Still worthwhile?

[dchester]

What is the opinion here on viability of Solar PV? Is it still worth buying this from and end user point of view? Obviously installers want to keep selling and pushing it but with greatly reduced subsidies is it worth putting them on your own house?

My own point of view is that it is a lot of money to shell out for somewhere you may not be in 6 to 10 years time. Although with the right installation it would be very satisfying not to have to pay the leeches for my electricity!

Power companies have been ripping us off for years, putting shareholders profits before customer welfare. I dn't see this changing in the near future. The greedy energy companies have the gall to blame their ever increasing prices on increased charges from their suppliers - excluding energy generation. This is almost certainly a direct result of the increased burden of energy supply and fuel price rises on those very same suppliers.

They are creating a vicious circle for their own ends. I dno't see the government doing much about it despite blathering about it being a problem. The more money these companies make, the more is raised in tax and VAT.

Would be interested in hearing the views of others here, especially those installing Solar PV.

Thanks

 

[Eco Deal]

I am an installer , I have two systems a 1.4 kwp at the 43.3p and a 4 kwp at the 16p rate.

now the 4 kwp to me is more about saving on electricity I just got my bill and I am £40 in credit. I know every day that my basic things like tv , laptop , fridge , freezer x 2 are run free all year round. the if we have a good day things like my washer dryer and hot water are free.

PV is still worth it the problem we have is that the 43.3p rate was too good and when you mention 16p they always look at the old 43.3p rate even if the price is 70% cheaper than at that rate , I think I paid over 5k just for the kit for my 1.4kwp and installed my 4 kwp cheaper than 5k

 

[Vegelen]

Q/ Is it better to be self sufficient or dependent?

Q/ Do you trust UK energy companies to supply you with a reliable future energy source at a competitive price?

Solar PV is a tried and tested technology.

It can generate a significant amount of your homes energy requirements- if the intended

location of installation of the solar pv system is in a suitable location that gets lots of light

throughout the year.

South facing roofs at an angle of 30 degrees are optimum with zero shading.

Shading effects the ability of solar panels to generate electricity.

Solar systems tend to generate ok in the months from March to September.

In winter solar pv systems dont generate as well as UK sunlight hours reduce.

UK FIT rates have reduced to far less profitable levels than 2011.

I now think of UK FIT rates as a way to pay for the Solar PV hardware installed on your

property, in a certain timeframe.

Crude Simplistic Calculations On A 3KW Solar System:

In a reasonable location a 3KW can generate 2,600KW per year.

If FITS were 15-16p you'd make approx £400 per annum in generated income.

You'd also make £50+ on half your generated energy via export income payments.

How much would you save on your consumed household electricity?

Lets assume you would use 1/3 of your generated electricity. i.e 866KW @ 14p = £121

reduced electricity bills per year.

450 + 121 = £ 571 per year.

You'd probably make your initial outlay back in 9 years.

The calculation to more accurately evaluate the actual payback time on a solar system is

more involved than I care to do here, it involves UK Inflationary affects (annual FIT rate

payments are index linked), annuallised energy price inflation etc

How much would the same money make if invested in a UK bank over the same period of time?

You have to think through the solar proposition for your own situation, in detail.

Right now the media and the government have killed peoples perception of solar.

Solar still remains a good long term investment and a great way to mitigate those rising

energy bills.

Solar power will return into vogue if energy bills keep increasing.

Right now Solar PV inverters are selling at sub wholesale cost prices.

If solar pv panels continue declining in price, it's going to be a very good opportunity

to install solar.

 

[FB.]

What is the opinion here on viability of Solar PV? Is it still worth buying this from and end user point of view? Obviously installers want to keep selling and pushing it but with greatly reduced subsidies is it worth putting them on your own house?

My own point of view is that it is a lot of money to shell out for somewhere you may not be in 6 to 10 years time. Although with the right installation it would be very satisfying not to have to pay the leeches for my electricity!

Power companies have been ripping us off for years, putting shareholders profits before customer welfare. I dn't see this changing in the near future. The greedy energy companies have the gall to blame their ever increasing prices on increased charges from their suppliers - excluding energy generation. This is almost certainly a direct result of the increased burden of energy supply and fuel price rises on those very same suppliers.

They are creating a vicious circle for their own ends. I dno't see the government doing much about it despite blathering about it being a problem. The more money these companies make, the more is raised in tax and VAT.

Would be interested in hearing the views of others here, especially those installing Solar PV.

Thanks

Solar can still be worthwhile for many and is worth exploring, but I take exception to your comments.
If utility companies are so profitable, why don't you go borrow some money, invest it in utilities and sit back until you become a millionnaire. You'll have a long wait. It isn't as rosy as everyone thinks.

Utility companies only have a profit margin of several percent. That's quite a low margin. I am also certain that if utilities were nationalised, the complete loss of any kind of competition would cause them to become lazy, bureacratic and lacking innovation - driving up costs for consumers. At best, their margin of about 6% would be the maximum reduction in prices that consumers could see. However, as I said: government-owned utilities would suffer bloated bureacracy (I used to work for the NHS and the number of middle managers doing pointless or duplicated desk jobs was often more than the workers on the ground) and lack of competition would leave no incentive for companies to innovate new and better ways to operate.

Also you speak of shareholders. They get paid around 5% to 6% annual dividend. That's all - unless random market price moves also cause the shares to go up (or down). The annual dividend payout is barely adequate for the risks involved. I've recently been reducing my utility shareholdings because I think the returns are poor - I'd much rather invest in other companies with bigger margins and less political interference (who nobody seems to notice because all eyes are on utility companies which allows other companies to make extortionate 20% or more margins - companies such as Apple, for example, make vast profit margins and people just keep buying!).

So if utility companies must work on a not-for-profit basis, I'd like to see solar installation also done on a not-for-profit because, after all, it's people's only defence from higher bills - just to ensure that hard-pressed consumers get the lowest, most competitive solar prices possible (because there have been a lot of solar rip-off's and overpriced installations in the last year or two). It's only fair that everyone works on a not-for profit basis, no?
Ah, but most people's definition of fair is if it affects someone else and not them. Selfish.

You also mention tax. "...The more money these companies make, the more is raised in tax and VAT...."
What do you think the government does with tax? Tax provide healthcare, policing, benefits, pensions and everything else that people consider to be their right. The previos government borrowed us to the eyeballs in order to give a short-term boost which the next generation will have to pay for - plus interest - from taxes.

 

[balbecdaze]

It's still a good investment, albeit you're investing less and generating less profit in real terms than when prices and the FiT were higher (as Vegelen shows).

It's also arguably more important as policies on climate change seem to have dropped off the political radar of US and European countries (don't know about the rest of the world). We simply have to reduce the amount of CO2​ we release into the atmosphere both personally (solar panels, electric cars and trains, solar thermal etc) and as a society.

 

[dchester]

Well for a start nobody in their right mind would "invest" that much money in a UK bank account unless they were crazy

We are in the SE of England and use about 30kWh of electricity a year. There's about 2kW constant "background" usage plus whatever else is used by the wife's apparently constant need of the washing machine, tumble drier and dishwasher!

So I think that we would need a 5kW installation which is >4kW limit which is a pain, however, we do have another property on the site which has its own supply so we could, say, fit 4kW to our place and 2kW perhaps to the additional property.

The problem is that the initial outlay makes this quite prohibitive and unless the panel costs reduce dramatically I don't see that being worthwhile. Sure this has started to happen as demand increased but with the FIT now being so small it's likely going to level off again.

 

[zeljuga]

Check your figures. 30 kwh is more likely one or two day consumption.

 

[FB.]

generating less profit in real terms than when prices and the FiT were higher

The previous overly-generous Feed-in-Tariff was being subsidised by higher prices levied/passed-on to those same hard-pressed bill payers. Solar is arguably making things worse, before they, one day, may get better.

The FiT, at 40-odd-pence per kWh, was insanely over-generous and no wonder the rent-a-roof boom happened as it was a "no brainer" and the main objective (bill savings) was only a tiny proportion of the payback, which was just plain greedy. Rates of return well into the teens percent are higher than any other "investment" available - especially considering the risks.
Now it has swung in the other direction and the FiT is a little on the low side.

 

[dchester]

Solar can still be worthwhile for many and is worth exploring, but I take exception to your comments.
If utility companies are so profitable, why don't you go borrow some money, invest it in utilities and sit back until you become a millionnaire. You'll have a long wait. It isn't as rosy as everyone thinks.

What a friendly chap.

I'm not suggesting that utility companies should be re-nationalised. That would likely be a disaster ending with the usual government bloat and another method of taxing us, but there appears to be a price fixing cartel operating here and customers are being ripped off. There is no competition or we would see energy companies trying to reduce costs and prices in order to capture more customers. Instead of this we see across the board price hikes far greater than inflation and convoluted, confusing price plans. That's not OK with me when this is an essential utility. There is clearly no proper regulation on the side of the consumer.

 

[dchester]

Check your figures. 30 kwh is more likely one or two day consumption.

I meant 30K kWh thanks

David

 

[dchester]

The FiT, at 40-odd-pence per kWh, was insanely over-generous and no wonder the rent-a-roof boom happened as it was a "no brainer" and the main objective (bill savings) was only a tiny proportion of the payback, which was just plain greedy. Rates of return well into the teens percent are higher than any other "investment" available - especially considering the risks. Now it has swung in the other direction and the FiT is a little on the low side.

Yes I think at 25p it was still a no-brainer really and I wish that I had done it back then really but install prices were still very high.

What is the sell-back rate like now on generated power fed back into the grid?

Thanks

David

 

[FB.]

What a friendly chap.

I'm not suggesting that utility companies should be re-nationalised. That would likely be a disaster ending with the usual government bloat and another method of taxing us, but there appears to be a price fixing cartel operating here and customers are being ripped off. There is no competition or we would see energy companies trying to reduce costs and prices in order to capture more customers. Instead of this we see across the board price hikes far greater than inflation and convoluted, confusing price plans. That's not OK with me when this is an essential utility. There is clearly no proper regulation on the side of the consumer.

Friendly? I just get fed-up of the one-sided "anti-business" mentality of the British public - many of whom have come to expect something for nothing at someone else's expense.

If it's so profitable, why isn't everyone rushing into building power stations and laying power and gas cables?
Why have big investors been pouring money into bill-payer-subsidised rent-a-roof, rather than going to the apparently lush green grass available in the generation and supply markets?
The reason, is that it's far from easy to generate and supply power at a decent profit margin; it's much easier to look for a government subsidy or handout in order to make a good profit.

 

[FB.]

In summary: unless businesses are able to make a fair profit margin, and aren't tied-up with red tape, then eventually there will be very few businesses left in Britain.

Perhaps you'd like to see even more tight regulation, with the result that more of our utility companies see their share prices slide to the point where Chinese, Canadian or French businesses pick up our companies for pennies in the Pound? United Utilities and Severn Trent had to cut their dividend payout to shareholders by 11% a few yeara ago after OFWAT come down hard on them. The dividends have yet to recover and now both are subject to buyout speculation from Canadian pension funds. We've already lost, to overseas owners: Thames Water, Northumbrian Water, Scottish Power to name just a few.

Businesses (and people) with money to invest are needed to provide jobs for the majority.

At least while the utility companies remain substantially listed on the London Stock Exchange, the dividends they pay may end up being spent within the UK, rather than being paid to overseas owners who gradually own more and more of the UK's infrasturture and gradually turn the UK into a bunch of peasants with no money and no posessions.

 

[dchester]

Well they don't want to plough huge amounts of cash into building new power stations. What we need, and some won't like this, is nuclear power and solar energy farms but the tree-huggers won't like that. (Appologies to any tree-huggers present!)

I think it's the only way forward though but nobody is interested in investing in the future when they can carry on milking the heck out of their cash cow. Instead of reducing prices to increase income by gaining more customers they try to find ways of telling us how we can reduce our usage! And don't forget, most of these companies do not generate electricity or bring up their own gas - they are just selling on paper someone else's.

I'm certainly not anti-business BTW. I have run my own business for 25 years. I am, however, anti ripping people off during the worst recession in living memory.

David

 

[FB.]

Well they don't want to plough huge amounts of cash into building new power stations. What we need, and some won't like this, is nuclear power and solar energy farms but the tree-huggers won't like that. (Appologies to any tree-huggers present!)

I think it's the only way forward though but nobody is interested in investing in the future when they can carry on milking the heck out of their cash cow. Instead of reducing prices to increase income by gaining more customers they try to find ways of telling us how we can reduce our usage! And don't forget, most of these companies do not generate electricity or bring up their own gas - they are just selling on paper someone else's.

I'm certainly not anti-business BTW. I have run my own business for 25 years. I am, however, anti ripping people off during the worst recession in living memory.

David

Having read most of the company's annual reports: they are eager to pour tens of billions into new power plants (including nuclear - but I believe that now every possible bidder has withdrawn, citing government lack of clarity).
The companies fear that changes in the government or regulatory mood (e.g. from one power source to another every couple of years) will mean that the companies end up having wasted billions on a multi-year construction project to build power stations using one type of "fuel" which has to compete unfavourably against another type of power generation which has a big subsidy.

Back in 2010, as an investor in National Grid, I coughed-up thousands of pounds (yes, National Grid made a cash-call from their shareholders) in order to invest £20-25billion in the UK's ageing infrastructure and to make new connections for renewables such as offshore wind.

 

[dchester]

In summary: unless businesses are able to make a fair profit margin, and aren't tied-up with red tape, then eventually there will be very few businesses left in Britain.

Wow I have stepped on a hornets nest! I like to make a fair profit margin myself but we are talking essential utilities here who are pandering to the shareholders and NOT their customers. Private business delivers the best service they can to their customers or they will not last 5 minutes. Utility companies don't have to do this. They can run rough-shod over all of us and I am staggered that some people in here appear to like that!

Perhaps you'd like to see even more tight regulation, with the result that more of our utility companies see their share prices slide to the point where Chinese, Canadian or French businesses pick up our companies for pennies in the Pound? United Utilities and Severn Trent had to cut their dividend payout to shareholders by 11% a few yeara ago after OFWAT come down hard on them. The dividends have yet to recover and now both are subject to buyout speculation from Canadian pension funds. We've already lost, to overseas owners: Thames Water, Northumbrian Water, Scottish Power to name just a few.
Businesses (and people) with money to invest are needed to provide jobs for the majority.

This has turned into a lively debate and I can't help thinking that half of the people here are employed by the utility companies!

This is the problem caused by successive governments. In my opinion, foreign busnesses should not be allowed to buy our utility companies or any part of the infrastructure of the UK.

 

[FB.]

-
Here is an extract from Centrica's half-year results announcement, from June 2012:

INVESTING FOR GROWTH

• Total investment of £1.5 billion in the first six months of 2012
• Further progress in gas development projects, to bring 140mmboe of reserves into production
• Moving ahead with £1.4 billion Cygnus development; largest gas discovery in the Southern North Sea for 25 years, supporting 4,000 new jobs
• First power from £1 billion Lincs wind farm in the coming weeks, able to supply around 200,000 homes
• Awarded planning consent for 580MW Race Bank wind farm; progressing towards a final investment decision in the first quarter of 2013

Here's an extract from SSE's (Scot & Sthn Electric) from July 2012:

· Networks: SSE's subsidiary Scottish Hydro Electric Transmission Ltd (SHETL) has undertaken capital works totalling £80m, including completing the new £25m 275kV substation at Beauly, and remains on course to achieve a Regulated Asset Value of over £1bn for the first time later this year;
· Wholesale: SSE's onshore wind farm capacity in operation has increased by 50MW to 1,353MW as a result of progress at the Clyde wind farm development;
· Wholesale: SSE's commissioned offshore wind farm capacity (net) has increased by 69MW to 256MW as a result of the completion of Walney and ongoing construction progress at Greater Gabbard, where 137 of the 140 turbines have now generated electricity; and
· Wholesale: The seventh of the nine caverns at the new Aldbrough gas storage facility being developed by SSE and Statoil UK Ltd have been brought into commercial operation in June and dewatering of the eighth was also completed in June, keeping the development on track to achieve full operation later this summer. Meanwhile, the facility continues to operate with high availability to meet commercial requirements.

In addition, the reservoir at the 100MW Glendoe hydro electric scheme is now being filled, in advance of electricity generation which is expected to resume shortly.

Other developments
Since the publication of its full-year results on 16 May 2012, SSE has also entered into an agreement with Endesa Generacion SA to acquire electricity generation assets in Ireland which are in operation (1,068MW), under construction (460MW) or in development for a total cash consideration of €320m (£256m) plus an estimated €43m (£34m) for working capital and €125m (£100m) to complete the construction of the Great Island CCGT.

 

[FB.]

I like to make a fair profit margin myself but we are talking essential utilities here

But where do we draw the line for "essential", without risking state-owned-everything and communism as a result?

Cars are essential.
Petrol is essential.
Food is essential.
Postal services are essential.
Telecoms services are essential.
Clothing is essential.
Household items - "white goods" are essential.

A case can be made that almost everything is essential.

Unilever (household cleaning chemicals and food producer) reported a 13% margin recently.
BT reported 13% margin.
Diageo (Guinness and alcohol) reported a 21% margin.
British American Tobacco reported a 32% margin.
Barclays reported 18% margin.
Shell reported a 12% margin.
Marks & Spencer reported a 7% margin.
"struggling" Tesco reported 6% margin (same margin as Centrica / British Gas)

Why would I (or anyone else) want to invest in low-margin businesses such as utilities, at the top of consumer's hit-lists, when many other companies - especailly smokes and booze - absolutely rake it in and rob people blind without them realising it?

 

[dchester]

Did you notice that everything you said related to shareholders and none of it to consumers?

 

[FB.]

Did you notice that everything you said related to shareholders and none of it to consumers?

Yes, because there has been too much emphasis on consumers and not enough on encouraging businesses to invest and create jobs.
The economy will not get out of its slump unless businesses can be encouraged to invest, and they will not invest unless the profit margins are satisfactory.

How many construction workers would be given jobs, if the utility companies suddenly were able to find profitable investment options for new power stations? How much extra would that inject into the ailing UK construction industry - and filter down as wages to ordinary people? Or should we continue to lack investment and buy all our power from the Continent, with money flowing overseas instead of the UK?


I presume, then, that you'd like everything to be owned by the state - including your business. After all: almost everything is "essential" and therefore why should one industry or sector be any different to other industries or sectors (especially if margins are already very low)?

As things stand, you can see where investors and businesses will put their money - smokes, booze and anything with a government subsidy. Not many will be interested in low-margin utilities and investment in utility infrastructure may be starved as a result.