Returns on investing in solar panels

[hayfield]

This is a question that I have been wondering for some time, some look for how quickly they get their money back, I am in the group who look how much it saves me on my dual fuel bills, others may have other values.

 

My original quotation worked on quoting returns on year 1,5,10 and 20. the salesman did say it may over this period need servicing, repair or replacements. But is guaranteed for 10 years

 

My quandary is that the cost and benefits are shown for 20 years, though I expect maintenance costs after the first 10 tears, to cater for these added costs, perhaps I should divide the acquisition costs over the first 15 years and perhaps use the next 5+ years to recover the maintenance costs after the first 10 years

 

Given I paid £2688 for the system, divided by 15 gives me an annualized cost for my investment for the first 15 years.   £179.20

 

Year 1 realized a financial benefit** of £283.74. A return of 58%

 

Year 2 due to the energy crisis the benefit increased to £470.47. A return of  162%  

 

Year 3 is 10 months old and so far produced £328 with two of the best months to be added. Projecting a return of  £138% for the year

 

** value of own energy used plus export income

 

To a certain degree the figures were skewed by the energy crisis, plus I got a very good deal due to the covid recession. But had the salesman quoted these figures I would not have believed him. But after 34 months we have nearly reached the 5 year projected benefits on the sales illustration

 

For me the best thing is that my DDI monthly benefit has not changed in 4 years and is on target to cover the forthcoming winter period 

 

I expect others will differ on how to calculate the return on their investment, please let me know where I may be getting it wrong

[GrumpyPenguin]

All I  know is that I save money, the installation paid for itself some time ago, I do a rough calculation every so often to check but I'm really not inclined to bother with the real minute details.

 

If I'm bored I can see exactly what is happening through the app' that came with the system & don't need a so called smart meter to tell me.

[Ray H]

We're are currently benefitting from the battery we have connected to the system. Most days recently we have imported not much more than 0.02kWh. Today, it is fairly overcast and there's not too much happening by way of power consumption and yet we have a full battery, have so far consumed 2.43 kWh, generated 7.01kWh and exported 3.49kWh and those figures are with a rather high tree on the grass verge opposite that means we don't generate too much from direct sunlight before mid morning.

 

My biggest gripe is that we get circa 12p per kWh exported which is less than 50% of what we pay for imports from the grid.

 

The less we can import the better.

[Kris]

3 minutes ago, Ray H said:

My biggest gripe is that we get circa 12p per kWh exported which is less than 50% of what we pay for imports from the grid.

 

The less we can import the better.

You want to change suppliers. Our import / export price is equal. We were getting 28p per kWh until the end of June. Not checked not the prices have changed a little.

[Ray H]

4 minutes ago, Kris said:

You want to change suppliers. Our import / export price is equal. We were getting 28p per kWh until the end of June. Not checked not the prices have changed a little.

 

That's interesting. I do check from time to time to see what the best rate is and I've only ever found it to be around 12p.

 

Ours is a fairly recently installed system so not able to profit from some of the early government schemes.

 

Would you mind telling me your provider please?

[Kris]

9 minutes ago, Ray H said:

 

That's interesting. I do check from time to time to see what the best rate is and I've only ever found it to be around 12p.

 

Ours is a fairly recently installed system so not able to profit from some of the early government schemes.

 

Would you mind telling me your provider please?

We use intelligent octopus flux. Like you we have not had our system for very long (just over a year) so we also don't get any feed in tariff options that the earliest adapters got. 

 

This link will take you to the tariff and if you sign up I believe that both you and I would get £50 providing you stay with them for a certain length of time. 

 

https://share.octopus.energy/rainy-goat-5

 

This screenshot shows you the current tariff that we get. Yours might be a little different as they do vary a little by area. 

 

 

This link shows you the initial rates you can sign up for. Still seems better that your 12p per unit. 

 

https://octopus.energy/smart/outgoing/

 

 

[Ray H]

That looks very interesting.

 

Our system was initiated by & with a company that decided during the fuel crisis that they didn't wish to be a "supplier" any more and we were transferred to British Gas. A bit of research revealed that Scottish Power offered a better price for electricity exported from the panels so we swapped over to them. It took us over a year to get our first payment and we have to read our meter and pass that reading on to them. Power exported from the battery is still handled by the original company and, to be honest, I don't know what rate we get.

 

I check to see what penalties I'll have to pay to switch from our present supplier.

 

Thank you.

[PatB]

Perhaps not entirely relevant on a UK oriented forum, but my own rough figures, overall, after 6 years from an 8.8 kW system amount to:

 

Initial installation $4800

Maintenance so far $0

Energy costs saved ~$4000

Export income ~$2900

So overall "profit" ~$2100, or $350 pa.

 

Obviously, annual return will increase as the initial installation cost is amortised over a longer period.

 

We're not typical though. We run a big electric kiln which chews up roughly 100kWh per firing, which usually happens weekly. Normally that's overnight on cheap energy, but often spills over into the following morning, so everything off the roof goes into it for a few hours.

 

I'm also not sure how things will look longer term. We went over to all electric heating a couple of years ago (along with air-conditioning for summer), which will have increased our imports and reduced our exports somewhat. We've also gone to electric water heating (6 months ago) and are treating the tank as a thermal battery, running it on a timer only during peak solar generation hours. That too will have reduced our exports but shouldn't increase our imports very much, if at all.

 

Generation averages about 12kWh/day at this time of year and double that (or a bit more) in high summer. It's currently putting out about 3.4 kW on a sunny winter day with some light cloud around. Which reminds me. I'd better go and put a wash on.

[hayfield]

17 hours ago, Kris said:

We use intelligent octopus flux. Like you we have not had our system for very long (just over a year) so we also don't get any feed in tariff options that the earliest adapters got. 

 

This link will take you to the tariff and if you sign up I believe that both you and I would get £50 providing you stay with them for a certain length of time. 

 

https://share.octopus.energy/rainy-goat-5

 

This screenshot shows you the current tariff that we get. Yours might be a little different as they do vary a little by area. 

 

 

This link shows you the initial rates you can sign up for. Still seems better that your 12p per unit. 

 

https://octopus.energy/smart/outgoing/

 

 

 

 

I am with Octopus so I will explore whether this rate is wort it for us

[Ray H]

I plan to do likewise.

[hayfield]

2 hours ago, Ray H said:

I plan to do likewise.

 

 

I hade a quick look but it seems its aimed at electric car owners and according to Octopus the rate I am on is the best for me

 

Within this thread I was looking at how to value Solar panel installations as an investment

 

When buying a system my intention was not saving the planet (we are relative low carbon users anyway and I bet our carbon footprint is lower than many of the eco zealots) but to ensure I could afford to heat and light our property without too much damage to our savings.

 

The simple fact that my DDI payments are still the same as 4 years ago, plus I am £300+ in credit as of the end of June. We were very lucky to buy the system when large discounts were available. Certainly after the energy crisis main stream thoughts on energy costs have changed completely, from a nice quaint thing to have, to a financially beneficial addition to the property and perhaps increased the value as well as desirability of the property. For a buyer its an income stream from the property

 

One thing I have not included in my calculations is the devaluation of the savings I used, whilst the interest I lost is minimal I feel I have preserved the value of the investment against the effects of inflation over the past 3 years, I think this should have a monetary value, but I have no Idea this does have any relation to this investment

[JohnR]

I've got some professional experience in this area, as an Energy Manager for a large Scottish health board.

 

Firstly, we probably pay less than most people for our grid electricity, as it is purchased as part of a giant public sector contract. It's certainly less than what I'm paying at home.

 

One of our buildings has recently been vacated by the University, and as part of moving our staff into it, I commissioned studies into making it net zero, including solar panels. We're going to use it as an office building, occupied from 8am-6pm Monday - Friday. 

 

Based on the amount our panels would generate, I estimate we'd used everything within those hours of occupation. I didn't make any allowance for excess consumption we might spill back to the grid, eg at weekends or outside work hours. 

 

The panel design is an 85kW design (so much larger than a domestic set up, but the principle is the same) on the corrugated metal roof. The cost will be £140k, and has a payback of 9 years. 

 

The reality will be that it will payback sooner, as there will be some consumption outside of work hours, and we'll get something for our export (just not very much in comparison to what we pay). 

 

Hope this gives some real world figures to help the decision. 

[sjp23480]

1 hour ago, hayfield said:

 

 

One thing I have not included in my calculations is the devaluation of the savings I used, whilst the interest I lost is minimal I feel I have preserved the value of the investment against the effects of inflation over the past 3 years, I think this should have a monetary value, but I have no Idea this does have any relation to this investment

John,

 

To keep it simple I compare the returns to the interest my capital would have earned had I left it in the bank. 

 

My solar returns easily outstrip bank interest rates. 

 

Whilst you can't access the capital invested in your system, you may get a benefit if/when you sell your house. 

 

Steve

[hayfield]

17 hours ago, sjp23480 said:

John,

 

To keep it simple I compare the returns to the interest my capital would have earned had I left it in the bank. 

 

My solar returns easily outstrip bank interest rates. 

 

Whilst you can't access the capital invested in your system, you may get a benefit if/when you sell your house. 

 

Steve

 

Steve

 

The returns against what my capitol would earn is 100's of times greater if not thousands

 

Bank interest rates guarantee you savings devalue each year

 

I think you now are correct in saying the house value increases, but I think we are getting our capitol returned most weeks, but we fail to reinvest it

 

My main driver in investing in a system was that I feared in years to come I would have to become more reliant on using savings to top up my income to pay for energy

 

After 34 months my system has produced £1,100 in cash benefits (either the value of self produced energy I have used or export income), simply I have £1,100 more in my bank account than I would have. So in practice the capitol has and is being repaid.

 

My dual fuel DDI payments as I keep saying has not increased for four years, but my credit balance with my supplier is more or less the same. It could be said in real terms the true value of my repayments have reduced

 

Have I said good buy to my investment, I would say on the contrary rather than my investment reducing because the returns are below inflation, my investment is actually growing in value.

 

I did at the start of this thread the usual basic calculation of what I believe was the return on my investment, I think my assumptions on maintenance costs being covered in years 15+.

However what I have not factored in is the transfer of savings which would be devaluing over the 15 to 25 year period, to an increasing asset. So rather than write off the initial cost, its an increasing asset.

 

The simple fact is rather than an item which many vies as an expensive luxury/indulgence, which like a car which devalues over time. Its actually the opposite, like the house its an asset which increases overtime. This is the factor I have not included into my attempt of identifying the real return of the system.