Solar or savings account? - Solar as an "investment"
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- čas přidán 4. 08. 2024
- I often get comments telling me that getting solar is a waste of money and that you'd be better off investing the install cost in the stock market, or similar financial investment, because you'd get better "return on investment" (ROI). Well, aside form entirely missing the point why some people get solar in the first place I don't think that's an entirely fair comparison. I've been giving this a lot of thought and I realised that the only way to be fair in the comparison is to treat the two "investments" in exactly the same way, i.e. using them to help pay for your electricity bill. And from that one simple concept the rest of this video fell into place...
Grab a copy of the spreadsheet here:
Please follow the instructions in the yellow cell in the top left corner.
Go to File, then Make a copy, so you get your own version to play with.
You don't need to ask permission to edit it if you have your own copy.
I don't want people changing the original version for everyone else. Thank you.
docs.google.com/spreadsheets/...
Price forecast report:
www.caa.co.uk/media/nqbbt035/...
Our home system summary:
6.8 kWp solar array split E/W
5 kW Gen 2 GivEnergy hybrid inverter
14.7 kWh GivEnergy batteries
A2A heat pump heating/cooling system
Myenergi eddi hot water diverter
Fiat 500e EV
Solar and battery tour:
• Solar PV and battery t...
A2A heating tour:
• A tour of our air-to-a...
00:00 Introduction
00:45 Why people install solar
01:49 How this video is going to unfold
02:38 You have to pay your bill, but how?
05:13 Example 1: no interest, no price rises
06:05 Example 2: 8.78% interest, no price rises
07:06 Example 3: 8.78% interest, 1% price rise per year
07:40 Example 4: 9.75% interest, 1% price rise per year
08:38 Example 5: 8.78% interest, 1% price drop per year
09:29 What will happen to electricity prices?
11:45 Example 6: 13.61% interest, 5% price rise per year
12:42 Example 7: Replacing inverter/battery, no price rises
13:57 Example 8: Panel output 80% after 25 years, no price rises
14:34 Example 9: Panel output 90% after 25 years, no price rises
14:54 Example 10: Panel output 85% after 25 years, 1% price rise per year
15:08 The spreadsheet, how to get it and how to use it
16:38 Conclusion
Please note that Tim is not a professional consultant, just an enthusiastic amateur, so cannot reply to requests for advice or opinions on specific systems or green investment opportunities. Thank you for your understanding.
Support the channel and get £50 of credit by switching to Octopus Energy using my referral code:
share.octopus.energy/cute-qua...
Or buy us a coffee:
www.buymeacoffee.com/timandkat
Tax. Interest is taxed, but reduced bills are not taxable.
It gets very complicated very quickly for individual circumstances (e.g. ISA / pension in UK), particularly as people able to install solar are likely to be in higher tax bands and already be filling tax-free allowances. But for a lot of people in this position in the UK that would push up the "break even" interest rate required significantly
Yes, good point. I'm implicitly assuming no tax here, or net interest rather than gross. I knew I was going to forget something! I'm going to pin your comment so it stays at the top, if that's ok with you?
@@TimAndKatsGreenWalk Glad you pinned the comment. I was about to say the same thing. £10K of savings at 5% will yield £500 per year which is the entire tax free saving allowance for someone paying 40% tax. Arguably, you need to be in that tax bracket to have £10K in the bank that you can use. After year 1, the interest means you already start to pay tax on the year 2 interest. If you are in the 45% tax bracket, then you get no savings allowance at all, so the tax implications make a solar investment more appealing. Additionally, as the BoE reduces rates with inflation a little more subdued, getting the rates of interest in your video would require stock market investments. Maybe, you could use an ISA wrapper to reduce the tax bill but that then gets waaaaay beyond the concept of this video. All in, I have just added a second array to my house. I am one of the lucky ones and I did your calculations on the back of an envelope to justify it to my wife. Keep up the good work.
You’ve got to be saving/investing over 20k a year in the UK for this to be a concern - great if you are
@@edc1569 Not quite right:
In England, Wales and Northern Ireland
For a basic rate tax payer earning up to £50,270/year you get £1,000 personal savings allowance and as you say £20K at 5% would bring you to this threshold
For a Higher rate tax payer (40%) £50,271 - £125,140 this allowance is reduced to £500 which is £10K at 5%
For someone paying the Additional rate (45%) that is earnings over £125,140 per year this allowance is £0
@@moonraker2010 I'd assume you'd be putting that 20k in an ISA wrapper, not sure why you wouldn't with your first 20k
It reminds me of an episode in Red Dwarf where Mr Lister was informed that he was the richest person in the universe because he left £10 in his bank account 2 million years ago. However Northwest power was the second richest entity in the universe because Mr Lister forgot to turn off the bathroom light!
Haha! I'd forgotten about that.
Thanks Tim. I think this nicely demonstrates what my ex-boss, a Finance Director, told me when I asked him what depreciation we should be using on a large IT investment. He answered with 'What end number would you like it to be?', in other words numbers can be made to look like anything to prove a point. I gave up trying to calculate my ROI on my panels/batteries a while back. I just grin when the sun shines and smile when my Octopus bill arrives saying they owe me money. 🙂
Ah, yes, negative bills in the Summer are the best! June for me was -£97 (spoilers for my June update video there).
Very good point. When I was chairing a NHS committee reviewing the costs and benefits of shifting surgery from our local DGH to a Community Hospital I noted that in some cases costs were higher in the CH. The CEO of the Local Health Authority replied that if I told him what outcome I wanted he would produce figures to support it. Essentially this involved juggling the balance of fixed and variable costs - an old accounting trick.
The slidey head graphic was pure comedy. Thanks 🤣
I'm glad you liked that!
They say diversify your portfolio. None of that matters when the entire market tanks (unless you're a genius at timing the market and turn to shorts etc). But the entire market going under won't affect your investments into reducing your bills.
Indeed.
Great video Tim 💪
Thank you!
Brilliant, thanks for a well reasoned argument Tim. The only thing I would add is that having solar encouraged me to use more electricity - I now have induction cooker, EV car etc. so the impact of solar is amplified further 👍🏼
Yes, indeed, once you start adding in EVs, heat pumps etc. the benefits of solar just get better and better.
Love it. I just think getting some energy for free is great. Forget the original cost and smile all the way.
Indeed. I love generating my own power.
Good video for people worried about if the investment will pay for itself, I did very similar modelling before I got my systerm over two years ago now but it all went in the bin when I discovered the savings I could make by having an EV and a cheap overnight charging tariff. What may happen in the next few year with this is very hard to guess so my advice is if the investment looks like it will pay for itself within 12 years it almost certainly will and is a far lower risk than investing for a return of 5 to 8%
I would concur.
Of course the EV argument has become vulnerable to the introduction of VED on EVs as well as the hike in insurance so it's become much more difficult to include an EV in the calculations. It was probably sensible to leave this out of the spreadsheet.
Really good video, where you kept a complex topic nice and simple. It's absolutely true that you can argue it anyway you like. In my experience the idea of bill certainly (even over a short term) seemed to convince a lot of sceptics to invest in solar. We humans are not very good at looking term planing, and it's really hard to ignore tiny energy bills.
Yes, indeed, it does give you a nice level of protection regardless of what happens to electricity prices. That is very appealing.
Excellent video! Thanks for taking the time to produce the spreadsheet and to walk through it.
I've tried to help friends and family see exactly this, but i've done a very poor job compared to you!
The main takeaway for me is that there are so many variables that go into any investment along with the associated risk. None of us have crystal balls, but solar panels do look like a very safe bet. Especially when you consider 40% or even 20% tax on other investments.
Total pedant here, APR should be corrected to AER.
I had this flash of inspiration at 2am one night and then couldn't stop thinking about it so I had to make this video at some point, really. And then once I started adding all the bits and bobs to the calculation I realised how complicated it can get! As you say, solar does seem like the safe bet given all the uncertainties involved. Fair enough on the AER, I didn't give that bit much thought if I'm honest!
Great video, thank you
No problem.
Thanks Tim - hope lots of people see this video. Tend to agree that there is a far too simple (?simplistic) view on ROI quite widely in circulation. Personally I would like to give a shout out to the benefits that are much harder to quantify, let alone monetise. For me, they are a big part of the reward from having solar - just feeling happy that we are making our own power from sunshine, as well as powering the neighbours when we export!
Yes, exactly, I love that feeling too. I hope this video helps tip a few more people over to making the decision to get solar installed.
I think of my solar a bit like the bonds markets, a low interest paying investment with low risk.
It fits in well with a Ripple investment and other long term investments like a Self Invested personal pension, never put your money all in the one basket . Diversification means no one event can wipe out your income/savings.
If you invest your money and loose your job then your investment will start to shrink, if you install solar it keeps paying no matter if you work or not.
Thanks Tim
Yes, I like the idea that my solar will keep helping reduce my bills for a good long while, no matter what happens.
Thank you - a thoughtful presentation which will help people think through the carbon/economic issues. We installed PV/batt in Aug 2023 and project that our total energy bill in first 12 months will be less than the cost of G & E standing charges. We installed for reasons of trying to decarbonise our life, and not on 'investment'. But unlike most things it's an expense that will claw back cost of capital in 10 years (longer maybe but that's not what matters to me), and will reduce my use of unsustainable fuels. Yes, it was a lot of capital, but only about 4% the value of house it is fixed on (so some perspective). We choose not to own a car, but if I did buy a car I wouldn't ask how good an investment it would be - it would be a rapidly declining asset with a host of secondary expenses - not what you can say of a PV/battery system!
Yes, exactly, all excellent points.
Excellent as always. I'm installing low carbon technology because it's good for the environment and it'll pay for itself, eventually.
I live off my investments and, in my own modelling, there's another advantage of solar: the lack of correlation with my investments (in fact, I'd argue that they're negatively correlated).
Great stuff. I'd like to get to the point where our bills are so low that we don't need as much income to live on. Getting there bit by bit.
Great stuff Tim. Residual values are another dimension, Tim. Even if panels are degraded by 20% after 25 years, they’ll probably continue producing for many more years. You can realise this value if you sell your house (although estate agents often poo poo this idea). There’s also a nascent market in second life panels.
Very true. I made the conservative assumption that your system would be defunct after 25 years but as you say many systems should last longer than this.
Reuse of resources is a great think to aim for... When my current system gets 10-12 years old, I'm thinking I'll move my current 400W panels to the north west side of the roof and put new ones on the existing framework on the south east, plus put in a new inverter.
Great video... My electricity bills were north of £500 per month at one point (And there is no heating component to that) - After the solar installation the electricity bills were immediatly reduced to zero day one and with some tarrif tweaking are now negative by a bit, and this includes wiping out the standing charge! As a higher rate TAX payer (and there are a lot more than there used to be of us) you'll see 40% of any savings clawed back by HMRC. All in all I say solar is a good option as it is just one less worry!
Great stuff. Yeah, negative bills are the best!
I view it as a diverse investment or as you briefly said, a hedge. I have other investments intended to produce other outcomes. It's interesting to see the money side of solar but that's not the only side. For example, the electric and gas grid could go out here and my house would keep running until maybe November. After two days of grid failure, everything else would grind to a halt.
Yup, there is no reason not have both if you have the funds available. And as you say there are many advantages to having the solar system, beyond the financial benefits.
I'm a fan of solar and the tax free return, but I thought I'd list some risks:
In contrast to cash, bonds and stocks, solar and batteries are a very illiquid investment that you can't just sell if you need money - you would need to sell your home. You need other, more liquid investments alongside it.
As you point out, as with returns on other investments, the future price of electricity is uncertain.
There's maintenance which might be unpredictable (again needing other savings).
There's also a small risk that taxes on it might change (currently tax free for individuals if "the electricity generated should not ‘significantly exceed’ the amount consumed in those premises").
Yup, all fair points.
Thank you for producing this video. It’s something that’s been on my mind since I had an installation in January. I am dissatisfied with it and wish that I had invested the money at current rates say about 4 1/2%. Unfortunately the install was not smooth and because of this it’s caused a lot of grief but more than anything the system is not performing anywhere near what I thought it should be or anywhere near what was projected by the Supply and installation company. Today on a Midsummers day I haven’t even managed to fill my 9.5kwh battery from 4.4 kWh solar panels which I find very disappointing. One of my days in January I got .3 kWh of generation for the whole day. That won’t even pay for the standing charge and also the system appears to be using 60 W hours per hour just to be switched on over and above any load on it which equates to almost 1 1/2 kWh for one day.
Very disappointing
That is a shame. If you'd like an independent estimate of how your system should perform it might be worth putting your system details into PVGIS, I've found it really helpful: re.jrc.ec.europa.eu/pvg_tools/en/
@@TimAndKatsGreenWalk thanks I’ll try that
Yes the link you sent me is comparable with the information I was given by the supplier, in fact it was more optimistic than the suppliers calculations.
Today’s generation will probably end up at half of what is estimated. Yes it’s cloudy. Am expecting too much?
@@marksweetman8765 Rather than individual days, how does your monthly and quarterly generation compare with the estimate-could it be more shade than expected? Or maybe a faulty panel etc.
@@marksweetman8765 if your monthly generation is well below what you're expecting based on those two estimates, then you might have a fault somewhere. Might be worth getting your installer back in to have a check on things. If you're only a little below then it could just be natural variation (see my stats videos for an idea of how much variability there can be).
Tax - is relevant I think. Reduced bills can’t be taxed so that ought to play a part in this? Oops I see the point was made ahead of me! That’s still worth a video Tim - looking quickly at the tax efficiency of saving bills versus other investment.
You know, I knew I was going to miss something and it turned out to be tax! Oh well. But yes, it's a very good point and one that might deserve a follow-up video at some point. I've got quite a few on my list, mind, I'll see if I can squeeze it in somewhere.
Tim, thanks for your work. Very interesting. I believe you are very close, but when the roof needs to be replaced the added cost or removal of the solar system will tilt the scale.
Maybe. Although if you replace a failed system with a new one they could be done at the same time, which would mitigate the cost a fair bit, possibly.
The other part missed is that exporting electricity produced by the solar is also paid for and that has made my bills zero for some months with Octopus paying crediting my account. My bills never went up and throughout the last few years of high prices, my bills stayed around £120 for a 5 bedroom detached home to be heated via the ASHP, 10,000 miles in my EV as well as all the house use for cooking and running all my gadgets!
With Octopus increasing payment for each kWh of export from around 4p to 15p, this has again reduced my bills. I installed 3.76 kWh solar PV in 2011 and added similarto the opposite side of the roof in 2018 (due to E/W facing roof), as well as adding a powerwall. Standard interest rates were all very low as my wife would not want to invest in any higher risk and stick to bank account. It made perfect sense "as in investment" in my home as well as making us feel better by using less oil/gas. Now it is only the smaller amount needed to produce energy that is powered that way.
BTW A great video Tim!
Thanks. I didn't miss the fact that exported power is paid for though, it's just folded into the savings. Export forms part of the total savings you get from the system. The £1000 "saving" per year in my example is the net saving, i.e. reduction of import bill plus earnings from export. In other words your net bill has gone down by £1000. If you didn't get paid for export that net saving would be less than £1000, for example.
@@TimAndKatsGreenWalk Thanks and thought it was worth explaining that!
Yup, I could have made that more explicit in the video.
Great video and totally agree it’s not a simple case of return you seem to have covered everything. For me I’ve been charging the Zoe at home when the sunshines, so for the last year my fuel consumption has been zero albeit I only do about 5000miles per year. One thing a close friend asked me, is what is the payback time on the panels etc but I didn’t have all the data at my fingertips so I responded by saying “ you recently fitted a new kitchen although not absolutely necessary the cost was about £20k , so what’s the pay back period on your new kitchen?’
I partly made this video so that I could point people to it when they ask questions like that. But the new kitchen argument is a good one too!
Another very little unknown issue that spooked me into investing in solar and battery installation, was the Bank of England in 2021 said this “The Bank of England has told British banks that they should take whatever steps are necessary to prepare their systems for negative interest rates, opening up a pathway for the central bank to use this additional policy tool to encourage more lending” I thought at the time I have money in the building Society earning very little interest but this new policy could mean I pay them to save my money. That thought spurred me to think I would get a better return by investing into Solar etc. As it turned out interest rate didn’t go negative but they did in Japan and only last month reverse their policy back to positive rates.
Interesting.
As you say, there are a great many moving parts, so that trying to quantify the financial side of things requires a fully functional crystal ball. So I think the chief motivation has to be to keep the planet in habitable shape for future generations.
But I think there are secondary motivations that may be more important than possible financial savings for some people, including me: 1) the amusement/entertainment/technical challenge of building an off-grid DIY system that costs a lot less than a commercially built system. 2) energy security - where I live, power cuts are frequent in winter storms, and having got rid of gas, with an A2A heat pump and electric cooking, I need some means of storing energy so as to ensure some level of heating.
So my answer to the unanswerable question of solar as "investment" is a relatively small solar setup, 1.3kwp, a relatively large battery, 8kwh, and a relatively small house that requires a minimal amount of power. And I'll take any financial benefits as cherries on the cake.
Yup, I would tend to agree. I do very much enjoy the tech and data side of it too (as you can probably tell).
For us, solar + batteries + EVs, have worked out very well.
Our main reason for going for solar though, isn't to save the planet, but indeed to both save money, and future proof ourselves from any price shocks as we approach retirement.
We have 9kw+ of solar, and 27kwh of battery storage - never pay peak rate prices for electricity, and even make a (small) profit each year, despite running two EVs!
Overall, we save roughly £3500 a year in electricity costs vs paying standard tariff rates, and £2500 a year in diesel/petrol costs. A total saving of £6k a year - effectively giving myself a near £11k pay rise!
We started with a 4kw system that attracts (meagre) FIT payments, and added 5+kw to that. The 4kw system has already paid for itself (it's now 9 years old I think). The rest of the system will have paid for itself in less than 6 years (so another 5 to go).
For us, solar wins, as it's very tax efficient - as are our EV's (salsac), as well as being exceedingly cheap to run!
As long as one is in their 'forever home', and are a high user of electricity, then solar 'with household batteries' becomes a 'no brainer' - if you plan to move, or don't use all that much electricity, then the sums may change.
My only regret is not getting yet more solar! Our system is split E/W, so produces very little in the winter months. I'm considering sticking a few South facing panels in the garden to capture more winter sun.
That sounds amazing, you've got a great setup. I'm hoping to add more generation but our main option is North facing. It might just be worthwhile though, if panels come down in price just a little bit more.
I'm e/w too and considering getting in solar. Is it really that bad in winter vs south?
@@PaulGuiry PVGIS is a good tool for testing that out: re.jrc.ec.europa.eu/pvg_tools/en/
@@PaulGuiry in November, December and January, we generate less than 1/10th of what we might in May, June and July. However, this is where a household battery system comes into play, where we can charge the batteries on cheap rate electricity overnight, and run the house from that during the daytime.
TBH, with current tariffs, we get paid for any solar we produce at twice the rate we can buy it in overnight, so we can run the house as above year round, and get paid for all solar that we export back to the grid.
We don’t actually do this atm (even though it may make financial sense), as there’s just something nice about charging the batteries from our own solar, and utilising pretty much everything we produce during the summer (charging cars, and running the house). And there’s no guarantee these tariffs will continue in their current form.
Careful thought needs to be applied when choosing a battery system, as they vary considerably in their capacity and utility. We required whole home backup, and a system that could continue to utilise solar to top up the system when the grid goes down. We live in area where power cuts are not uncommon - remote Northumberland - we had 19 cuts last year, just 5 so far this year; with the most recent being just this morning at 04:30! We used to run a generator as a back up, but since getting the battery system, haven’t needed to fire it up.
Solar by itself will drop offline during a power cut to prevent the grid being ‘back-fed’, but some battery systems can isolate the house entirely from the grid and keep the solar running, so extending the time one can operate without grid power.
Very interesting. I have a system the main considerations I had was energy security. I am in Ireland and at the time there was a lot of concerns around the potential for scheduled power cuts. It didn’t work out that way. If there was a reliable domestic wind energy system I would be self sufficient all year round.
That's a good reason to get solar. Certainly part of our decision making process too.
And an Excel fan, I like this a lot.
It's actually gsheets (I'd prefer to use Excel but not everyone has Office, so gsheets are easier to share). I spend too long making spreadsheets!
Good one Tim, no negative comments so far, perhaps the detractors only come out after dark?
They'll come, I'm sure of it 😉
Thanks for the advice. Thinking about buying them, and have an EV , so free motoring thrown in❤.
No idea whether to get a battery or not?
It's often worth getting a battery, even a modestly sized one. It gives you more options down the line, especially in Winter when you can charge it up using cheap overnight power when there's not much solar. I would aim for about the same capacity as your typical daily usage in the Winter, so probably between 5 and 10 kWh.
You could try a hybrid solution by transferring the capital cost of the installation onto a 0% balance transfer credit card and then invest the lump sum instead?
Granted it would take a bit of managing and would rely on a good credit ratings and card limits being sufficiently high, plus being able to roll the balance at the end of the interest free term each time..
Oof, yeah, not sure I'd want that level of hassle. I'm sure someone would be prepared to do it though!
The UK needs power , using your own solar reduces grid loading , means less fields of PV, wind turbines , gas power stations , nuclear and fuel imports. Hinckley point C isnt going to reduce bills as it is guaranteed a high price when it goes online. Lack of investment and reliance on foreign owned generation and imported fuel+global high gas prices got us into this energy crisis.
Yup, there are really only upsides to generating your own power.
But Tim I hear you say! Brilliant lol
😁
We tend to think of the whole thing as an annuity: We get paid for the FIT, we recover a bit more of the solar because our excess solar goes into my batteries, we have switched to Agile and save a bit more from that and we have also changed the way that we use power so that we use less of it and store it cheaply for use throughout the day.
The bonus is saving the planet, a little bit.
How much we save is hard to evaluate because our lifestyle has changed and not just our infrastructure investment. Whatever we save gives us more money each month, hence the concept of the annuity.
It's all good. I'm glad it's working well for you.
We wanted to 'do our bit' for the environment but could ONLY do it if it costs less than we were paying at the time. After 8 months, we're finally there (including regular loan costs) and that won't go back, so Solar power (even with an EV) FOR US will always cost less than the non-solar options. After 8 months, we're now #61 less than non-solar. By 12 months that should be a few hundred. Once the loan is paid off we'll be £5K to the good (10 years) and after that we're rapidly beating that.
That's good to hear.
The investment assumption is that they pay a uniform interest rate through the term, the reality is to achieve the types of rates illustrated there will be peaks and troughs. The electricity bill is a constant deduction and if there are enough early troughs the subsequent reduction in capital will have a significant impact on the number of years bills that can be covered.
Feel free to add variable interest to the spreadsheet if you think it'll help.
@@TimAndKatsGreenWalk Haha i'd love to write an excel sheet to predict the markets. Should have said that i thought this was a great video. What i was suggesting is that another factor against investments is that to return the yearly percentage demonstrated your talking about stocks or funds, in this case the S&P. It's not that it's variable per se, it's more that the investment model can get wrecked by weak early performance e.g. if you invest 10k and you the market tanks, you're still taking out your electricity bill each month/year but by the time it recovers your capital has been reduced so even future outpeformance won't get you back on track. If this was a traditional investment to get your 8% PA you wouldn't withdraw in a slump. Again great video!
@@honeypablo74 yes, the uncertainty of stocks investments certainly makes it harder to predict. I'm sure there are some investment evangelists out there who will say you can do a lot better than my figures, but that's a big risk for sure! I'm glad you liked the video.
Hi Tim, in the video you show two graphs and you comment that prices will stay stable into the future. The Heathrow report has some pretty scary numbers in it though. In each scenario it shows stable prices at between £180 and £200/MWh. The market reference price so far this year is £63/MWh so the reports are stable at 3x current market price. The CfD subsidies so far this year give a price of £160.50 for offshore wind, £111.22 for onshore wind and £107.80 for solar. So even though the cost of grid scale renewable generation is higher than the market price it is still well below the forecasts in both reports.
If the price of electricity goes to the price predicted in these reports then a home solar system is a no-brainer and a great investment. Protecting myself against those sort of crazy prices is why I'm having a system fitted.
I think those prices are the delivered price, rather than the wholesale price, so that might account for the difference. But in any case I think getting a system installed is still a great idea to hedge against future prices, whatever they end up being.
As a low user the biggest concern is how much you are paid per unit. When it was around 4p/kWh making the maths work out was impossible. At 15p/kWh it gets far more interesting. But how long will that continue... It makes it difficult to work out and makes a big difference.
The other big concern is the daily standing charges. These keep growing. Currently paying 83p a day in standing charge (dual fuel) and my energy usage is £1.46 per day (Agile for electricity). So unless in the future I can manage off grid then the percentage of energy to standing charge is only getting worse. Obviously this is a fixed cost if you have solar or not.
Obviously I appreciate that I'm not a typical energy user.
Standing charges are a killer, for sure. It's getting a bit ridiculous, I agree.
if you are that low of an energy user first step should be get off of gas.
I don't know how much I spent on my solar setup as it was a DIY setup over multiple years. I am agile so the prices are all over the place changing every half hour. Thursday I have 9 hours of minus grid priced electric so I will use as much minus prices electric as I can. For me it was just a bit of fun playing around at setting up solar. I now generate about 1200 KWhs a year of DC electric.
Sounds like a fun project. I wish I had the skills and inclination to do the same but I know my limits!
Surprised the 'payback' on solar is so long, the payback for my battery only is currently at 4 years and, although this will change for the worse I feel, it will continue to pay while power companies offer high and low rates.
Well, in a lot of cases a solar install will pay back quicker than 10 years. As I said in the video, I chose a conservative estimate, partly to keep the numbers nice and neat. You can put your own values into the spreadsheet to get a more applicable example.
"But Tim, " I hear you say...
😁
"But Tim" I hear you say 😂😂😂
😁
As a longtime heating engineer, I have to say you've covered pretty much all the bases other than what happens after 25years if you need to replace the system?
Despite this obvious scenario, the future is going to be powered by electricity and the best option for most people is the solar pv route which opens the way to utilising the "green" options for heating and hot water.
Well done for your efforts and superb presentation!
Thank you. I'm taking the view here that you've essentially got a zero value asset after 25 years, so you either get rid of it, in which case you spend no more money but also can't cover your bills any more, or replace it, which would start the cycle all over again. Therefore the equivalent financial investment has to last for the same length of time to be exactly equivalent.
The Aiko panels I have just had installed have a performance value of 90.6% after 25 years. Chances are if I am replacing the panels it's because there has been some breakthrough in panel efficiency and I'd generate more power by replacing them, not because they need replacing. I only expect to replace the inverter after 10 years and the battery in 10-15 years maybe.
I've always maintained that the route to significantly reducing the country's CO2 is to reduce heat losses and encourage the take up of solar PV.
Unfortunately, the Government incentives where "highjacked" by cynical companies offering free installs in return for the tariffs then available.
Instead of £7500 towards heat pumps,which are not the one size fits all panacea as the first step; offering that amount towards PV, battery storage etc. is a more logical approach!
After all, it's a chicken and egg situation that makes more sense to provide green energy on a larger scale to then power EV's, heat pumps etc.
Also cansider house insurance costs and maintenance costs.
I covered the maintenance costs in the video, the bit where you have to add more to the investment to make it fair. You could do the same with insurance, adding a little extra to your investment each year to keep them equivalent and fair, but that is likely to be very small.
In Australia the owners of solar might have to pay the grid to take their excess energy.
Similar in Spain.
Why not in the UK in a few years?
We have somewhat less sun than Australia or Spain, but you never know. And that's what batteries are for, helping smooth out the supply and demand.
Yeah it’s likely to happen when pricing goes negative, batteries solve this issue.
Hi Tim, what's happening with the heat pump hot water cylinder?.
Installing next week!
@@TimAndKatsGreenWalk Is this separate to the Daikin setup (think you have Daikin) or is it being integrated.
@@Soulrollsdeep Mixergy iHP
@@TimAndKatsGreenWalk not tempted by a Heat Geek mini store?
@@Biggest-hz7ng I don't have an A2W system, so no outside heat pump unit that I could use for it. It is a great product by the looks of it though, could be a game changer for a lot of people.
I made the worst choice and invested in the octopus ORIT fund and they just lost my money and I got no solar panels.
Oh no! I'd not heard of that before. That's a big shame it didn't work out.
Totally agree but export income from spare summer capacity will pay way more than any investment.
That all contributes to the total annual saving.
You can put your yearly export income in a financial investment. I don't think the model takes that into account.
@@TheXanikseo the export income is part of the savings. Credit that you use to pay your Winter bill. It is accounted for implicitly in the total savings amount. Last year we saved £2000 but half of that was earnings over the Summer. Those earnings helped pay for our Winter import but even so our total annual bill was £200, so we didn't "earn" any money once the full year was accounted for. If you happen to come out of the year with some credit you can spend it how you please.
@@TimAndKatsGreenWalk what you say makes sense, however as you mention there are no yearly export earnings which is what I was talking about and is missing from the model. If you earn from your solar set up, then you can reinvest those earnings like dividends, providing an extra advantage. Granted, a system which is able to earn you money over the year is fairly high bar and not currently applicable to most people. However, as energy prices increase, so does income from export, meaning this may become relevant at some point even to those who initially bought a system that wasn't a net earner.
@@TheXanikseo this thought experiment is designed to make an investment and solar install equivalent, so if you're earning an income from your solar install beyond your total bill then that means an equivalent investment wound be doing the same, i.e. it would give you a little extra to spend at the end of the year too. In both cases you could reinvest that income if you like, or do whatever with it. It's not missing from the model. You've got to consider what an equivalent investment would do, which in your case would be proving more income than you need to cover your electricity bill.
Great info , but what about the sicario that the government give you a 100% interest free loan over 10 yrs? I live in Scotland but I presume that it is available in the rest of the UK.
My 9k solar & battery costs me £76 a month, surely most folk would fall into this category.
I've not heard of such a scheme for England. Maybe I'm wrong.
@@TimAndKatsGreenWalk Yep, not for England.
Some building societies offer a similar thing for so called green home improvements. Typically over a 5 year period though.
Barclays even pay you £1000 for solar and battery home improvements! Although, you can only claim once on this greener home reward scheme and they will pay £2000 towards a heat pump so probably wiser to use it towards that.
Just need to calculate the impact of this year’s weather… 😂 Will next year be better or worse? 😬
Who can say.
A solar installation doesn't explode after 25 years tho 😁... It's a 25yr guarantee of a certain standard of production for 25yrs not a deadline for end of production
No, indeed, I was taking a worst case scenario where your system stops working after 25 years. Most systems should last longer, of course.
@@TimAndKatsGreenWalk I hear that a lot tho ... Like EV batteries are no good after the guarantee and you have to replace all the solar panels after 25 years 🙂..... It would have been nice if you continued your graph for 40 years showing the profits continuing... To drive home the point
@@Damadchef there is a lot more I could have included, but sadly a choice has to be made as to where to stop the video. And I can guarantee if I showed the charts all heading to 40 years I'd have got similar comments saying "what if your system only lasts 25 years?". You see the dilemma. The spreadsheet is available for your own tinkering, however, so folks can make their own examples.
@@TimAndKatsGreenWalk yes I understand 👍
I dont see it as a financial investment. I wanted to take control of my energy supply.
That's a good reason to get solar.
Good video ! Having PV, Batteries and an ASHP, resulting in my energy bill going from 3500 to approx 600 pounds per year...I think it is a no brainer. I agree though that not everybody has the means to pay for the initial outlay.
Thanks! Yup, combining the technologies makes it even better, I've found the same.
@@TimAndKatsGreenWalk @mark82421 .....some people are way to narrow minded - obvious initial benefits but why not use said savings made and invest monthly into whatever you wish.....make another tab Tim of said savings over 25 years and how much would have been invested..... Only Joking 😀🤣
Early days for me but im on track for an 8 year pay back for pv and battery. (And looked at individually both have similar payback terms)
Plus i also have various investments in energy already and over 5 years theyve not performed very well (check out INRG). So i ahev no incentive to do more.
I did look at Ripple which has several advantages esp you can move house, (one of the biggest drawbacks with solar) but the return on that is disgraceful and i use that word advisedly that because i cant see why solar in fields done in ine big install with massive economies of scale and no scaffolding should have a much longer ROi than a single house PV system, eg Ripple is around 25 years break even compared to 8 for home. Somethings wrong there.
You missed the most important comparison! What if you put the electricity bill money into the same savings account?
So either start with a lump sum and put no money in, or start with nothing and put money in every year.
Suddenly solar starts looking even better!
You still have to pay your bill though.
@@TimAndKatsGreenWalk the idea being you either have the lump sum and pay the bill, or have no lump sum but don't pay the bill.
You can either pay the bill out the lump sum, or you can pay the bill from "elsewhere" and have the same "elsewhere" money come INTO the account, if you have panels.
Crikey that must really have been bugging you. How many discussions have you had on this with people to put that much effort in.
I am with you on the decision scale and will probably be dead before the 25yrs is up, but like the control I have over not buying electricity anymore. Not to mention the PV system will have some value even at the end of 25yrs. Maybe just the roof brackets & wires but something; so I can sell it with the house.
Are you going to do the same on BEV as I bet you get the same questions !
Oh boy, you wouldn't believe the sort of comments I get. I mostly made this video so I could simply point people to it instead of having to write lengthy replies. I hope it works! Good point about BEVs. I may well do a similar video but I get far fewer comments on that subject because I don't tend to do too many EV videos (the anti-EV brigade make it quite unpleasant, I have to say).
But Tim,
A couple more reasons to get solar.
1. Just tired of paying your heard earned money to utility companies and own nothing for it.
2. As a hobby. I have friends who think nothing of spending $40,000 or $50,000 USD on rebuilding and customizing their classic cars. I would rather play with solar for my hobby.
Nice video. Have a good day.
It has very much become my hobby, I'll admit that!
Well, first, you have to not move home for 25 years as it will add little to the value of your house if you sell and a 10+ year old solar system could even be a deterrent. Secondly, you really need a battery system in the UK and it's looking like these have to be kept outside and away from buildings (new regs - esp not in your loft) and your house insurance may rise if not. Investing in stock market not only has a gain but keeps up with inflation, historically 10% avg has been easily possible (assuming tax free wrapper). 10K earns 1K gains a year = free energy for life (maybe :-). You can always invest in ESG stocks or wind power stocks if you want to be environmentally friendly. Battery technology and solar panel technology will improve but I don't think it is quite there yet. Solar inverters will need replacing every 10 years or so, panels cleaned or replaced, batteries replaced, etc. Will like-for-like replacement parts be available in 10-25 years time (the companies probably won't exist) or will they just have to replace the whole system? Is it really saving the planet to buy batteries and panels made in China (using coal powered energy) rather than wind-powered UK grid? EVs can be charged any time of day and so they can use cheap rate power when available (if surplus wind energy). Do we even need solar panels? Just store cheap electricity from grid at night 1am-5am and power the house on batteries when needed in the day. Esp. when battery technology becomes super efficient, safe and cheap as it must in next 10 years. It does not seem that simple to me if living in UK...
A 10% return on the stock market will not be an ethical fund and will be heavily reliant on fossil fuels . So actively destroying the planet. Solar pv made with Chinese coal power have a very short emissions payback of 2 years. The rate at which China are installing solar and wind it's improving all the time.
Well, I made my case in the video. Fine if you don't agree.
@@TimAndKatsGreenWalk I am undecided. I was just pointing out a few more things to consider which you did not cover.
@@joewentworth7856 XWQS has returned 17% in last 6 months and is a world ETF but selected for low carbon/ethical companies. What you say about China may be true, but should the whole world start buying batteries and panels from China - or - don't buy them and use the much lower impact UK grid energy? I don't know the answer myself, but I have yet to see an unbiased review.
@@steve6375 I would suggest that solar does add to the value of your house, potentially not as much as you paid for it but even a 10 year old system has a long life ahead of it and is a valuable addition. I did mention you might want a battery too. You don't need to replace like with like, a different inverter can be used easily enough if an old one fails and has no direct replacement. I included the replacement of equipment in my video, so you can add that into the spreadsheet as you feel appropriate. You certainly wouldn't need to replace the whole system if just your inverter/battery failed, that'd be a quick and easy swap. Panels will last 25+ years (as mentioned) some as long as 40, so will not need replacing in the time horizon I covered. And most will self clean in the rain so never need manual cleaning.
Three reasons to invest in solar;
1. Energy independence
2. Saving on energy consumption
3. Assist allrviatibg global warming
If ROI is the primary concern, invest in the stock market, and stop trying to muddy the waters.
I agree. I hope your last comment was directed at people who get solar for financial reasons and not me?
@TimAndKatsGreenWalk That was written before watching your video, which I just started to watch. Never thought financial gain was your consideration.
@@52gulfpapa ok, cool. I did wonder if you'd written that before watching the video, as I more or less said the same thing early on.
@TimAndKatsGreenWalk I'm in the Bahamas and turned on my off grid system 01/2019. I can not send power to the grid. I only supplement my solar in the summer for my air con, usually
You didn't take inflation into account which reduces the value of a financial investment but not so your solar investment which hedges the equivalent inflationary rise of electricity price.
Electricity price rises are built into the calculation.
@@TimAndKatsGreenWalkMy point was that he financial value of savings is reduced by inflation.
@johnh9449 true, assuming you have any money left in your investment after 25 years. If you think something is missing feel free to grab a copy of the spreadsheet and add whatever you like.
@@TimAndKatsGreenWalkTim, I was simply making the point that inflation eats into the profit of a financial investment (e.g. 3% inflation reduces 5% interest to 2% value), whereas a solar PV investment hedges against the rising cost of electricity with inflation because the value of the PV electricity produced also rises with inflation. Additionally you could argue that the capital cost of the PV installation rises in value with inflation if the installation cost of a later identical system rises with inflation (ignoring write off and cheaper manufacturing) - the opposite of non interest bearing financial capital savings which reduce value with inflation.
Investment guaranteed APR after tax of 8.78% without risk 😅😂😂😂😂 all investment has an element of risk…. Cheap electricity ⚡️ will be offset with invest meat cost of upgrading the grid; so no drop likely in average price of electricity
Yup, my examples were designed to make a point, I'm not suggesting you could get anywhere near those returns!
Nice video, but your probably better investing the money, and when it comes to remortgage buy a solar system thought a small increase on your mortgage as it will be the cheapest and cost effective method. assuming your not going to chain 0% interest credit cards, until you can pay off the balance.
Well, you can try that out with some adjustments to the spreadsheet if you want to find out for sure!
@@TimAndKatsGreenWalk it's a nice spread sheet, you must be an spreadsheet wizard!
I have done a few calculations myself in the past just no where nears a pretty or nicely laidout then yours. Waiting to see if a house goes up for sale which is south facing on our estate before we have to remortgage and get the extension as we will get solar then.
@@Sean_S1000 thanks. I do spend rather too much time working with spreadsheets in my day job, so I may as well make use of those skills!
you have too much time on your hands.
switching your energy provider can also give to savings.
There is no way that switching providers will save you £1000 a year.
Good video. Solar as an investment is probably too risky/uncertain if someone does it purely for return on investment. Nobody knows what leccy prices do in next 20 years, plus they might need to move house and say bye to their precious solar. Maybe if their financial portfolio is large enough then diversification benefit might be make it worth getting solar. Chuck that £15k on your roof instead into your £1 mil stock portfolio and get that tax free return (maybe, maybe not?). I imagine the correlation between interest rates (or world stock market) and electricity prices is weak to non existent.
Also, Tim, what's with the attitude? Relax a little. You need a develop a thicker skin if you keep putting yourselves out on the internet, can't expect every comment to be nice and constructive on the nets. Also remember, it's hard to always read the tone of the comment right on the nets, most people are not trying to get you. Good job overall.
Attitude? Most people are indeed not trying to get to me. Some most definitely are! Try reading every one of my comments and then try telling me how to deal with them! Most are perfectly pleasant, tbf, but I made this video so I could simply reply with a link to save myself time later. It's not about having a dig at those commenters. By the way, saying "what's with the attitude?" could be considered quite rude. As you say, the tone of comments can be hard to interpret 😉