Customer Help

[RGawley]

Hello

Im looking some help , if you can give me the wisdom on how to:

• Expected Minimum Electricity Generation from a PV System
• Expected Minimum ROC’s Payment @ 17.22pence(current rate)
• Expected Minimum Savings
• Total Minimum Payment/Savings per annum

If you could simplify it we would appreciate I.

what are the calculations(formula) to work out these answers?

If your going to illustrate could you illutrate a 3KW system?

Thank you

 

[SRE]

Be a really good idea to get a couple of local companies out to talk to you. They can go through the different panel and inverter options, work out if you can fit the amount you want on your roof and then if all of that is possible tell you what figures you can expect. There are a lot of variables to cover, if it helps make a list when your installer comes - we encourage our customers to do that, it's a big investment.

 

[FB.]

Hello

Im looking some help , if you can give me the wisdom on how to

· Expected Minimum ElectricityGeneration from a PV System
· Expected Minimum ROC’s Payment @17.22pence(current rate)
· Expected Minimum Savings
· Total Minimum Payment/Savings perannum

If you could simplify it we would appreciate I.

what are the calculations(formula) to work out these answers?

If your going to illustrate could you illutrate a 3KW system?

Thank you

I'm a customer, a solar-sympathiser and professional investor (not solar,but.....) and my view is completely impartial, with no axe to grind and based on my observations of solar array performance.

I'll lay out my base-case assumptions, for a sound business plan:

3kWp system.
Cost £6250.
45-degrees off optimum South-facing (i.e. facing SE or SW).
30-40 degree roof pitch.
No significant issues with shading from trees, chimneys, gables or overhead utility cables/wires.
Located in Central England, for an expected annual generation of 2400kWh.
Current FiT = 21p, plus 3.1p Export Tariff for 50% of the power generated. Effectively paid 22.55p per kWh.
Able to use one-third of the power "on-site", with two-thirds goingto the grid.
Cost of electricity from your provider: 13p per kWh
Electricity costs assumed to rise in-line with inflation
Annual inflation sits around the Bank of England's target (3%) which is also fairly close to the average inflation rate over the last 25 years (25 years being the duration of FiT payments).
The system is worth zero after 25 years, and the money cannot be retrieved,unlike a bank account (assuming the bank doesn't go bust!).

Firstly, since the money can't be recovered at the end of its lifespan, you should allow a 1/25th "depreciation" charge for each year.
Annual depreciation: £6250/25 = £250 (red signifying a negative number/deduction/cost/loss)

Money received from Feed-in-Tariff and Export Tariff:
2400kWh x 22.55p = £541

Bill savings, assuming one-third of the power is used in-house:
2400/3 x 13p per kWh = £104

Gross annual income: £541 + £104 = £645
- subtract depreciation allowance -
£645 - £250 = £395 net profit in year 1.

£395 net profit on £6250 initial cost is 6.3% return on investment in year 1.

However, the real gains come later, once the benefit of inflation-linking of FiT's and the rising cost of power is taken into consideration.

With inflation at 3%, the gains become:

year 1: £645 - £250 = £395(6.3% p.a.)
year 5: £748 - £250 = £498(8.0% p.a.)
year 10: £867 - £250 = £617(9.9% p.a.)
year 15: £1005 - £250 = £755(12.1% p.a.)
year 20: £1165 - £250 = £915(14.6% p.a.)
year 25: £1350 - £250 = £1100(17.6% p.a.)

So the returns start out very satisfactory (6.3% in year 1) and progress towards outstanding as time passes and inflation increases the annual FiT payments (into the teens percent in the second half of the system's lifespan).

Note that if inflation is higher than 3%, the returns will be even greater.Many people believe that inflation will be much higher. I have used a conservative estimate so as not to mislead.

Also note that interest rates paid on cash deposits are not increased everyy ear in line with inflation; interest rates are whatever the Banks set them at (influenced by the Bank of England, who only appear to know how to reduce interest rates since the BOE became independent in the late 1990's).

Also note that solar offers returns which stack up very favourably with mostother options, given that most asset prices (shares, property etc) can fall aswell as rise like a rollercoaster, whereas solar is much more predictable (even with the UK's erratic weather, which tends to average-out over a period ofseveral months).

Many installers use higher assumed inflation rates and very high energy-price-increase assumptions.
4% inflation and 10% energy inflation are often quoted, along with failure to recognise that the original outlay must be recovered from FiT payments and bill savings, rather than being able to "cash-in" the solar array like you would a bank account, property or share purchase.

 

[SRE]

Might be a bit more honest if you ask for installer help rather than customer help everyone has to start somewhere but posing as a customer to get other hard working installers to do your work for you is pushing it a bit

 

[FB.]

So if I take my above numbers and present it like most installers (excluding depreciation charge, assuming 4% inflation, 10% energy inflation, and assuming 50% on-site power utilisation):

The same 3kWp system as above, for the same £6250 initial cost:



Money received from Feed-in-Tariff and Export Tariff:
2400kWh x 22.55p = £541 (at 4% it goes up to £801 in year 10 and £1185 in year 20)

Bill savings, assuming half of the power is used in-house:
2400/2 x 13p per kWh = £156 (at 10% it goes up to £405 in year 10 and £1049 in year 20)

Profit year 1: £541 + £156 = £697
£697 profit on £6250 initial cost is 11.2% return on investment in year 1.

Profit year 10: £801 + £405 = £1206
£1206 profit on £6250 initial cost is 19.3% return on investment in year 10.

Profit year 20: £1185 + £1049 = £2234
£2234 profit on £6250 initial cost is 35.7% return on investment in year 20.

So you can see that it makes a huge difference by changing inflation assumptions and ignoring the fact that the solar panels can't be cashed-in.

Personally, as a professional investor, I prefer to make a cautious assessment of the benefits.

However, those who make a living from selling solar have an incentive to make the returns look as good as possible.

In any case, whoever is right (me or the sales people) the returns from solar are good to excellent and well worth considering as an investment.

 

[Earthstore]

Might be a bit more honest if you ask for installer help rather than customer help everyone has to start somewhere but posing as a customer to get other hard working installers to do your work for you is pushing it a bit

I was not sure what you meant here, but did a little research (its not hard) and I see where you are coming from.

Why not say that you are an installer, and that you try to buy panels direct from manufacturers, or that you have fitted some systems and just do not understand the financial returns, there are some really good folk on here, that help many people out for no gain, but honesty is the best policy.

 

[SRE]

Having a bad week thinking about how much we've sunk into solar financially as well as blood sweat and tears, compared to cost of courses now and the phone hasn't rung once this week! Not feeling very charitable I'm afraid :-( charity begins at home.

 

[FB.]

I was not sure what you meant here, but did a little research (its not hard) and I see where you are coming from.

Why not say that you are an installer, and that you try to buy panels direct from manufacturers, or that you have fitted some systems and just do not understand the financial returns, there are some really good folk on here, that help many people out for no gain, but honesty is the best policy.

Yes, that was why I removed my posting, although another member PM'd me as they were interested in what it said - so I put the posting back up again.

 

[Gary K]

:-( charity begins at home.

Quite agree, unfortunatly most of it is going abroad