Can DECC keep the FiTs scheme open?

[SRE]

Self use is a mine field. 40% for an average householder with a 4kW system is wishful thinking.

I totally agree, we advise our customers, based on our experience that 25% can be achieved with some hard work, anything over that extremely optimistic, unless your meter is going backwards ;-)

 

[Gavin A]

I extracted the Net Present Value

the problem with the Net Present Value method of calculating rates of return is that for probably 95% of customers they will simply take the NPV rate you give them and compare it to the bank interest rates they're currently getting without realising that NPV has already done that comparison and is giving them the additional value on top of the bank rates they could be getting.

While I do see the argument for using it, I really don't think it's appropriate in these circumstances for this reason.

I am contemplating using it for professional investors, buy to let types and businesses, but would still only do it alongside the simple annual rate of return, with an explanatory note.


eta - as well as the headline figure, we also supply 25 year payback sheets with each quote showing the anticipated rates of return for each year of the next 25 years for FIT, Export and self consumption along with the assumed rates of payment, incorporating losses from the panels. With that we also show the total 25 year income / savings, as well as this figure minus the initial system cost to give the actual profit made on the investment. We're currently reviewing this side of things, and I may add a NPV column to this more detailed section, but don't want to risk confusing customers too much.

 

[Gavin A]

I totally agree, we advise our customers, based on our experience that 25% can be achieved with some hard work, anything over that extremely optimistic, unless your meter is going backwards ;-)

we tend to use 30% for 4kWp systems unless we have data showing they're heavy daytime energy users.

 

[FB.]

Self use is a mine field. 40% for an average householder with a 4kW system is wishful thinking.

For an average householder who isn't at home during the day that may be true.

But in the first quarter of this year, I will have generated about 750kWh.
My usual power usage would be around the same amount as my first quarter generation - maybe a bit more due to winter (I pay £36 per month DD to Scottish Power).
I have actually dropped my electricity import by about 325kWh in the most recent quarter (i.e. a 40% reduction, or, by extension, 40% usage in-house) so it's dropped my monthly consumption from £36 to £21.
I am, however, in the fortunate position of working from home, so I'm able to take advantage of sunny days.

 

[Gavin A]

it's also early in the year, so generation is lower. Your consumption to generation ratio will drop come summer.

 

[SRE]

I have the advantage of 18 months with a 4kwp system, working from home, using as many electrical appliances as possible during sunny periods. Our consumption has reduced from 5000kwh pa to 3800 pa give or take an odd kwh. In my book that makes 24% and I work hard at it.

FB you too will become as frustrated as me when you're system is generating 27kwh in a day and you've only managed to use 5 or 6

 

[The Solar King]

Gavin is right about net present value. The problem is the number of people out there quoting this. I suspect that most of them do not understand it themselves. This is where the danger lies and also makes it difficult when talking to prospective customers. If some numpty has told them they will get 9 or 10% and I tell them no they will not, what does the customer think then? It gets worse when the best some of the double glazing salesmen can accurately work out is their commission.

 

[FB.]

.......I am contemplating using <NPV> for professional investors, buy to let types and businesses......

Any professional investor who deserves to hold onto his wealth should have done most of the sums and research in advance.

..... don't want to risk confusing <ordinary> customers too much......

Yes, I think that most people's eyes will glaze over if you get too complicated and you may end up losing a sale to someone who has been less thorough in providing the investment case.

 

[Gavin A]

It's worse than that solar King, as some companies are actually using the annualised average returns to give them their percentage figures, which then include all the assumptions about RPI and fuel cost rises.

IMO it would only be OK to use annualised average figures is you were using NPV methodology, not doing this is IMO a dishonest way of supplying the figures unless you're really up front about how you've calculated them, which none of these companies generally are. It's how companies can get away with still charging over the odds, while claiming 10% returns.

We prefer a happy medium, that our customers can easily and simply understand... ie pay £8,000, get £800 back in year one, and that would be a 10% return on investment.

If you're going to get as complex as NPV, then really IMO you probably need to have your workings verified by a qualified financial advisor, and realistically you ought to also be able to incorporate into those figures factors such as the tax benefits from the none income taxable status of FIT's etc. Personally, I'm happy that our method is simple, and easy to understand, with no danger of sounding like some sort of dodgy financial advisor when trying to explain the methodology used - even when with NPV you're actually trying to present a more honest picture for your customer.

 

[Earthstore]

At the end of the day you can make your figures whatever you ,want them to be, they are just nunbers on a piece of paper, it all depends on how honest you are really, and if you want to meet that customer in the street who tells you how pleased they are with the system that you installed and it is performing better than you said it would.
As for a 25 year projection, IMO there are just too many assumptions, so you really could make the final figure whatever you want it to be, just by changing things slightly then compounding that by 25 years.

The best explanation I heard from a customer was "I now do my washing etc in the day time, my meter is stationary, and then every three months the electricty company put a load of money in my bank account".
But then I like things to be simple...