Invoice for Solar panels before 12th December

[Worcester]

Actually guys from an accountant and investors point of view you are not talking about ROI (return on ibnvestment) you are talking about the IRR - internal Rate of Return.

Given the above figures from Earthstore, assuming no maintenance costs:

Over a 10 year period, you ROI is -20.1%
Your 10 Year IRR is -5.7%


i.e it doesn't add up.

If you take 25 years and assume maintenance costs at 2% per annum (e.g. inverter replacement)

Your 25 year ROI is 63%
and your 25 Year IRR is 6.5%
giving you a multiple of 1.63
and the Present Value of your investment is £16,416.42

It's the IRR that matters.

Just getting my money back doesn't count.
The problem from an investors point of view (on a house) is that it is a tied asset - once bought it has no intrinisic value until the property is sold - the money is locked down and can't be used for anything else, also no-one has been able yet to prove increased property values.
If I have stocks and shares, or a cash ISA, I can realise that assett at any time.

On a commercial installation it may be different since these could be sold retrospectively to effectively become a roof to rent scheme, they could also be used as 'guaranteed' income as security for other loans. - Doubt you'd get that on a house though!

 

[solarsparkie]

well thanks for that , could you show me the export tarriff provider which dosnt charge a standing charge please

Feed-In Tariff	Output	X Feed in Tarriff Rate			Total
3433.6	21	From table		£721.06
Savings	50%	Cost (pence)	13			£223.18
Export	50%	3.1	Export		£53.22
Total Savings/Income							£997.46
Cost of installation	£9,520.81				£9,996.85
	VAT	5%
Annual return on investment					10.0%

Well you really are trying to dazzle us with your brilliance, and as fantastic as it may be it is flawed.
Please see the table above, this is for a 4KWP system, fully fitted, including scaffold, the performance figure of 3433.6 is for the optimum roof according to the SAP formula.
If I was certain of the FIT rate I would supply this system to you.
It clearly shows the ROI (the pink section), so, yes it is possible.
As stated again and again, this is for year one, if the system out performs the calculation, which in my area they are your ROI will increase, also the FIT is indexed linked, and energy prices are rising, but in my opinion you have to use too many assumptions for a 25year ROI
Why you are pursing this matter in such a negative way is quite beyond me, are you trying to prove to us all that you are in some way superior?

 

[solarsparkie]

thankyou very much worcs , the voice of reason at last

 

[Earthstore]

Would you be kind enough to explain how a 10% ROI over 10 years equates to a -20.1% loss?
£997.46x10=£9974.6, investment was £9996.85 loss of £22.25.
But this does not include RPI or energy price rises, if you were to add in some assumptions for these, then the small loss would be a gain, would you not agree?

Sorry, export provider making a charge? The example given is for a 4KWP system, there is no export meter installed.

 

[solarsparkie]

so where does the export money come from?

 

[Earthstore]

Are you not aware how the FIT works?
Do you understand at what output you have to have an export meter? ( this may vary with different DNO'S).
I am always willing to help on here if I can, but recently I have been shot down by trying to help, I am fully aware of my mathematics, I keep it simple.
I respect Worcester's comments, (not sure about clik fit though) but as I asked, if you have a 10% return over 10 years, how does that equate into a 20% loss? 10x10 =100.

 

[solarsparkie]

earth store , you get a standing charge if you want an export contract as i understand it you have to take that off your income , if you have found someone to provide you free export remuneration it would be very usefull to everyone here

 

[Earthstore]

You are correct, if you have an export contract.
This varies according to the suppliers, also so does the tariff they pay you, shop around you can get up to 5p export, however with the cost of running the export meter, and their various charges you have to calculate which one is the most viable.
My example was for a 4KWP system, so there would be no export meter installed, so energy companies assume that you use 50% and they buy 50% back from you.
If you calculate correctly on a customers system and take into account their usage/export, some may benefit from an export meter and some may not.
It is normally the later.
I really hope this helps.
Do you always install an export meter?

 

[solarsparkie]

in a word no , when standing charge factored in wasnt worth it but if you have found someone to pay on the 50% no charges please enlighten me , i keep askin and you keep avoiding giving me an answer

 

[Earthstore]

We are all sorted on this one, phones are a fantastic invention.
Time for me to retire from this thread, but thanks for any constructive posts.
Merry Christmas

 

[gricks]

View attachment 9234
If Earthstore, with the greatest of respect, has simply taken Annual Return on Investment = First Year Gain*100% / Cost of Installation, and indeed 997.46/9996.85 rounded up gives 10.0%, then we've probably solved the mystery of why politicians, newspapers etc have screwed up the solar PV industry.

The above is wrong; it has been dealt with in other countries a long time ago see... PV Installation
Quote "Be aware that many PV installers conveniently 'forget' about the money you invested and only look at the income to calculate payback time and profit. This is wrong, misleading, and results in double-digit ROI numbers that are not realistic."
It is important that with Solar PV one gives away a lot of money - you only start to make a profit once you get it all back. This applies not only to the customer but also to a business.

The hypothesis is that permie civil servants encouraged Ed Miliband MP on 02 Feb 2010 to say "a return of up to 9 per cent annually was better than any bank could provide" and this continued with Greg Barker MP on 31 Oct 2011 advising fellow MPs. "...it [43.3p/kWh FIT] has been delivering bumper returns."
Meantime Fred Gulibull and all his mates see these high figures in papers alongside adverts for 3.4% compound interest for cash ISAs and because 10 beats 3.4 many times decide they can't lose and plonk for panels. Consequently by week ending 23Oct2011, just before the consultation leak, <=4kWp installs had risen to 4991/week; the conservatives then panicked and shut down the entire solar PV industry.

ROI can be manipulated to give high figures. ROI is convenient as you don't need to click scientific mode on the calculator app but even properly calculated it gives higher results than the compound interest that the public is used to seeing with banks and building societies. Customers have little or no exposure to ROI or IRR kindly introduced to us by Worcester.

So the plan would be...
a) Calculate equivalent compound interest that people can compare with in a standard manner for everyone.
Equivalent Annual Compound Interest = (((Total Income Gain/Total Cost)^N) - 1) * 100 where N=1/Period i.e. for Period=25yrs N = 0.04
b) Embed this in a solar calculator like the superb one on the Energy Savings Trust website so everyone can access it (no more messing around with Table H2, spreadsheets, 2005 v 2009, RPI etc)
c) Make it mandatory to include the resultant report in every quote.

The %/year will be single figures* but by giving people accurate info that they can compare against. Hopefully the FIT of 43.3p/kWh or closeto could stay in place without the mad rush that was seen in early October 2011. We want a more restrained move towards the situation in Germany where the number of installs caused electricity prices to fall winter and summer. The solar industry could then continue in the UK - we'd all have a sustainable future.
If you liked the plan please lobby MCS MPs DECC EST and anybody.

* ASIDE: Using above example for 4KWP system, fully fitted, including scaffold, 30degs and South, Exeter Uni EX4 4SB Cost=£9996.85 using EST calc & EST assumptions results are: Total Gain=£39,967 and Payback time=6yrs - very good !
Equivalent Annual Compound Interest = (( 39967 / 9996.85 )^0.04 - 1)*100 = 5.7 % per year. (Pls check)
At 21p/kWh we get Gain=£21,147 Payback time=12yrs and 3.04 %/yr.
Is £9996.85 inc VAT a lowish total cost as %/yr here seem too high; if Barker et al see this this they may keep the 21p/kWh

 

[solarsparkie]

which means at todays inflation rate customers only lose 2+% on thier hard earned:dots:

"At 21p/kWh we get Gain=£21,147 Payback time=12yrs and 3.04 %/yr.
Is £9996.85 inc VAT a lowish total cost as %/yr here seem too high; if Barker et al see this this they may keep the 21p/kWh "

 

[richlatham]

Thanks to all who replied to my original post.

For me, the 21p FIT makes it not worth buying the panels at current prices.

A 4 Kwh system will cost me about £10,000 installed.

My roof faces ESE and I currently pay just under £50 per month for electricity.

Using Energy Saving Trust figures the estimate of what I will save on my bill in the first year is £100. This sounds reasonable as most of our usage is during the evenings. We'd use the immersion heater during the day instead of the gas and put the washing machine and dishwasher on during the day too.

Using other estimates which assume a £200+ saving on usage and the 21p FIT, the estimated total return in year 1 is £856.

Assuming that the yearly returns will go up year on year, the total of £10,000 is returned some time in year 10. However, if I'd put my money (£10k) in a long term deposit a return of 3%pa seems reasonable - this means that I wouldn't actually get my money back until some time in year 13.

I've not factored in any costs for maintenance or repairs. There is an assumption that the units will degrade slowly to 80% efficiency after 25 years, but I don't know that we have solar panels aged 25 years that we can measure against. How good are guarantees if the installer goes out of business?

After year 13 it's admittedly pure profit, but 13 years or more is a long time to wait and you can't liquidise the investment if needed. On the other hand, if we sell the house in theory it will be worth more or perhaps more attractive to buy.

With the 43p FIT, it was estimated I would return just under £1700 in year 1, with £10k being returned in year 6 and it beating the long term deposit in year 8.

The above means more to me than any ROI or whatever!

I'm very sorry for the honest and genuine fitters (like you guys who post on this forum) as the drop in FIT and subsequent uncertainty will I'm sure have caused the bottom to fall out of the market. Hopefully you did Ok when the going was good.

 

[The Launderer]

At current rates of inflation your long term deposit paying 3% pa will be worth less than it is now in 10 years. All FIT payments are indexed linked so it is conceivable you could be in profit in comparison to your deposit account in less than 10 years.

Electricity inflation has been well above RPI so again your savings on your bill could be higher than your calculations.

Also the concept of installing PV is not all about return on investment. Its about reducing our reliance on fossil fuels and there will be many purchasers for that reason alone.

Having all of the investment returned in 6 years demonstrates why the government felt it necessary to cut the FIT rates, which after all are funded by taxpayers.

Investing your money in a PV system increases the value of your property so some or all of the money in the first few years transfers from a depreciating bank balance to an increased equity value together with a reliable source of additional income.

In my opinion PV installers still have a worthwhile product and if we can sell the benefits to potential customers there is still a market.

 

[TedM]

in a word no , when standing charge factored in wasnt worth it but if you have found someone to pay on the 50% no charges please enlighten me , i keep askin and you keep avoiding giving me an answer

All FiTs suppliers (electricity companies) are required to pay a deemed figure for export at, currently, 3.1p if no export meter is fitted and the owner declares to not opt out of the standard export payment (just a tick in a box on the application form).

For PV the declared deemed figure is 50%. As Earthstore said, this is all built in to the basic FiTs scheme.

Export meters are only required on systems above 30kW.