certainly 20-30% over estimate accords with what we are finding on our installs down here on the south coast.
Hmmm.... so it's probably correct that 25% outperformance of the government SAP figures is quite likely.
Based on that outperformance, I'd expect annual returns to average the following, at various FiT rates, assuming:
SouthEast or SouthWest system.
3.7kWp
Installation cost of £10000
Allowing an annual 1/25th depreciation charge to reflect the fact that, unlike pulling money out of a bank account, the array can't be sold to get your money back.
One-third of power generated is used in the home and reduces electricity bills, with a retail electricity price around 15p per kWh (similar to that charged in the last year or so).
One-half of the power generated earns the 3p per kWh payment from the utility company to which it is sold.
It also assumes that electricity bills rise in line with RPI. Some disagree with this, in which case the benefits would be even higher if electricity prices continue to go up faster than RPI.
43p FiT = RPI+7%
21p FiT = RPI+4.5%
16p FiT = RPI+3%
Substitute RPI for whatever figure you think inflation will be.
If the Bank of England manage to keep inflation at their so-called target of 3%, investment returns of RPI(3) + 3% = 6% per year from a 16p FiT is not too shabby.
If RPI inflation continues at the 5% level seen during 2011, that makes a most-likely outcome of 8% annual returns from as little as a 16p FiT........or you can take your chances for (maybe) a similar long-term return in the stockmarket or property market.
So, actually, I think that once the potential customers have finished sulking that the FiT for new installations is less than their neighbour got, solar PV still looks viable - offering very acceptable investment returns, although not as generous as previously.
