Reply to Which complaint

[Energetic]

Had this back from Which. Not too keen on publishing this kind of thing on the open forum, paranoid...



I was passed a note from our customer service team to contact you. Many thanks for your email regarding our guide to investing in solar panels and some of the queries that you have raised.
I'm afraid we disagree that the article is misleading. We state clearly what the limitations are of the calculations, and how our calculations differ from those often quoted by installers by including installation costs. I've put some more information below.

Calculations
To form the basis of our calculations, we use the data on the Energy Saving Trust's website to calculate how much you'll earn annually through the feed-in tariff, then multiply that by 25 (the number of years in the scheme). We then work out what profit you make after installation costs have been factored in, and derive an annual growth rate from that.
The key here is that we factor in installation costs into the calculation and base the annual growth rate on the net profit you make, not as an annual return on your investment. We take the view that you’re not technically making a profit until you have recouped your initial outlay.
Our calculation is based on one scenario, and you may get more or less depending on what you have installed. Our scenario involves a 3kWp system installed in central England for £10,000.
I must point out that the figures are only illustrative and as you raised in your email, we do not factor in rises in the tariff from increasing electricity prices and from inflation over the next 25 years. We do not do this because we don't know what don't know what they are or will be. Therefore, we state clearly that the real return may be even higher in the future but as a consumer organisation, we have to be responsible with what we report and artificially inflating rates of return. If we do synthetically increase the rates using models and projections, we will be providing a rate of return which we cannot be sure will be received. At least with the figures we have published, these will be achieved as a minimum.

Further work
We recognise that there are limitations to the potential growth calculations, given that we have not factored in inflation or increasing energy prices. We are working on a way that this can be included but we need to make sure that we are doing so responsibly and not artificially increasing potential returns beyond what can be realistically achieved.
I hope this answers your queries, please do get back to me if you’d like to discuss anything else.
Kindest regards,
Gareth
Gareth Shaw
Deputy Editor, Which? Money
[email protected]

 

[Somecamel]

£10k for a 3kW lol- Did they do their market research in November by chance

 

[SolarCity]

At the risk of sounding a bit stupid, are ISAs guaranteed? If not, then aren't they already speculating on returns anyway?

 

[SRE]

At the risk of sounding a bit stupid, are ISAs guaranteed? If not, then aren't they already speculating on returns anyway?

That was my thought - at the minute the best I could get was £5640 tied up for 2 years @ 4%. How on earth can you assess what the interest rate for Isa's will be in 5 year's time. The other thing that worries me slightly is that we all know that SAP underestimates so where is the small writing at the bottom to say that systems may overperform??

I think a real case study would be useful, with real figures. I may suggest that when I get a response.

 

[Somecamel]

According to the Bank of England, the current inflation rate is 3.5% (doesn't specify if this is RPI or CPI, Do we still have RPI) so your making half a percent on your money over 2 years.

The current £325b of quantitative easing will surely push inflation up if we don't get any growth.

 

[solarsavings]

Some years back Which made Glowworm's Flexibomb boiler of the year (or their daft customers did) that alone told me all I need to know about their research and the reply above proves it's b o l locks!!

If they could point me in the direction of someone wanting to spend 10g on an installation right now..........

 

[Energetic]

I have replied to Gareth, I've had a few ciders but have hopefully got some sensible points in there somewhere. I have used some of the ideas posted on here to make my point so thanks for contributing, particularly liked the last line from solarsavings above...

Dear Gareth,

Thank you for your prompt reply.

I understand how you have come to the figures you have published, the fact is though, they are still misleading.

Let’s start with the initial price, installers up and down the country are routinely charging around £8K for a midrange quality 4kW system. If you could point me in the direction of some customers willing to pay £10K for 3kW I’d be most grateful! We’re hearing of people charging £6.5K for a cheap Chinese 4kW system. Your example starts with PV at a serious disadvantage based on that price alone.

By leaving out inflation you are both overstating the performance of the ISA and understating the performance of PV. Index linked investments are a rare thing these days and it provides a serious safety net for a PV customer. Adjusting the ISA rate to current published inflation figures leaves you with very little growth percentage. With the real un-doctored inflation rate it becomes even worse.

Now I’m not a financial journalist or an economist but my take on inflation is this; we are likely to see international central bank intervention in the form of quantitative easing for some time to come, leading to a higher than usual inflation rate on food, fuels, energy and the necessities of life. Now I realise none of this is guaranteed but the likelihood of this intervention is probably higher than allowing an out and out crash. I’d be interested to hear your views on this but the way I see it PV is about the best investment around. I have ISA’s, I’m renting at the moment but if I had property I would junk the ISA’s and get as much PV installed as I could.

The majority of our clients are shrewd investors and are cashing in poorer performing investments to go for PV. They are able to work the figures out for themselves. If the payback for PV was as poor as your figures suggest we would not have city institutions piling into the rent a roof schemes that we currently do, it’s a no-brainer (as much as I dislike that expression) for a professional investor, guaranteed 10% returns, every fund managers’ dream! Renewables and microgeneration represent a great opportunity for households to lessen the stranglehold that the big 6 have on us all, as bills increase so will their tariff payments and their own production will become more valuable to them.

If you’re really interested in presenting the facts and the best advice to consumers I urge you to speak to consumers or credible installers and get a real set of figures and/or a case study to look into. Contact anyone on the forum I linked to the previous email or myself, we would be happy to help. Our industry is currently being demonised by uninformed media and jaded corrupt politicians in the pockets of the big 6 energy companies. Germany has seen a reduction in wholesale energy costs due to the large scale PV and wind deployment contrary to the current treasury line that we’ll all pay more.

I feel your time would be better spent helping consumers choose the right PV company, there are some unscrupulous companies out there, the rent a roof crowd particularly insidious, often taking away the ability of many of their customers to sell their own homes or re-mortgage.

Looking forward to hearing your thoughts.

 

[SolarCity]

Great reply