I’ve briefly looked into the possibility of solar
in the past but it’s never been the slam dunk it’s advertised as, so I thought
I would lay out my thinking here to try and get it straight and come to a
conclusion, for now.
Previously I’ve gone so far as to have a couple
of quotes put together, so the amounts below are roughly right tweaked for
simplicity, and give a decent indication of the way the wind is blowing… or
which way the sun is shining, to butcher a metaphor!
Assume we have a total gas and electric cost of
£100, of which £70 is electricity, that’s £840 of electricity costs per year.
Against that we assume that however many panels
we can cram on the roof will account for 65% of that cost, so a saving of £546,
say £550 a year.
On top of that you get Feed in Tariff and
export payments of maybe another £180 a year, so a total benefit of £730 per
year (£550+180). Sounds good!
A couple of years ago the approximate cost was
£8k to have this all installed, but a bit of a search on line shows the cost
coming down to maybe £6k.
Some basic maths says £730 / £6,000 = 12% yield
– again, pretty good, much better than the FTSE!
So, if you stop there, that’s all good. Money
invested £6k, return 12%, lower bills, greener planet.
Reversing the maths (6000 / 730) gives 8.2, ie,
just over 8yrs to get your money back on the initial outlay. However, whilst
this is an investment, in that it provides a return, it is not one which can be
assumed into perpetuity because this is a piece of machinery which will fail.
So, if you want perpetually low electricity
costs you would need to save the money from the reduced bills for 8yrs to pay
yourself back for solar kit number 1, and then wait another 8yrs until you have
enough to replace the system… in theory, 16yrs until you actually realise your
“free” energy…
If the system can run perfectly for 20yrs, and
some give guarantees for 25yrs to match the feed in tariff contract, then
you’re looking at 4-8yrs of free energy.
Is it worth it?
Maybe, but life may get in the way. You
probably won’t stay in the same house for 20yrs. You could keep all the savings
looking to move after 7 or 8years hoping the person buying your house will be
happy to inherit an aging solar system and happy to pay for replacement kit
when the time comes… but that’s not the reason why you move house is it.
Ignoring general house price inflation do you get premium for having solar and cheaper
energy bills… maybe… enough of a premium? Who knows. But what happens when you
move to another place with no solar – do you give up and pay more or shell out
again for another new system?
The alternative to subsidise your bills would be
to put the same money in the market and use the dividends to pay the electric
bill. But you aren’t going to get 12%, or not sustainably anyway, so to get the
same reduction to your bill (£45pcm) you would need £18.2k (assuming a 3% yield
and no tax), or £13.6k if you’re happy with the 4% rule. Or live in darkness in
the winter…
The initial fag packet conclusion is either the
cost of the panels has to drop a lot more to a pay-back period of 5yrs or less,
or it’s simply better to save the extra and stick it in the markets?
I would certainly be interested to hear if anyone
has looked into it more closely, or thinks any of the above is wrong. Please
let me know!!!
No comments:
Post a Comment