I've been thinking about getting solar PV as an investment.
Wondering if there's anyone here who's done much thinking about the financials of it recently?
Key factors that determine rate of return would appear to be: (1) Price Paid for Kit / Installation; (2) Potential Output from Solar on Installation Site; (3) Direct Consumption from Panels; (4) Use of Excess from Panels; (5) Cost of Electricity; (6) Maintenance Costs.
(A) = (B) + (C) - (D) - (E) + (F)
Where:
(A) = Return over Twenty Years Discounted to Present
(B) = Total cost of electricity over twenty year period without solar panels, discounted to present
(C) = Either ...
If Kit paid in lump sum: Upfront Cost of Kit + Installation
If Kit paid over time: Sum total regular payments over payment term discounted to present
(D) = Cost of units consumed via solar over twenty years at rate otherwise would have paid buying from grid discounted to present
(E) = Either ...
If Battery: Cost of units consumed via solar at rate otherwise would have paid buying from grid discounted to present - Battery Deterioration and Replacement Costs
If No Battery: € made exporting energy YOY discounted to present
(F) = Maintenance / Misc Costs
That's where I get stuck. To go further i'd need detailed info about units consumed, unit prices etc ...
Thinking about it I wonder is it fair to say:
Wondering if there's anyone here who's done much thinking about the financials of it recently?
Key factors that determine rate of return would appear to be: (1) Price Paid for Kit / Installation; (2) Potential Output from Solar on Installation Site; (3) Direct Consumption from Panels; (4) Use of Excess from Panels; (5) Cost of Electricity; (6) Maintenance Costs.
- Price Paid for Kit / Installation can be via upfront investment, finance or with solar as a service. Solar as a service seems like a v good option: it's essentially an interest free loan and the real cost of repayments decreases with inflation. You can invest the capital you otherwise would have spent buying the kit upfront on something else, making it even more profitable.
- Potential Output from Solar on Premises - Not much you can do about this. Determined by house orientation / space on roof. Hidden perk of having a south / south-west facing garden I guess?
- Direct Consumption from Panels - Total output from the panels that you can use throughout the year. More the better.
- Consumption of excess from Panels - Excess energy can be (i) stored in a battery vs. (ii) exported and sold via the Clean Export Guarantee to either save or make money, respectively.
- Cost of Electricity is obviously key too. This seems to only be going one way.
- Maintenance and Miscellaneous Costs. Not likely to be significant.
(A) = (B) + (C) - (D) - (E) + (F)
Where:
(A) = Return over Twenty Years Discounted to Present
(B) = Total cost of electricity over twenty year period without solar panels, discounted to present
(C) = Either ...
If Kit paid in lump sum: Upfront Cost of Kit + Installation
If Kit paid over time: Sum total regular payments over payment term discounted to present
(D) = Cost of units consumed via solar over twenty years at rate otherwise would have paid buying from grid discounted to present
(E) = Either ...
If Battery: Cost of units consumed via solar at rate otherwise would have paid buying from grid discounted to present - Battery Deterioration and Replacement Costs
If No Battery: € made exporting energy YOY discounted to present
(F) = Maintenance / Misc Costs
That's where I get stuck. To go further i'd need detailed info about units consumed, unit prices etc ...
Thinking about it I wonder is it fair to say:
- Investing in solar panels is a risk free, (mostly) tax free investment. The only thing tax needs to be paid on is energy exported via CEG above a certain amount.
- The value of your investment in solar increases proportionately to energy price inflation. In other words, by investing in solar you save yourself money you otherwise would have spent buying energy from the market at a premium.
- Solar adds to the capital value of your house in the event of it being sold? Does this happen in practice?
- Buying a battery insulates you from inflation in the energy market by increasing energy consumed directly from your panels i.e. a greater proportion of the total energy you consume will be self-generated. However, if CEG rates increase in line with energy inflation rates, this might be a better option because you don’t have to pay for battery kit. Also, you could invest the money you might spend on a battery on more panels and export it?
- Solar as a Service seems like a v good option because (i) you effectively get the kit at a discounted rate because you're paying for it over time at 0% interest and (ii) you could invest the money you otherwise would have spent on kit on something else.
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