Solar PV - economics?

[2Btoo]

Guys,

I'm planning an extension on the back of our house. One option is to put some solar PV panels on the roof. It will be a first floor (i.e. single storey) pitch roof, South-South-West facing and pretty much unshaded.

I had a PV installation on our last house with the high FIT rate and was disappointed by the financial performance of it. I probably got my money back out of it over 10 years or so but other investments would have done much better. I know that the FIT's are now much much lower but it seems that installation costs are now much lower as well. Also, a large amount of the cost of the last installation we had was for the scaffolding needed to put it up; with this extension then there would be no scaffolding cost thus reducing the cost further.

I know that this is a 'how long is a piece of string?' type question but can PV installations stack up from a financial point of view nowadays or are people only doing it for ecological reasons (which is no bad thing)?

Thanks.

[Scrump]

Recent thread here with some relevant discussion. Also discusses battery storage alongside the panels.
https://www.pistonheads.com/gassing/topic.asp?h=0&...

Surprised you were disappointed with the old high rate FIT payments. I have panels on the orginal FIT scheme which ended in 2011. I achieved pay back in 6 years and am paid tax free £1800 pa plus free use of the generated electricity.

[2Btoo]

Scrump said:

Recent thread here with some relevant discussion. Also discusses battery storage alongside the panels.
https://www.pistonheads.com/gassing/topic.asp?h=0&...

Surprised you were disappointed with the old high rate FIT payments. I have panels on the orginal FIT scheme which ended in 2011. I achieved pay back in 6 years and am paid tax free £1800 pa plus free use of the generated electricity.

Thanks. That's a helpful link.

The old rate FIT was much higher and I think we made our money back in about 10 or 11 years. We had the installation for 14 so there would have been an amount of profit on top of that so we were perhaps £4k or so in pocket at the end of it. As an investment that's very poor indeed; the £12k or so that it cost back in 2006 invested in a modest FTSE tracker would be worth nearly £19k now.

[Condi]

2Btoo said:

I had a PV installation on our last house with the high FIT rate and was disappointed by the financial performance of it. I probably got my money back out of it over 10 years or so but other investments would have done much better.

Your solar installation was risk free, pretty much, as the payments were made by the government. There can't have been many (or any!) other risk free investments which made 10% rate of return.

[2Btoo]

£12k in, around £4.5k in my pocket after 14 years.

Leaving aside all discussions about risk, that was not a good investment.

[Biggy Stardust]

2Btoo said:

£12k in, around £4.5k in my pocket after 14 years.

Leaving aside all discussions about risk, that was not a good investment.

Plus any free electricity plus the residual value of the asset?

[glennjamin]

Had 13.25kw system installed in 2012 cost £10,800 return so far £17,500. Current fit per KW is 0.5603p. Delighted with return index linked tax free for 25 years who wouldn't be happy with this as a investment ?.

[boyse7en]

2Btoo said:

£12k in, around £4.5k in my pocket after 14 years.

Leaving aside all discussions about risk, that was not a good investment.

We paid around £11k for an install in 2009. Broke even after 10 years and now making around £1000 a year.
So you could look at it as a poor return (0% over 10years) or a good one (at 20 years it will be 100% return).
Plus I save roughly £150 a year in electric, so around £1500 over 10 or an extra £3000 over 20 years.

Personally I don't think £13k profit over 20 years is a bad return on £10k investment. Might have got better in shares, or might have lost the lot on dogecoin, but this has virtually zero risk which is definitely a plus.

[BobSaunders]

You also have to consider that it’s not £ in your pocket, but less carbon impact.

[DaveCWK]

In terms of pure economics, even if you fit them yourself/absolutely minimise install costs, & can actually make good use of the generation in a smart way (timed appliances, hot water heating, electric car, running AC on the sunniest days etc) I'm still not sure that a fresh install actually makes sense.

[2Btoo]

Biggy Stardust said:

Plus any free electricity plus the residual value of the asset?

My calculations on return/year takes into account the electricity saving (easily calculated as we had a spin-back meter).

The point about the residual value of the asset is a good one as it's residual value is just about zero once fitted. A solar array on a house roof adds very little if anything at all to the value of a house.

boyse7en said:

We paid around £11k for an install in 2009. Broke even after 10 years and now making around £1000 a year.
So you could look at it as a poor return (0% over 10years) or a good one (at 20 years it will be 100% return).
Plus I save roughly £150 a year in electric, so around £1500 over 10 or an extra £3000 over 20 years.

Personally I don't think £13k profit over 20 years is a bad return on £10k investment. Might have got better in shares, or might have lost the lot on dogecoin, but this has virtually zero risk which is definitely a plus.

The return will be zero at the 10 year mark and will then increase, so if you were to have it for 20 years then it would be a 100% return. However this represents a very poor investment over that time period.

It's also not zero risk. There is a risk of panel or inverter malfunction (how long does an inverter last?), there is a risk of panel damage, there is an ongoing cost of cleaning the panels every year (a DIY job but not enjoyable if you don't like climbing around on rooves with a hosepipe. However paying someone to do it will be a dent in the return).

DaveCWK said:

In terms of pure economics, even if you fit them yourself/absolutely minimise install costs, & can actually make good use of the generation in a smart way (timed appliances, hot water heating, electric car, running AC on the sunniest days etc) I'm still not sure that a fresh install actually makes sense.

I reckon this is spot on: as an investment, solar PV is poor unless you have mitigating factors (can install very cheaply, have a perfect south-facing roof etc etc etc).

BobSaunders said:

You also have to consider that it’s not £ in your pocket, but less carbon impact.

And this is another good point; many people will choose to do a PV install for ecological reasons. This is a good thing, but my suspicion is that if they are trying to justify such a thing on a financial basis then they are kidding themselves.

[Andeh1]

Value/saleability of a house? I'd pay more for a house with solar panels. Also man maths to an increased offer if required. We'll make £18k just living here for 10 years based off previous owner's investment.

There is also a certain smug feel good factor turning on the a/c, slower cooker, washing machine, tumble dryer etc knowing it is free to run on a sunny day!

[gmaz]

Also consider using excess solar to charge an EV. Fuel costs become zero if you're able to top it up during the day.

I have 4.3kW of panels and an 8.2kWh battery. On the Octopus Go tariff I charge the battery overnight to 50% @ 5p/Kwh. That gives me enough energy until the sun is up and the solar powers the house and charges the battery up to 100%, which we use in the evening. Excess solar goes into an EV via a Zappi charger.

In Winter I'll probably have to charge the battery up more but at 5p/kWh its still cheaper.

You can also use a water heater like an Eddi to offset the amount of gas you use for hot water/CH if you have excess solar.

[Condi]

Best thing about using the energy yourself is that on a FIT tariff you were paid for 50% of the generation as if you fed it into the grid. Use 100% at home and not only did you get free hot water or free driving from your EV, but also got paid an export rate for half of that. Amazing it was ever agreed to tbh, but it was and great for people able to store their solar energy.

Cheapest part of the day during summer is often that 1pm-4pm time when people are out the house but the sun is strong. In California its a big problem despite their much larger aircon load, simply due to the amount of solar there is there.

[pquinn]

BobSaunders said:

You also have to consider that it’s not £ in your pocket, but less carbon impact.

Have you actually checked the environmental impact of manufacturing PV panels? Nasty high energy non recyclable things.



Personally I wouldn't bother now unless there were compelling reasons to support a bad grid supply. It doesn't work out economically without subsidy, and it's just another thing you need to maintain. Not really a great selling point either for most people unless they think they're getting them free.

[bmwmike]

I got given an array of 120w panels and asked on here, another site, and also a commercial local installer and the feedback was don't bother with those (free) panels, buy 250W ones instead which are more efficient. Eh!? On that basis, how can free electricity not be worth installing but 100% higher cost for twice the output can be? The panels are still stacked against my shed, have experimented with heating the greenhouse which would work a treat in summer when its not needed.

[Evanivitch]

Condi said:

Cheapest part of the day during summer is often that 1pm-4pm time when people are out the house but the sun is strong. In California its a big problem despite their much larger aircon load, simply due to the amount of solar there is there.

Which is why it's so important the economics are right for split east/West systems to make better use of the load during the traditional peak demands. I have a South facing roof which will be getting solar in 2022, and hopefully a few panels on a small east facing section too, even if it's not a sound economic decision.

[rustyuk]

There is currently no economic sense for installing solar panels at a residential property.

Not even using man maths.

[pquinn]

rustyuk said:

There is currently no economic sense for installing solar panels at a residential property.

Not even using man maths.

Yep. People talking about historical returns is irrelevant if you're installing today.

There are reasons to install them but saving or making money isn't one of them. Neither is 'helping' the environment.

[Evanivitch]

pquinn said:

Have you actually checked the environmental impact of manufacturing PV panels? Nasty high energy non recyclable things.

The return on energy investment in solar is very good and upto 96% of the panel can be recycled. Would you like to provide any evidence to support the claim you've made?