Lazy and misleading or truth Which report

[babba]

Hi guys I came accross this article from Which please read it and give your feedback.

Is solar PV a good investment? - How to buy solar panels - Creating an energy saving home - Which? Energy

 

[SpitfireW'sale]

Prices based on a 3kW system for £10K? That price is a year out of date at least. Very disappointing article.

 

[Ian-LS]

Very misleading. Why does it not take into account the inflation indexed linking? why not include electricty costs that rise as they have done year on year for the last 5 years?

Why not actually get some up to date installation costs as £10,000 is way out and they should focus on the average cheapest 3 kWp PV system as consumers should be encouraged to shop around for the best deal as they would do with their energy supplier, credit card and buying a new house or car.

Therefore the article is not worth reading further

 

[Earthstore]

Oh dear, what a badly compiled comparison.
To make a 25yr comparison you have to add in some educated assumptions, like energy price rises and the index linked FIT, if they were added in and then compounded over 25yrs the final figure would be very different.

When making this type of comparison you could make the returns for PV whatever you want to, it depends on your assumptions, but to openly admit they have put none at all in makes the whole thing pointless, well apart from making the public believe that PV just does not work financially any more.

Also if they were to use the real price of a 3KW system at today's prices then their calculations would be very different.

Why they do not speak to customers first that have a quality install and get their views is quite beyond me.

 

[Ian-LS]

its the same as on the EST website assumptions

"Our Solar Energy Calculator presents financial performance in ‘real’ accounting terms (i.e. in today’s money). Therefore this tool
does not include any adjustments for the Retail Price Index (RPI) or inflationary costs for electricity (imported) over the next 25
years. It should be noted that the Feed-in Tariffs rates payable to you over this period by the utility companies are linked to the
Retail Price Index (RPI) and will automatically increase with RPI every year. No maintenance costs have been included in our
calculations (e.g. replacing the inverter or inverter components) "

http://est2.solarjuice.com/static/downloads/est/Solar%20Energy%20Calculator%20-%20Assumptions-3ea8583e7814429c5f661b6736316e64b4501c1e.pdf

Using this means you can get paybacks of 18 years....who would invest in PV if this was actually the case?

 

[Earthstore]

We are all doomed.. (quote from Dads Army)

 

[FB.]

I'm known on here for "pessimistic" projections for solar PV, but here are the annual figures which I think each option in Which's list would achieve, assuming inflation at the Bank of England's 3% target, assuming a new inverter (£1000) once during the system's 25year FiT lifespan, assuming 35% power usage "in-house" - and assuming their £10000 price for 3kWp is correct, but also including a more realistic £9000 for 3.6kWp.
It also assumes that the system has no value after year 25 of the FiT agreement; i.e. the original outlay is lost and the only benefits were from bill savings and Feed-in-Tariff/export tariff payments for the 25 year period.

At the old 43p FiT:
Cash ISA................3.25%
3kWp (£10k)..........8.5%
3.6kWp (£9k).........10.5%


At the new 21p FiT:
Cash ISA................3.25%
3kWp (£10k).............5.75%
3.6kWp (£9k)...........7.5%


At the proposed 16.5p FiT:
Cash ISA................3.25%
3kWp (£10k)..........4.75%
3.6kWp (£9k).........6.5%

 

[FB.]

Of course, if governments around the world contiune to struggle to deal with their debts, they will probably eventually - or continue to - devalue (quantitative easing) their currencies.

In this instance, as in the late 1970's, inflation could really pick up, so any investment with inflation linking would be highly prized.
Cash ISA's, paying 3.5% with inflation soaring to 10% would result in life savings which once might have bought a nice new car, being only able to buy a moped after ten years.

If inflation stays at the recent 5% per year, then even a 16.5p inflation-linked FiT will be offering close to 10% annual return on a 3.6kWp/£9000 outlay.

Do not underestimate the safety net which inflation-linking provides.

 

[FB.]

The following link is to an article which shows the tendency for governments to devalue during difficult times - with the inflation rate being higher than interest rates, resulting in savers losing their buying power (the page scrolls to several graphs lower down - pay particular attention to the two inflation v interest rate charts at the bottom of the page):

History of Inflation in UK | Economics Blog

The two wars, the 1970's and again today were/are troubled times.

Place your bets, gentlemen, on where inflation and interest rates are heading - and which one is likely to be the highest.


Given a choice between my savings in cash, or my savings "invested" into a solar array even with the proposed 16.5p FiT, it's no contest; the solar array wins by a mile.

 

[confounded]

If inflation stays at the recent 5% per year, then even a 16.5p inflation-linked FiT will be offering close to 10% annual return on a 3.6kWp/£9000 outlay.

Do not underestimate the safety net which inflation-linking provides.

Absolutely, without RPI linking even last years 43p would have been a poor deal over the lifetime of the scheme.

As you point out with money printing across the globe, with Europe recently printing over £2 Trillion to smooth out the Euro crisis (not even remotely solve it) we are indeed in interesting time.

 

[Energetic]

This really winds me up, i have just started another thread about misleading media campaigns before even seeing this one. The bulk of the press never really understood any of this from the beginning.

I have just written a complaint to Which about this article, it's misinformed at best and deliberately incorrect at worst.

Their mandate from their website is: 'We focus on consumer issues and ensuring you have the information to make the right choices - whether that's by reviewing products or providing independent advice you can trust.'

With this article Which has failed the consumer.

 

[FB.]

For those pondering whether we'll see deflation as in the 1930's; I believe it to be very unlikely because:

1.
We are no longer on the gold standard, which, in "the old days" prevented governments printing money, since each new unit of currency had to have gold bullion backing it.

2.
Governments and central banks are already using quantitative easing, which is basically printing money and is a devaluation of the existing money, with the resulting inflation which results (inflation is actually the value of money going down, not the price of things going up; measure a house priced in non-printable gold and the price in ounces of gold is not too far away from where it was when many of us were born).

3.
The US, in the early 1930's, "discovered" the cure for deflation. They devalued the Dollar. The flood of extra money into the system killed deflation stone dead. The US Federal Reserve Governor Ben Bernanke was appointed not least because his academic studies involved much work on the 1930's depression/deflation.

 

[FB.]

Houses priced in gold:

How much gold does it cost to buy a home in Britain? - MoneyWeek

Basically a sideways trend with periods of boom and bust (i.e. houses not going up in price when measured by something which isn't printed/devalued at will).

 

[FB.]

Absolutely, without RPI linking even last years 43p would have been a poor deal over the lifetime of the scheme.

As you point out with money printing across the globe, with Europe recently printing over £2 Trillion to smooth out the Euro crisis (not even remotely solve it) we are indeed in interesting time.

Worse still; while money is devalued, the "price" of essential daily-living rises - but with little in the way of pay rises for many, due to developing nations' workers willing to work for a fraction of what the UK workers demand.

So with rising costs and static wages, daily living looks set to get tougher for many households.
With little interest available on savings, an inflation-linked Feed-in-Tariff and the ability to use home-generated power could help many households limit the damage from rising costs.

 

[FB.]

....and right on cue, the Telegraph has just published an article saying exactly what I've been saying:

Disposable income falls to three and a half-year low - Telegraph

I'll crawl back into my hole and be quiet now.......