels should last 25 years or more and have a value especially if electricity prices continue to rise and it's then a good selling point for a property. Slightly different as I get FIT payments but ours had paid for themselves in under 5 years and now generate £2500 a year in payments with another 10 years of index linking to go.

£7000 solar + battery. £2500 panels, £2500 battery, £2000 installation costs (quick example).
After 10 years time it will cost more to take them down than their sale price. That's why I say £0.
Similar with battery, there will still be some value but cost of decommission and transport will take it down close to £0.
Maybe if you sold together with your house but I'm not sure if I'd pay extra for a house with system set up in 2015 😎

FIT is no longer a case. So I will skip it for consideration.

The problem with these ITs and the reason the market‘s become sceptical of them is that they're loaded with debt, debt is more expensive than it was a few years ago and forward electricity prices have been falling. UKW has also had issues with weaker than expected wind speeds.

CityWire often has good articles on them. Usually the answer is that the dividends may need to be cut and UKW is probably the safest as it, IIRC, has the least debt and best dividend cover whilst NESF is by far the riskiest with the most debt and weakest dividend cover. I wouldn't bank on those 10%+ dividends, they're actually a sign of stress.

https://citywire.com/investment-trust-insider/news/big-12-renewable-pioneer-greencoat-plans-to-ride-policy-winds-of-change/a2474736

Heedtheadvice

Newbie_John said:

Heedtheadvice said:

You have ( carefully?) listed many of the unknowns for both 'investments' I.e the financial perpective but, as has been pointed out, the value of the solar system is ulikely to be 0 in ten years time.

It may well be that the sale value is minimal but the value is in part surely related to the 'dividend' that is generated to the owner, is it not. That divi does not fall off a cliff at 10 years so neither does it's worth to the owner.

You also seem to be ignoring one of the main best methods of investing i.e. Diversification.

Why not do both?

You can rightly claim you have some diversification in your funds (but that is very limited) and a solar system even more limited so you should maybe add in property insulation and the direct social green benefit ( less use of fossil fuels  lower fumes and emissions) at point of use, I.e. where you are?

I'm not ignoring diversification, quite the opposite I've listed multiple funds so you can invest in wind turbines, solar, batteries, in UK and abroad.

My main issue with solar on the roof is that in my case the return would be at least 20 years (low usage in summer 5kWh a day, high in winter up to 40kWh a day, mostly when the sun is out). 
And every person who showed me their calculation of how it paid till itself quicker didn't do it correctly.

If most here agree solar keeps its value for long time, why haven't you invested in solar funds like Octopus Renewables, Bluefield Solar, NextEnergy solar?

Not  ignoring diversification?

Maybe paying lip service too it. All one sector with a bit af geographic spread...?

Didn't do calculations correctly?

I think you need to justify that statement!

How do you determine that those with solar systems have not invested in solar funds?

I have, but to a limited extent as part of a wider portfolio and suggest that others have too. Why not post on the Gems forum and ask or provide data to backup your claims?

Yes I agree that you are comparing apples with oranges and there are more risks with funds ( as posted above such as levels of debt) than you have mentioned.

Newbie_John

@Heedtheadvice, I've mentioned earlier that everyone does the calculation following way:
Units sold X 15p (export rates) + units used X 26p (cap rate) = let's say £1000 
So return in 7 years on £7000 spend on solar system.

But with many ToU rates it's quite easy to pay less for electricity, what if you averaged out 13p/kWh by being on either EV or Heat Pump tarrif? That extends return period significantly.
Also, £7000 is gone, so you lost £300 a year of interests of kept in savings account at 4ish %, that alone stretches return over additional few years.

@wmb194, sure they're more or less all half-paid, interest rates are going down, slowly but there is a trend, but I get your point.

@phlebas192, why? I considered solar in my house but due to low energy usage it makes no financial sense - I think it'd take me 20 years+ for any return. So why not invest in solar elsewhere - hence I brought these examples. I have given it a go in August - 4x£1000 in UKW, ORIT, BSIF, SEIT and with dividends about £400 a year it would lower my electricity bill by half. (Btw, that's a small part of my portfolio aimed at diversification).

jimjames

Newbie_John said:

@Heedtheadvice, I've mentioned earlier that everyone does the calculation following way:
Units sold X 15p (export rates) + units used X 26p (cap rate) = let's say £1000 
So return in 7 years on £7000 spend on solar system.

No idea where you get the claim that "everyone" does the calculation that way. I've never done that calculation and use my actual rates although they are fairly irrelevant compared to the FIT element.

Newbie_John

jimjames said:

Newbie_John said:

@Heedtheadvice, I've mentioned earlier that everyone does the calculation following way:
Units sold X 15p (export rates) + units used X 26p (cap rate) = let's say £1000 
So return in 7 years on £7000 spend on solar system.

No idea where you get the claim that "everyone" does the calculation that way. I've never done that calculation and use my actual rates although they are fairly irrelevant compared to the FIT element.

Personal experience, anyone I've asked, either in person or online, salesmen, MSE guide (point 5):
https://www.moneysavingexpert.com/utilities/solar-panels/

Some top Google results:
https://pvfitcalculator.energysavingtrust.org.uk/Results/SolarResults

Everyone multiples saved kWh by 25p price.

Maybe you can find me a place that does it correctly?

Linton

I think the choice between investing in companies running solar farms and buying domestic solar generation equipment is a false dichotomy.

If your motives are green I dont see that buying shares in solar farms adds much to reducing climate change.  The point is that when you buy the solar shares you are normally paying the previous owner of those shares.  None of your money actually goes into increasing the total amount of solar electricity generated except possibly very indirectly.

But by buying your own solar generation you are directly adding to the total amount of solar electricity.

If you are solely motivated by the financial returns why restrict yourself to investing in solar funds?

 

Roger175

If it's of any help, I have run the calculations to try to justify putting a solar array/battery on our house many times and I just cant make it stack up for us. (others maybe, but not for us).

I built our house myself. It has very low energy costs and I will not be using an electric car unless it becomes a legal requirement to do so, in fact my wife and I (both recently retired) have just changed our cars to efficient nearly new (ex dem) petrol models which we intend keeping for next 10-15 years (we do v low mileage now). 

We run a heat pump in connection with a log burner for which I have free wood. Total energy costs are well under £150/month for a 4 bed property with separate annex.

Initially, I had assumed we would add a solar array as part of the new build process, but once I started running the calcs, it just became obvious that it didn't stack up. Instead I have invested in Greencoat within my high-yield share portfolio. With 9%+ dividend and preservation of capital (well, within the bounds of investment risk), I reckon I will be better off, with no 'ugly' panels on the roof. Furthermore, do some reading into the carbon footprint of domestic solar PV panels, this alone may put you off.