Why considiring the ROI?

[Bob Smith]

Hello,

From about 15 years the industry has promoted the installation of PV array for domestic use as an investment with a good return on investment.
They compare with what you'll get if that money was saved on an ISA etc...

As far as I know PV system are the only house improvement where the ROI is considered and most people will take their decision on that sole argument.

I ask the question.
When someone decides to spend 10k to renovate his/her perfectly functional yet outdated bathroom. Does that person calculate the ROI of that investment?
When the single glass windows are replaced by double glazing and 6k is spent, does the installer show any ROI calculation?
When the lounge is decorated because the children have grown up, is there a ROI calculated?

I believe the answer is no. It is seen as house improvements, something that makes sense to do. (I could give other examples such as a car. Why pay 20k a car while a 10k car will take you from A to B as fast, as safely. What is the ROI when paying 10k more for a car?)

Why can't PV systems not be simply seen as a home improvement? The bigger installation the more benefits (same with double glazing (they don't all have the same thickness or even triple glazing).

I hope this thread will help develop a further reflection on the topic and maybe one day people will install PV systems as easily as they decide to redecorate their entire house without all the headache of ROI calculation.

What are your thoughts?

 

[Murdoch]

most people know that the cost of a new bathroom or kitchen will add to the value

most people know that installing double glazing won’t save much money but will probably make a house more saleable

when I installed our PV it was because the saving on our lecky would be more than 1% interest on a savings account or 2% saving off our mortgage. Reducing our foot print was a major consideration

I think the justification to install PV now is simple, given the price per kWh now but I’m not convinced, as yet about the batteries.

then there is the thorny question of how many people can afford the capital outlay

what is wrong is that many homes are still being built without PV

 

[Geoff1946]

Re What are your thoughts?

The big difference is that all the other items you mention have visual or comfort benefit, whilst solar panels can be seen as the opposite.
When I had mine installed in 2013 I had to persuade Mrs that they wouldn't be too much of an eyesore for the neighbours.

 

[Bob Smith]

Re What are your thoughts?

The big difference is that all the other items you mention have visual or comfort benefit, whilst solar panels can be seen as the opposite.
When I had mine installed in 2013 I had to persuade Mrs that they wouldn't be too much of an eyesore for the neighbours.

Ahaha, The same here. in 2014, I was ready to go ahead after having explained all the benefits at the end she said. I don t want them they won't look nice!!. Then in November 2015 she learnt from a friend who lives 800 yards away that they were going to have solar panels and Mrs started to tell me all the benefits her friend has told her. I jumped on the bandwagon and relaunched the project. Now if you were to talk to my wife she would tell you all the benefits of solar (and the Fit is only the icing on the cake,....).

 

[Bob Smith]

most people know that the cost of a new bathroom or kitchen will add to the value

most people know that installing double glazing won’t save much money but will probably make a house more saleable

when I installed our PV it was because the saving on our lecky would be more than 1% interest on a savings account or 2% saving off our mortgage. Reducing our foot print was a major consideration

I think the justification to install PV now is simple, given the price per kWh now but I’m not convinced, as yet about the batteries.

then there is the thorny question of how many people can afford the capital outlay

what is wrong is that many homes are still being built without PV

Thank you Murdoch for your contribution.

As far as adding value to the house, would you think this is also a bit of a gamble? I explain what I have in mind
1) The house is valued 300k, then you spend 10k on the new bathroom (that you don't benefits), What will the house value be? 320k? maybe more? But the house value is not price at which a buyer will buy. I guess this is probably the safest of the situations I am discribing

2) You live in that house, decide to spend 10k to renovate your 10y old bathroom, which was still fully functionnal. You feel better about it, nice bathroom, looking modern. You sell your house 10y later. What's the ROI here? One could say, without renovation the house would have been sold for a lot less. OK. But what if the market crash anyway?

Regarding the capital, well it is the same as renovating a kitchen or a bathroom. You could take a loan?

This shows that a lot of decisions are still taken based on perceived benefits which affect more our emotions than our rationals.
I bet there are plenty people who would prefer spending 10k on redecorating than on a PV system.

Batteries are getting better and better, in 2016, the warranty was about 5years, now it is 10. DoD was not even 50%, now you can have 100% with LiFe4Po.
In 5 years, there should be Solid State batteries on the market. The problem is that innovation is moving fast and if you want the latest tech, you'll never buy.
The justification for a battery will depend on many factor, the size of your array and level of generation, your energy conception and usage (do you often need peak power of 5kW, or 2kW is enough for instance).

Reducing our carbon foot print is more and more understood. My uncle, 70. bought PV (no batteries) and said, I know I'll never get my money back at my age but I feel I'll do something for the environment and knowing that I get free electricity is a good feeling

I 200% agree with you regarding new houses. I do not understand why there isn't a law to mobile new built have all their roof covered of panels and also to use existing building instead of taking on farm land/green land (I know the installation is more expensive).

To conclude, do you think the industry should try to promote PV not on the ROI but on all the other benefits instead ?

 

[Murdoch]

I bet there are plenty people who would prefer spending 10k on a new car or a foreign holiday than on a PV system.

Edited that for you ............

Like the people who smoke while in the food bank queue.

 

[Andy1733]

I have a brother in law who is savvy with stocks and shares who said after I asked why he hasn't fitted solar
I could stick a spare 10k in a ISA it will earn me 4.2 percent per year... There's only me and the Mrs at he. It would take me too long to get my money back...

 

[Bob Smith]

I have a brother in law who is savvy with stocks and shares who said after I asked why he hasn't fitted solar
I could stick a spare 10k in a ISA it will earn me 4.2 percent per year... There's only me and the Mrs at he. It would take me too long to get my money back...

Sure but nothing is guaranted on a SS ISA. While the sun never let's you down. year on year you pretty know for sure how much electricity will be generated.

You can tell him this. I paid 6k for my 4kWp system with power diverter to heat the water in 2016. I got FiT too. From the FiT and export payment + the electricity I did not import and the gas saved (rough estimate though as I have nothing to measure) for the boiler. It took me 5 and 2 months to get my 6000 back. So roughly a 20% return per year. I now, know the FiT has gone but electricity price double...

 

[Andy1733]

Sure but nothing is guaranted on a SS ISA. While the sun never let's you down. year on year you pretty know for sure how much electricity will be generated.

You can tell him this. I paid 6k for my 4kWp system with power diverter to heat the water in 2016. I got FiT too. From the FiT and export payment + the electricity I did not import and the gas saved (rough estimate though as I have nothing to measure) for the boiler. It took me 5 and 2 months to get my 6000 back. So roughly a 20% return per year. I now, know the FiT has gone but electricity price double...

You can't educate pork. I though he would be able to see the benefits but obv not. He's only 50 so he can't use the I'm too old excuse.

 

[binky]

You can't educate pork. I though he would be able to see the benefits but obv not. He's only 50 so he can't use the I'm too old excuse.

those with most money care less about the bills. I did a job in a stockbrokers lovely barn conversion in the Devon countryside some years ago. It was a hot summers day, and the customer was moaning baout it being hot - the central heating was on, and the patio doors wide open FFS!

 

[binky]

What are your thoughts?

Initially PV was often seen as ugly and undesireable by many, but all black panels has vastly improved aesthetics and PV is now regarded as desirable on a house you may purchase by most people. Some still think they are ugly, but you can't please all the people all the time.

 

[Berserkerboy]

Energy costs have nearly tripled in a year. Last year I was paying 10.3p/kwh. It's now 28.3p with a further rise to come in October.
The payback time for my system is now 4-5 years, which will decrease as energy prices rise. 25% roi. Not many investments can reliably compete with that.
Regarding new build without PV...WTF!!!. No joined-up thinking, but then, that's no real surprise is it? We have a highly paid civil servant neighbour who is the most incompetent person I know! I hope that isn't the norm,...., but their performance leads me to suspect that it is.

 

[revor]

When did my install spring last year I calculated my ROI was 5% better than being in savings. With the leccy gone up in price and switched from fixed export to variable, return is now about 11%. Have a battery and am careful when we use power run washer shower dishwasher etc when sunny most of the time. What I make now also covers my LPG gas bill. so what's not to like . So we are going to build a new nuclear power station for 20 billion for 6 million homes with cost overrun say cost 25 billion that would go a long way to installing ca 5 million homes with PV. Factor in the decommissioning cost of the power station in future you add a battery to all PV installs for practically a PowerStation at home. No brainer.

 

[binky]

When did my install spring last year I calculated my ROI was 5% better than being in savings. With the leccy gone up in price and switched from fixed export to variable, return is now about 11%. Have a battery and am careful when we use power run washer shower dishwasher etc when sunny most of the time. What I make now also covers my LPG gas bill. so what's not to like . So we are going to build a new nuclear power station for 20 billion for 6 million homes with cost overrun say cost 25 billion that would go a long way to installing ca 5 million homes with PV. Factor in the decommissioning cost of the power station in future you add a battery to all PV installs for practically a PowerStation at home. No brainer.

There's another nuclear station to be built at Sizewell C

 

[Slateral]

All the above.
SWMBO didn’t like the look, I reckoned too expensive, ROI is too long, etc. Then, after some issues with Scottish Power over my smart meter and as a consequence, paying more attention to my bills, came the realisation that I was being cavalier with my energy use and the increase in the April cap was going to seriously impact my finances.
So I decided to use the cash from the 1% interest savings account to get solar, review usage, save money long term while hopefully doing something positive for the planet.
And the system performance has been remarkably good, plus the Octopus Agile export tariff provides way more payback than the 7.5p/kWh I used in my pre-purchase calculations for the summer months. It won’t be good for the winter, though so I’m looking to move to another tariff for that period.
And who knows what the tariffs will be in a years time, although it’s hard to see energy cost going down any time soon.
Currently, I’m optimistically anticipating payback in 5-7 years - if its longer, well I’m 73 and if I’m not around the kids will get the benefit!

 

[Gian]

most people know that the cost of a new bathroom or kitchen will add to the value

most people know that installing double glazing won’t save much money but will probably make a house more saleable

when I installed our PV it was because the saving on our lecky would be more than 1% interest on a savings account or 2% saving off our mortgage. Reducing our foot print was a major consideration

I think the justification to install PV now is simple, given the price per kWh now but I’m not convinced, as yet about the batteries.

then there is the thorny question of how many people can afford the capital outlay

what is wrong is that many homes are still being built without PV

I agree about battery's. I read many forms and many people buying specialist battery packs like Tesla, growatt, Goodwe and many other brands. My issue is they are all battery's that are unique to brands and hardware. Most people who have forked out for those packs have disposable income. The true question for me is the pay back of the investment. I suppose now with electricity prices they would pay back quicker. I have a growatt system and after if my battery fails now I am out of pocket. It's my third battery as I have had quite a few failures,as well as control units . So now I have another 18months which would make it 8 years for my initial investment of £12k. I have another system using lead acid batterys using a Goodwe inverter, on this system I am playing and I have had a inverter failure and it took 6 months for Goodwe to replace it and it was hard work. My own thoughts now is to invest in a v2g inverter and rather than pay £8k plus for battery's I would rather buy a used ev. Using this larger ev battery to run my home and use solar and economy 7 cheap rate to charge battery's especially in winter. I have then a good car with bigger battery and it's multi purpose use as well as a home storage system. Then I don't have to buy any dedicated storage battery. This is just my own views ,and how I want to move forward .

 

[Bob Smith]

I agree about battery's. I read many forms and many people buying specialist battery packs like Tesla, growatt, Goodwe and many other brands. My issue is they are all battery's that are unique to brands and hardware. Most people who have forked out for those packs have disposable income. The true question for me is the pay back of the investment. I suppose now with electricity prices they would pay back quicker. I have a growatt system and after if my battery fails now I am out of pocket. It's my third battery as I have had quite a few failures,as well as control units . So now I have another 18months which would make it 8 years for my initial investment of £12k. I have another system using lead acid batterys using a Goodwe inverter, on this system I am playing and I have had a inverter failure and it took 6 months for Goodwe to replace it and it was hard work. My own thoughts now is to invest in a v2g inverter and rather than pay £8k plus for battery's I would rather buy a used ev. Using this larger ev battery to run my home and use solar and economy 7 cheap rate to charge battery's especially in winter. I have then a good car with bigger battery and it's multi purpose use as well as a home storage system. Then I don't have to buy any dedicated storage battery. This is just my own views ,and how I want to move forward .

This is good thinking to use the car to power your home instead of buying batteries. This is obviously a very specific case depending how who is at home and when the car needs to be driven when there is no sun. While I like the idea to use the car's batteries to power the house, the car's batteries need to be charged from time to time too. This situation would not fit my family (unless we have two EV... one is usually always parked).


Anyway.. I see that while the post is about why consider ROI for PV while no other home improvement does it. I see that most of the replies show that ROI is something well implemented in part of a PV installation.

 

[Berserkerboy]

It's my third battery as I have had quite a few failures,as well as control units

Blimey!...That's not good.
Hope that was all replaced under guarantee?

 

[Berserkerboy]

When did my install spring last year I calculated my ROI was 5% better than being in savings. With the leccy gone up in price and switched from fixed export to variable, return is now about 11%. Have a battery and am careful when we use power run washer shower dishwasher etc when sunny most of the time. What I make now also covers my LPG gas bill. so what's not to like . So we are going to build a new nuclear power station for 20 billion for 6 million homes with cost overrun say cost 25 billion that would go a long way to installing ca 5 million homes with PV. Factor in the decommissioning cost of the power station in future you add a battery to all PV installs for practically a PowerStation at home. No brainer.

Did you install yourself or was this an MSC installation with a FIT?
Mine is DIY with no FIT, and a back of a *** packet calculation is giving me at least 20% now.

 

[Bob Smith]

Can you think of any reasons why Carbon Footprint is not included in the ROI calculation? So far I have never seen an installer who includes it and put some figure. (yes my app tells me how many trees I have saved but that is for illustration purposes)

Companies trade their carbon credit. Why not us too?
In addition, PV help to improve your EPC and potential to make you change band. This too add value, don't you think?