PV Payback Calculations

[The Launderer]

I have been looking at various websites of companies selling PV and have came across some examples of what I would consider to be misleading information. Or maybe I am just naive in thinking that we should try and present the solar case honestly.

I came across a Solar PV company who claimed a 2.90kWp system costing £10,260 had a payback of less than 12 years. They claimed the first year benefit of the system was just over £650.00 (which seems reasonable if even understated)

Simple arithmetic of Cost price / Annual Benefit gives a payback of nearly 16 years.

To justify the lower payback period the site contained a year by year detailed financial statement which all looked plausible and then I drilled down into the numbers and found:

The solar PV system only degrades by 1% in 10 years.
Inflation Rates used for FITS is 3.6% every year
Inflation Rate used for export is 3.6% every year
Starting off rate for unit cost of electricity is 14.4p
Inflation rate for electricity cost is 11% year.

These figures were not listed on the site, so unless the customers looked into the detail they would take the payback claims at face value.

I think that this is the type of thing REAL should give guidelines on so that all PV companies use the same information. What do others think?

 

[wstevew]

Its definitely harder to sell at 21p. Even at 43p I had a salesman try to tell me total return would be 75000 on a 4kw system over 25 years lol.

The problem with that example is you should be able to get a larger system for that money and get a quicker return. Most of the assumptions relate to energy export which is a small portion of the return.

The biggest problem with the 21p is it excludes those without the perfect orientation roof or those with shadows because it eats into the return. E.g those with east/west should get higher FIT as they will produce less but the production will be better spread throughout the day.

 

[moggy1968]

to be honest, most of those figures are not unreasonable. The last inflation linked rise was 5%. my electric bill is currently 15p per unit and electricity has risen 30% in the last year. Degredation is about right, 20% over the lifetime of the system on decent panels is reasonable (as against some of the Chinese rubbish, although there is some good Chinese stuff)
Countering that ther is no evidence the export rate will increase at all, but then at 3p per unit it is actually a very very small part of the calculation.

I would expect payback on the systems we are quoting on to be around 10 years as quoted and in reality significantly less, although we would be quoting significantly less than that price assuming it was a reasonably straightforward installation using branded panels such as Bosh or Samsung.

They should however be upfront about the figures they are using

 

[SolarCity]

They should however be upfront about the figures they are using

That's the key.

I've had customers who have told me "One of your competitors' systems will pay for itself quicker than yours.", when the system they have quoted is an inferior option.

I know other members disagree with me here but I don't think inflation nor rising electricity costs should be factored in to the calculation. It should be kept simple so the customer can understand it.

 

[The Launderer]

Degredation is about right, 20% over the lifetime of the system on decent panels is reasonable (as against some of the Chinese rubbish, although there is some good Chinese stuff)

This company were claiming total of 1% over 10 years.

I agree that most of the figures are not unreasonable and if this company were really on the ball they should have used a bigger system as an example which should give bigger payback.

The reason I raised the issue is we are designing some marketing material and I am trying to decide what information is reasonable to use.

I am not too sure about the use of inflation figures but if we decide to use this type of information I want to be sure the figures we use are okay.

 

[solarsavings]

Our quoted returns are often lower than our competitors who give an isolation figure of 1100kwh/m2 against a more reasonable 850kwh for east anglia.

 

[moggy1968]

I have lost jobs because competitors quoted better figures, so now I take care to explain where these figures come from and explain to them also that all our systems are producing results beyond what we quoted (20-30% on out demonstration system)
We say on our website, we like to underpromise and overdeliver!
You have to do what you are comfortable with. If you want to be a shark, good luck. If you want to be upfront and honest, well, all the better.

 

[yellowvanman]

Countering that ther is no evidence the export rate will increase at all, but then at 3p per unit it is actually a very very small part of the calculation.

The export rate is index linked just the same as the top line generation rate. Last April generation rate increased from 41p to 43.3p and the export rate changed from 3p to 3.1p. I know it only a ripple in the pay back figures though!

 

[solarelectrix]

try looking at; Solar PV SAP Calculator

gives a fairly balanced view I think, however payback times will reduce in line with KIT prices also. I cant see the suppliers hanging on to stock or pricing! After all how much is the production cost of a PV panel?