Solar panel quote

QrizB

and spend the rest on gilts

You're still overlooking the effect of inflation 💸

Even if energy prices remain flat for the next 15 years, other prices won't. The value of your £12k in 2041 will have been eroded. The value of the solar PV will also have fallen, but along the way it will have better tracked electricity costs than the gilt has (PV returns improve if energy prices rise, and fall when they fall).

Gilts might, or might not, turn out to have been a better investment but you won't know until 2041.

Martyn1981

https://forums.moneysavingexpert.com/discussion/comment/82079729#Comment_82079729

Not sure what you mean by all the savings happen in the future? Is this the approach of only making a profit after payback, rather than when income is greater than costs?

For instance, let's say we have a £7k install cost, that saves/earns on the energy bill £800pa, v's investing at 6%net so £420 income.

Even if we deduct the capital cost via a 20yr depreciation with zero value at end of term, that's only an annual cost of £350, so we have £800 income/savings - £350 costs = £450 profit. V's the £420 in the investment. So an income, saving, return, whatever we want to call it that is better in year 1 (and subsequent years), not in the future.

And of course things only get better for the PV in year 2, as the investment will need to pay/make up the monies on the bill (not covered by the PV income), which will draw down the savings, reducing income. Or if the bill is low enough not to draw down the savings, then that would mean there will be monies left from the PV income to invest and also earn interest boosting the PV side.

[Yes there are other PV maintenance costs to consider, but these are small, and the PV income benefits from an element of index linking, as it's linked to leccy prices (though these could of course go down).]

Newbie_John

@QrizB Im only skipping inflation to make numbers simplier,, sure the £10k wont be worth £10k in 2040 but it's still £10k just worth less..

@Martyn1981 yes, i take the approach of profit is only when its paid back. I guess if you live in a place where you know you will be in 10-20 years time then you can look at it your way with amortisation etc. I think i will likely live in the same place in 5 years, not sure about 10 years and going beyond that not sure if i will be alive!

Anyway, moving away from the main point, Ive seen multiple approaches on this forum - Large Fogstar batteries 20kWh+ and no solar, entire roofs with solar like 10kW+, full house electrification EV, HeatPump, PowerWall - and i agree they could all be profitable if you understand exactly what you're doing. OP is not there yet, they just rely on a message passed by someone else that it will definitely be profotable - and I want to provide a different critical point of view (which is hard to find online) to their approach. Im glad they've asked the question rather than just move on with £12k long term investment hoping for the best. But nobody knows if 1kWh in 2035 will cost £1 or 5p and that is a key here - some will win some will lose. The gilt idea is simple, safe and easiest to predict. A lot of people are happy to take a loan and pay for £10k system because salesman promised 5 year payback..

debitcardmayhem

https://forums.moneysavingexpert.com/discussion/comment/82080008#Comment_82080008

I don't think that the OP was asking if it was profitable per se only if it was a good quote, and his 2nd quote if he can shave about £1k off that then its a good quote and I would see it being worthwhile, plus if he does as I suggested with my illustration he will be able to benefit financially too.

I did similar with my system, but used a S&S isa.

Newbie_John

https://forums.moneysavingexpert.com/discussion/comment/82080057#Comment_82080057

Well, your case comes with a plan - knowing that you can have different providers for inport and export, knowing of Ocotpus Flux and high export rates 16-19 etc.

My only issues with it is that bit:

After 10 years - £12500 + solar and battery.

In my case, assuming all gilt coupons went towards electricity payment we have £10k + nothing else. £2500 difference which is £200/year profit for solar. And thats fine if you dont move, nothing breaks (I guess they mentioned PowerWall so 10 years warranty right?) etc.

But would they invest the money knowing the real profit is just £200 a year?

Yes it gets better and better after year 10, but thats also the most unknown area - no warranties left, fairly old system, age, moving houses..

debitcardmayhem

@Newbie_John talking of unknowns how long does the op have left on his 18p kWh fix , and what it will go up by in the next 3 months his saving will be bigger by then. But then if anybody can say what their circumstances will be in the future they are in the wrong job.

Screwdriva

https://forums.moneysavingexpert.com/discussion/comment/82079415#Comment_82079415

I think OP may have received an additional quote that has 20 X 515W bifacial panels and a Tesla PW3 for ~£12.5K but I'll let them share more should they decide to :)

Assuming this to be true (paired with an export allowance of 10KWh), the system size is now 10.3+ KWp with 13.5KW of storage.

Assuming a very achievable annual generation of 9MWh and value each KWh at a (humble) rate of 19p per KWh, OP should see earnings/ savings of £1.7K per annum or around 7 years to pay for the system.

We all know the £ will likely be higher, as the above does not factor in 1) more lucrative tariffs or 2) future inflation of energy 3) incremental bifacial generation as these cannot be predicted with accuracy. Just to point out, OP has also not shared their heat generator type or whether they have plans for a A2A or A2W heat pump in the future or indeed if they suffer from blackouts.

I would really be interested in Gilt yields that could match the above IRR.

Newbie_John

https://forums.moneysavingexpert.com/discussion/comment/82080114#Comment_82080114

Well the kWh price during next 10 years will be up and down, sure it will soon raise but that could be just a temporary thing. If the war hasnt happened the prices were slowly going down.. and if I was meant to base my savings purely on the next 3-12 months then i would put £10k into Greencoat UK Wind or Ocotpus Renewables yielding 10% in dividends yearly.

Also theres the usual reference problem, what do you do when you sign up to a very cheap ToU tarrif with certain slots below 10p? Monthly calcualte your average to be sure how much you saved? Use SVR rate to feel better as savings were higher?

Anyway, I will leave it here, thank you all for a discussion !

debitcardmayhem

https://forums.moneysavingexpert.com/discussion/comment/82080125#Comment_82080125

I wish … jealous😎

QrizB

I think OP may have received an additional quote that has 20 X 515W bifacial panels and a Tesla PW3 for ~£12.5K but I'll let them share more should they decide to :)

I can see how that sort of quote could be very appealing!