UKC

I’ve been looking at putting in solar panels for some time now but we’re 53° North and I’m just not sure it’s worth the financial outlay or that the environmental costs of manufacturing the necessary kit will be offset by the potential clean energy generated.

We’ve got a decent sized stretch of South facing roof so what do you reckon, should I go for it or wait for more efficient panels to hit the market?

In reply to Stichtplate:

I'll say what I always say on this. Putting a few solar panels on a suboptimal roof is the least cost effective way to add solar panels to the grid.

I looked into it and decided it made more sense to invest the cash in funds that install them (and wind) at industry costs. But it really depends. The only real answer is you have to do the maths.

In reply to Stichtplate:

58 degrees north here.  Had solar panels for over 10 years.  They do not a lot in the winter but in summer we produce plenty of electricity.  

Prior to being a two electric car household, we produced more than we used over the year.  We recently got an Eddi which diverts any excess solar power into our hot water tank, thus avoiding the need to run our oil boiler for water heating as frequently (not at all in the middle of summer, greatly reduced in spring and winter).  We also have a zappi charger so can divert solar into the cars.

We are on an old style FITS model, so they paid for themselves fairly quickly.

If you have a decent roof aspect and aren’t shaded by trees, you definitely are not too far north to generate power.  Whether it’s worth it for you, I couldn’t possibly advise.

In reply to Stichtplate:

For a new house, you can get £2500 grant towards panels and a battery and £9500 interest free loan. You need to speak to Home Energy Scotland (typical call waiting time is not too long and they are very helpful, knowledgeable and friendly) to check if it's the same deal for an existing house but I think it is.

The battery backup ability to keep your house running in the event of a power cut is a nice little bonus.

Measuring the inclination and slope of your roof will allow you to use this page to estimate for your specific location, what kind of generation you are likely to achieve:

https://re.jrc.ec.europa.eu/pvg_tools/en/tools.html

Don't underestimate the savings from the interest-free loan - it will pay for the lions share of the installation cost, you pay it back over 10 years and with the interest rates sitting at 5% base rate currently and more like 7 to 10% if you were looking to get an actual loan, you are saving a _lot_ of money.

Remember when you are doing your calculations that the price of electricity is not likely to drop back down to what it was 5 years ago:

https://www.statista.com/statistics/589765/average-electricity-prices-uk/

It's going to stay at double the rate it was in the medium term history even when the going is good. And there is every reason to expect that the 2021-23 price spikes will repeat the next time there is a world event that causes energy uncertainty in the markets.

Make sure to get a few quotes, different installers can differ by thousands of pounds.

You'll also be adding value to your house.

I've not commented on the carbon cost of the panels, installation, etc. I leave that to others.

Edit: Also, you can get 15p per unit from Octopus for shunting it onto the grid, which is significantly more than the 5p to 8p you often see quoted for other companies. And there is a smart tariff you can use with a smart meter to allow you to fill up a battery when the cost is low (like 2 or 3p per unit at 3am in the morning) and get 20p or more for emptying it onto the grid at 6pm when the demand is high. You will need a functioning smart meter for this latter smart plan though. If you are somewhere remote that can be a big problem and you could be stuck with the flat rates.

In reply to Stichtplate:

We're 57.5° north and have been really pleased with the results. Our roof is almost the perfect direction and angle.

Yesterday we got nearly 10kw and even in the short days in December/January it'll still pull in enough to take the edge off of things.

In reply to Stichtplate:

Whilst the light intensity will reduce the further north you go, the panels will be cooler so the losses are minimal.

There was a study released recently (simulation rather than a practical experiment) that suggested that solar panels are more efficient when placed vertically. This is because they can optimise the early morning and afternoon sun more effectively and avoid getting toasted at mid-day.

In reply to Longsufferingropeholder:

What return are you typically getting from solar funds?

And have you looked into since electricity prices sky rocketed?

A residential solar system can return 7% to 10% per year depending on how good a deal you get on the installation. £500 saving on electricity a year from a £5k installation of 5KW.

If you're beating that, who is it with, as my investments in index funds don't beat a home solar system. 

In reply to montyjohn:

Interesting. How have you calculated the comparison, as obviously you would still have your initial sum at the end of an investment in index funds whereas with solar you presumably instead have decomissioning costs / scrap value at end of life? What life are you assuming for your solar system?

In reply to Stichtplate:

A point that may be appreciated by some - we needed our roof repairing (strip slates, replace membrane and reslate); because the solar panels meant that we didn't need to buy any additional slates, and because the work was all done as a solar panel 'bundle' and therefore VAT exempt, the solar was effectively foc. Made it a no brainer.

In reply to Stichtplate:

You'll be fine. I've used domestic solar panels in Greenland (c. 70N) in the summer to power the equivalent of a medium house, without the luxury of a grid-based backup. I can't help with the finances, but as soon as the sun comes out in the summer you'll get ample power.  

In reply to Stichtplate:

I don't know how accurate this is, but you can play around with this website to get an estimate of the amount of power a given array in a given location might produce over the course of a year.

https://globalsolaratlas.info/map

If you have an idea of installation costs you should be able to do some back of an envelope maths to estimate the likely payback period. For me it was something like 12 years, which if I had the money to splash would be worth it.

In reply to Longsufferingropeholder:

I've had a similar view; however I'm not quite as convinced. land rent/ purchase is a big part of the costs - I already own my roof. 

"> I looked into it and decided it made more sense to invest the cash in funds that install them (and wind) at industry costs. But it really depends. The only real answer is you have to do the maths."

In reply to montyjohn:

Around 7%

Yes.

I don’t think we could save £500 on consumption. And standing charge is £200 a year and they don’t save that. We seem to use about 2000 kWh, not typically when the sun is up.

Remember that 7-10% is starting from -100% so it’s 10 years until you start making profit, unlike the funds/trusts. So even if I look at it purely financially, without even considering how many kW of renewable energy you’ve added to the world, it’s a non-starter here unless I’ve got my maths wrong somewhere. Obviously different situations will give different answers so everyone should do their own sums.

In reply to agarnham:

“In the UK, the cost of solar panel modules works out to roughly £200,000 for every megawatt of power produced, before inverters, land cost and other key infrastructure like grid connections are accounted for. To put it in perspective, to generate 1 MW of power will require 5 acres of land. The average cost of an acre of farmland costs in the region of £7,500-£10,000. The total result is often over £600,000 per megawatt in the current market. “

https://www.pfnexus.com/blog/starting-a-solar-farm

Seems closer to £1000/kW is typical on a house roof, so still quite a difference.

In reply to Longsufferingropeholder:

I was going to ask if you're sure about that 7% as it seems too good, but I did find a company (NextEnergy Solar Fund) that typically paid a 7% dividend.

That does change the maths quite a bit and makes the investment fund far more lucrative.

However, you are relying on others to manage your investment. Just comparing the dividend assumes no change to the value of the stock, but NextEnergy have lost 33% of their value over the last five years.

Theoretically they could go bust and you loose everything (assuming you re-invested the dividends).

Which is why diversity is really important. If you pay into a pension, then you are probably already investing in NextEnergy as they are in the FTSE250. If one day the markets crash, NextEnergy go bust, your pensions dwindles to nothing and electricity prices go through he roof, you'll be glad if you invested in your own panels.

For the same reason, don't just invest in panels, trade on the stock market also, if one day all our energy problems are solved such that electricity is almost free your panels will be worthless, but at least the booming economy on the back of it means you've still won.

In reply to montyjohn:

That's one example. There are loads of others like it, some of which have done the opposite, and some huge ETFs that do the same things but don't return so much in dividend form.
Obviously I've spread out as much as possible so it's not an issue when fluctuations happen. And remember leccy bills and hence the return from your roof will fluctuate too, and a decent slice of the massive hike in electricity bill was in the standing charge which you're still on the hook for, so it's kind of a lottery either way. Nothing stopping you both having solar panels if you have the roof for it and investing in somebody else's.

Couldn't agree more.
I'd like to see us getting all of our energy from zero-carbon sources. And once there I see no reason to stop at ~35GW.

In reply to Longsufferingropeholder:

You may not be taking into account a couple of things:

1) It's not -100% because you get a government grant (assuming you also install a battery). So in reality it's maybe more like -80%.

2) Because most of the remainder of that 80% is with the government interest-free, 10-year loan, you need to factor in what that is worth - something like 7% in the current interest rate environment. While your effective return from this will decrease as you repay the loan, in the first year that loan will effectively mean your 7-10% return is more like 14-17%.

3) You don't pay tax on any savings on your electricity bill. If you have invested in a fund, returns from that are taxed and if you are already in the higher rate band, that's about a third of your fund dividends gone in tax. Of course, you may be able to solve this issue if you can ISA wrap it.

3) Your solar system is an excellent hedge against rising future electricity prices.

4) If you have a battery and smart meter, you can charge it up at 3am in the morning and discharge it at peak time 5pm or 6pm and make money purely from storing grid energy for a little while. If you take a look at the Octopus Agile Tariff, the demand for electricity in winter in the early hours is actually so low that you can be _paid_ to consume electricity.

5) If your panels don't produce enough in the winter, you can charge your battery almost for free or even be paid to do so (see 4 above) and use this yourself during the 4pm-7pm peak period to save even more on your electricity bill.

If you want a real number for %age return over the lifetime of a solar system, you need the following data, most of which is unknowable:

- Future electricity prices.

- Future tariff models and prices you can sell your electricity for.

- Future weather patterns.

- Solar pannel and battery lifetime.

- Solar panel and battery performance over their nominal "lifetime".

- Future interest rates.

- Future geopolitics

- Usage patterns that will be employed with the battery.

- loads of other things I can't think of right at the moment.

The bottom line is that back-of-the-envelope calculations that only consider "solar system costs X to install, generates Y units per year and my supplier charges me Z per unit" is wholly insufficient to properly calculate the return you can achieve with smart usage of the system and reasonable assumptions about the future.

Also, It is important to note that a "solar fund" is presumably a big bag of equities and/or bonds related to the solar industry. One of the things you are critically ignoring is the possibility of the fund losing value or going bust. If I invest in an S&P 500 fund and claim "oh, I get 7% per year", that is true, but it's a long way from a totally guaranteed and linear 7% and as a "solar fund" is probably a relatively new financial product, I'd want to do a lot of reading around it to evaluate the risk side of the equation.

In reply to Rob Exile Ward:

I'm probably going to be doing the same in the summer. Did you get integrated solar panels or solar slates? And if you don't mind me asking, who did you get to do the work? 

In reply to RobAJones:

General reply to thread.

Considering house solar panels myself with batteries. To reduce my supplier bill and provide power cut back up for lights and oil boiler.

A few points.

Not enthusiastic about letting an electrician mess about with my slates, make sure roofing expertise is involved.

Solar panels can overheat, frame mounted with ventilation behind makes sense to me, also permits easier replacement or repair.

We are at 54.3 North. My two options for placement on the house are roof at 30deg or vertical by the first floor bedroom windows. Looking at the charts vertical  appears to win for highest minimum potential  input in winter which probably suits our needs. Roof fixing will provide a larger overall annual input.

Vertical advantages,

will reduce or avoid scaffolding costs.

Easier to clean and not be covered by snowfall.

No interference with roof slates.

Higher minimum input.

Only negative point is that I think I already have PP for roof panels but may need to reapply for vertical ones.

Seems like a no brainer, anybody see any flaws?

In reply to henwardian:

I'm pretty confident I have taken all those points into account. I certainly haven't not-thought about them. Everyone's case will be different but I can't be the only one in this situation so it's worth looking at with an open mind.

1) If you start talking about battery as well then that upfront cost is higher and yes, the payback is different. Still doesn't look like a winner for me. Battery alone without solar might just but it's not by much. I haven't overlooked it.

3) or pension. Or you could pick funds that don't return profits as dividend and stick to CGT thresholds when you sell. Or other things, but anyone prepared to go down this road would hopefully know all that.

4 onwards) The massive issue that I haven't seen addressed is that for a low-usage household the standing charge part takes a huge bite out of all those arguments. It's such a massive chunk of our bill that even if we didn't draw a single electron from the grid we could only ever reduce the total by about 2/3. That's the main issue.

The returns from the amount we'd have spent on solar panels put into clean energy investments is within a few quid of what it takes to pay our whole electricity bill, including standing charge. That simply would not be the case had I installed panels and batteries. To get 7% payback on the cost of a decent sized array our bill would have to be negative. Economically, for someone in this situation, like I've said, I just can't make it add up. It would have to make £200+ of clear profit on export before we plug anything in just to break even given the size of the unavoidable standing charge. I know that’s around what we would expect given current seg rates but it’s a long way from guaranteed to stay that way. I haven't seen a tariff that gets around this standing charge issue but would love to know about it if there is one. Or if anyone else that doesn’t use much electric has experience to share.

Addressed this above. Your 'presumably' should be a 'some are' and your 'probably' is misguided; renewable energy funds aren’t new. Some are and some aren't those things. And like montyjohn says you don't just invest in one. There are lots of different vehicles for this, some are trusts, some are companies, some are funds, and you're right that they're not without risk. But as montyjohn says neither is the return from your own roof.

Also we've not discussed that unless something universally catastrophic happens I can just sell and still use the very same cash to cover the roof in solar panels if circumstances change.

If we were doing roofing work or rewiring or anything like that I'd look at it differently but like I keep saying the maths is what it is and it needs working through for the individual situation. I'm pretty happy that I've invested some money in solar panels and it pays my leccy bill. You're pretty happy that you've invested some money in solar panels and it pays your leccy bill. And that's ok. But if I'd done it your way it wouldn't pay my leccy bill. (And there'd be a couple fewer kW of renewable power on the grid. And I can still change my mind).

In reply to Stichtplate:

I'm not sure if it's been posted already, but check out pvwatts for a guide as to what kind of yield that you can expect.