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.

[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.

[2Btoo]

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

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

[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.

[2Btoo]

soofsayer said:

I have been dissuaded from having pv panels at ground level by 2 installers. I have a perfect spot for a large array but have been told that installation costs (hardware and time) is much higher than roof mounted (which is fairly simple),

Sounds pretty rum. Installing panels at ground level is harder than putting them on a roof a couple of storeys up? Points about shading and vegetation may be relevant but this first one sounds like someone is pulling a fast one.

[2Btoo]

Not a clue, but am interested in the council-run auction scheme.

Care to tell us more?

[2Btoo]

DonkeyApple said:

Yes, but good sense like that doesn't cut it with the greens and those who are bent on 'virtue signalling'.

[2Btoo]

Traffic said:

Had solar fitted in November, my electricity bill for March would have been around £350 and instead it was £25. It's definitely washing its face whilst we have high electricity prices!

Sounding good, but how much did that £325 saving cost you?

[2Btoo]

gfreeman said:

Standing charge of 24.11p is subject to a whopping increase of 19.28p per day!!!

Off topic, but why can they justify an increase like that on standing charge? The cost of maintaining cables will (at worst) be associated with RPI, not the cost of the energy running through them.

[2Btoo]

DonkeyApple said:

I'm not sure that I am being cynical. I've looked at this repeatedly over the years as I've quite a bit of roof estate, the land for wind and also battery storage. I just can't get it to add up at any level.

The eco thing doesn't add up as you're creating a whole load of pollution with a relatively short lifespan, maybe 20 years and the issue of battery predictions in this usage being 10 years so you will have two sets of batteries to pay to dispose of and by 2042 we're going to be able to buy all green energy from professional, efficient firms.

We don't have a good price for selling and a variable purchase price so being a vendor doesn't add up.

But the real crux is that 8-10 year payback. That simply kills the numbers. Your initial spend is just that a spend, not an investment. In really simple terms, as an example, you spend £10k to effectively make £1k a year. Ergo, it takes ten years just to get your initial £10k back. Your system then manages to last another 10 years without any maintenance spend so you're going to get £1/year over ten years so you're total return is potentially £10k after 20 years.

Conversely, stick the initial £10k in a ftse etf acc and not only do you still have that £10k but assuming zero capital growth the long term yield shows that at the end of 20 years you'll have £25k. Even if you opt for distribution the rough calc is £500/year in yield but without spending the initial £10k so after twenty years you have £20k.

I just can't see how investing to become a highly inefficient micro power station can compete against a professional set up. I think the whole thing is driven by man maths and the our desire to try and be self sufficient as we think it will be better than giving our hard earned to evil big corporate etc.

As you say, the capex needs to get much lower before we start to get close to there being sense in this for your typical household.

As for the solar roof tiles, there's a reason even Musk has stopped talking bks about them. . They remain a possible product of the distant future.

On the whole, I tend the hold the view that if money can be spent to reduce spend then in almost every case the smart money goes towards insulation after simply using less. Generation is a last resort that simply doesn't add up for most.

Hence why there is thread after thread of smart enough folk on PH continually asking how it does add up and they're always answered the same but people either being honest and saying it doesn't or by people employing man maths.

Edited by DonkeyApple on Tuesday 12th April 10:30

If you are cynical DA then so am I.

We had solar PV put on our last house in (I think) 2008 or so. £14k up the swanny and it was only a couple of years after installation that it dawned on me that that £14k wasn't coming back. Sure, there was income every month (or quarter) and a saving on bills and we got our £14k back in about 8 years, but that put us back to where we were at the start (minus inflation, but we'll leave that out of things). And that was with the big FIT that is now long-gone history. Did the panels put £14k on the value of the house as the installer assured us they would? It's hard to tell as there are no direct comparables but I'd say pretty comprehensively no. My strong suspicion is that I would have been much better off financially by putting that £14k in the stock market back in 2008.

We're now looking at an extension on a new house and the question is whether to put solar panels on it. The cost of electricity has gone up and the cost of solar installations has dropped HUGELY since 2008 (and that drop apparently happened at exactly the same time as the FIT dropped, which adds to my cynicism). However even with the higher cost of electricity and the lower cost of panels I am still struggling to get over the problem that the installation cost is sunk money as unlike with other investments you can't simply withdraw that money. And I am struggling to get the maths to add up to do another installation, when the £3k or £5k or whatever it is could be put into another investment that would return 7.5%/year (FTSE average) WITH the ability to take the original investment out.

[2Btoo]

gazapc said:

2Btoo said:

We're now looking at an extension on a new house

Just a quick thought, are you considering 'in roof' integrated panels. So they are not mounted over whatever tiles you are using. Can save a good chunk of tile cost depending on the type used.

It's not something I had considered simply because I didn't know that such a thing existed ... thanks to the other posters who have added details.