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Solar Panel Economics

August 3, 2017
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By Paul Homewood

 

 

h/t Dave Ward

 

 

Dave tells me E.ON have been trying to sell his mum solar panels!

Given that we are being encouraged to use solar panels (which we have not got), to charge batteries (which we have not got), in order to charge our electric cars (which we also have not got), I thought I would take a look at their costings.

Shills for renewable energy, such as the ECIU’s Jonathan Marshall, like to make them sound all cuddly, by describing them as a democratisation of energy supply.

Looking at the numbers though, they are a very expensive way of getting some of your electricity for some of the time.

 

 

These are the costs from E.ON.

I used their solar calculator, and entered details for our house, which is a pretty average size, including my current consumption of 5600 KWh a year. The calculator came back with:

  • Cost of solar panels plus battery – £10960
  • Electricity generated – 4073 KWh
  • Self consumption – 2682 KWh
  • Export to grid – 1391 KWh

In short, the system could not supply all of my demand, and much of what it could produce would be no good for me because I could not use it at that particular time, hence the export to the grid. (Presumably much of this surplus would be in summer, and I would mainly reliant on buying in electricity in winter).

Under the Feed in Tariff support system, the export to the grid would be worth 19.4p/KWh. However much of this is government subsidy, as the rate I currently pay is only 11.2p. At this rate, I would only be paid £156 for energy exported.

The self consumption of 2682 KWh would, at current prices, be worth £300 a year, so I could make a total annual saving, excluding govt subsidy, of £456.

With inflation, these savings could be expected to grow in future years, but equally there would be interest to pay on the capital cost of the panels, which would be likely to far exceed such savings.

The battery is only guaranteed for 10 years. Although the panels might last a bit longer, there would also be maintenance costs and degradation to take into account.

Economically then, it would be unwise to assume a life of longer than 10 years.

On that basis, an annual saving of £456 could not justify the capital expenditure.

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37 Comments
  1. Ian Magness permalink
    August 3, 2017 9:26 am

    I went through this exact same calculation a few years back with various providers Paul. I came to the same overall conclusion – not remotely sensible. On any sensible estimate of gas and electricity costs saved, I worked out my pay-back time to be about 15 years by which time, no doubt:
    1) we wouldn’t be in the house;
    2) parts and labour costs would push the pay-back time much further out anyway.
    Ludicrous.

    • Green Glow permalink
      August 4, 2017 11:09 pm

      My subsidy collector panels were one of the best investments I ever made. As a 2011 adopter I was lucky enough to be able to invest £13.6k for 4kW nominal (you can now only invest about a third of that).
      They pay me £507 per MWh, i.e. 12 x the current wholesale price of electricity. Then they pay me again to export ½ of it. Then I can use all the electricity myself anyway. Then it’s index linked to RPI. Then it’s tax free for 25 years. Then I get green glow from everyone thanking me for saving the planet. What’s not to like?

  2. dave permalink
    August 3, 2017 9:40 am

    To replace all domestic electricity demand throughout the world with home panels, then, is

    about £1 Trillion of new investment – every year for ever

    ( £15,000 per household x Twenty million households x thirty-three economies like the UK, divided by ten. )

    And domestic electricity is what, about 1/10th of total energy demand?

    Total energy demand world-wide is definitely going to double over the next few decades.

    Put it all together; and solar can stop all CO2 emission in the lives of our children and they will only be paying

    a mere £ 20 Trillion a year.

    Medieval Cathedrals seem positively cheap as virtue-signalling to God, by comparison.

  3. August 3, 2017 9:59 am

    I don’t know where you are getting the tariff figures from, but the current export tariff is 5.03p/kWh and the maximum generation tariff is 4.29p/kWh (10 to 50kW installed capacity), to give a total of 9.32p/kWh. See https://www.ofgem.gov.uk/environmental-programmes/fit/fit-tariff-rates

    • August 3, 2017 8:45 pm

      Agree , the Eon calculator comes out with a £number but doesn’t tell you it used a 19.4p/KWh.FIT, more likely it used Phil’s numbers.
      You can double check via http://www.pvfitcalculator.energysavingtrust.org.uk/

      I am happy that means there isn’t a huge subsidy coming out of the electricity system, but there is an inefficiency cost and HIDDEN SUBSIDY.
      There are 2 products 1.Reliable On-Demand electricity
      and ii. Intermittent electricity that comes from solar wind..which is worth less.
      On the middle of a hot summer day cos your solar/wind is privileged the network is forced to take it …so the guys with the gas power plant are forced to turn down and stop earning, but these days they will have negotiated their own subsidy deal to cover this.
      And as ever *subsidies/extra-inefficiencies are not paid by unicorns* they come out of electricity payers money.
      And the important thing is that is not just you and your neighbour’s bills , but in the electricity component in every product/service that is in your name.

      If solar worked well without subsidies Eon would have put it outside it’s own gas power plants.

  4. HotScot permalink
    August 3, 2017 10:14 am

    The 1970’s double glazing scam seems tame by comparison!

    PS

    I went to look at some student flats in Newcastle with my daughter. Three of them were old Victorian gaff’s, fitted with nice new (well, relatively) PVC double glazing, and the smell of damp when we walked into them was revolting, and a health hazard.

    Unless houses are designed from the outset to utilise ‘new technology’ it’s usually not a good idea to retro fit it in my opinion.

    • dave permalink
      August 3, 2017 12:47 pm

      The old Victorian places would be dry, even with double glazing, if the original airbricks were unobstructed.

      • HotScot permalink
        August 3, 2017 12:53 pm

        dave,

        Not sure air bricks are enough on their own. With fireplaces blocked up and unused, an important means of circulation (cool air being drawn into a working fireplace from the rest of the house) is non existent.

      • dave permalink
        August 5, 2017 9:33 am

        One must keep a route for air to escape out through the eaves.

        It used to be said that the Romans built with hypocausts. Not usually. They were the equivalent of air-bricks. In certain places with this arrangement, ground floors have lasted two thousand years.

  5. August 3, 2017 10:15 am

    Add to this is the fact that these panels generate an urban heat effect which warms the planet. The science says that if you want to warm up the earth; then plaster it with solar panels. Happy to respond should any one wish to challenge that; but first they should acquaint themselves with the Stephan-Boltzmann equation.

    • Tim Hammond permalink
      August 3, 2017 10:27 am

      I don’t know the detailed physics, but I struggle to see how if I take an input of energy (sunlight) and take out some of that energy as non-heat producing (at the solar panel level) electricity, how can what doesn’t go into electricity generate more heat than if I simply let the original sunlight generate heat?

      The basic amount of energy coming to the Earth doesn’t alter, and the heat from burning fossil fuels doesn’t matter, as even AGW enthusiasts recognise. It is how much of the heat escapes the earth that determines whether it heats up or not. Or am I missing something?

      • August 3, 2017 6:06 pm

        Yes Tim. You are missing something.
        The Stephan-Boltzmann equation gives the relationship between incoming radiation and the resulting temperature of the recipient body.
        As: T^4 = R*(1-A)/e*S where T is temperature, R is radiation, A is Albedo, e is emissivity and S is the Boltzmann constant.

        From this it is evident that a reduction of A will result in an increase in T.
        Solar panels are specifically designed to capture as much R as possible from which some useful energy is generated. This is done by designing as low an Albedo (A) as possible. That is why they all look dark.
        It is agreed that where these panels are placed over an area of low Albedo little difference will result; but often this just does not happen, hence the additional absorption of energy, giving rise to an urban heat effect.
        The useful energy generated eventually degrades to lower levels in use, usually as heat dissipated.
        If you want to cool the planet best paint your roof white. (same logic)

      • Jongo permalink
        August 4, 2017 10:00 am

        The issue is energy. It can neither be created nor destroyed. It doesn’t matter what you use it for, it all eventually degenerates into heat. The energy extracted for electricity generation will eventually return to heat once the electricity is put to use.

  6. David Benn permalink
    August 3, 2017 11:21 am

    Did I read somewhere that the panels must be cleaned on an annual basis in order to reduce power generation losses?

    Also, given the quantity of toxic elements contained in the panels, what is the cost of disposal of the panels when they reach the end of their useful lives?

    I asked a green-leaning colleague what his solar panel disposal plans were, and the response was that he planned to move house before it became an issue……

    ;¬)

  7. August 3, 2017 11:35 am

    UK domestic rooftop systems don’t need an export meter.

    ‘If your system is under 30 kWp you don’t need export metering. Indeed, it’s usually uneconomic to do so. Instead, opt for a “deemed export payment” whereby a tariff (index-linked) is paid on 50% of the energy generated on site.’

    http://www.brightonenergy.org.uk/2014/06/guide-installing-export-metering-solar-pv/

    The income from this is trivial.

  8. keith permalink
    August 3, 2017 11:42 am

    I can well understand David Benn’s comments. We used to have so called self cleaning glass in our conservatory, self cleaning my a**. It had to be washed every two months by the window cleaner. So yes, cleaning cost must be built in, plus as David says, disposal costs.
    I bet none of this mentioned by solar salesmen. Overall I have come to the same conclusion as Paul. The kit does not pay for itself.
    I also remember No Tricks Zone saying there is a problem in Germany in that some fire brigades will not tackled a house fire that has solar panels. It seems they can still be generating electricity while the house is on fire, so endangering the firemen. Not heard anymore about this though.

    • richard verney permalink
      August 3, 2017 12:42 pm

      With current H&S laws, can a window cleaner work on a roof from a ladder, or is scaffolding legally required?

      • dave permalink
        August 3, 2017 12:50 pm

        The cleaner can do what he wants if he is self-employed.

  9. BLACK PEARL permalink
    August 3, 2017 12:02 pm

    Might be interesting contacting your local council about the process of solar panel disposal.
    Can they just to go straight to landfill or will there be a special disposal process ?

    • Tom O permalink
      August 3, 2017 1:11 pm

      I would hazard to guess that they have to be treated as hazardous waste which, due to what they are made of, they truly are. It costs a company dearly to dispose of hazardous waste, and I would suspect that due to the bulk, the home owner will have to pay as well.

    • spetzer86 permalink
      August 3, 2017 1:38 pm

      This is from California, but describes the issue: http://www.dtsc.ca.gov/HazardousWaste/SolarPanels/upload/SolarPanelFAQs.pdf

      • August 3, 2017 2:45 pm

        In short: solar panels are a fully regulated hazardous waste.

    • August 3, 2017 7:56 pm

      There is a recycled solar panel biz in a nearby village.
      If the panels are so great why would anyone sell them on ?

  10. Jack Broughton permalink
    August 3, 2017 1:53 pm

    According to Renewable Energy World 2/8/2017. IKEA are about to launch battery storage in the UK. Cost is £ 5000 to store 3.3 kWh: i.e. about 1 MWh / year stored.
    To buy this electricity rom the grid would cost about £ 150 ……. A green “must have”!

  11. Rowland H permalink
    August 3, 2017 3:41 pm

    Well, you must have a fairly decent sized house; our annual consumption is 2300 KWh even though we don’t have gas but then there’s only 2 of us. Maybe you need more LED lights!

  12. Eric permalink
    August 3, 2017 3:59 pm

    Your electricity is cheap. Here in sunny California, I pay 15 pence (in USD equivalent) for the LOWEST tier of my usage, and the more I use, the price increases, until I’m paying twice that. Avoiding this highway robbery made my solar panel economics work out. I expect my solar panels to pay for themselves after 6 years at the rate they are producing, and I’m insulated from future electricity rate stupidity in the Land of Fruits and Nuts.

    The math is simple for me:

    Abundant sun + ridiculous electric rates + a pinch of government subsidy = a good financial decision for me

    Even so, I can’t make such an easy justification in other US states.

    • Jongo permalink
      August 4, 2017 10:10 am

      Again, the issue is Government action/interference, not technology or economics – or common sense. Historically, ALL Government pro-active actions in all spheres have tended to produce the exact opposite result to what was intended.

  13. stephen m lord permalink
    August 3, 2017 5:50 pm

    I saw a combined heat and energy system for a home in Germany. IT HAD A SINGLE CYLINDER diesel engine generator running off natural gas and making hot water for washing and heat and electricity. Diesel engines running on natural gas last 20 years or more because it’s so clean burning.
    SINCE you need nat gas backup for Solar panels any way this would be a common sense way to cut emissions.

  14. FrankSW permalink
    August 3, 2017 7:33 pm

    The real value of solar power is not even your retail price of 11.2p..

    Rather it should be wholesale charge that generators that Drax or Sizewell get paid. After all the power retailers have to add in their costs which include management of the distribution network. Nobody stays in business for long selling products at the same price they buy them in at.

    How about producing an averaged wholesale cost to compare it with.

  15. A C Osborn permalink
    August 3, 2017 7:43 pm

    Paul, does the “Cost of solar panels plus battery – £10960” include fitting?

    • August 4, 2017 9:21 am

      E.ON do install, so I presume it is included, though they don’t specify

      • David Young permalink
        August 5, 2017 7:51 am

        The website and downloadable information leaflet offers very little (if any) solid information, so l’m of the opinion that such details (components/installation/maintenance costs) would be covered in the more rigorous on-site survey.

        There’s no “hard sell” though. An E.ON representative called the following day and was quite happy to delete my details after I told him the payback period was too long – about 16/17 years in my case.

  16. billbedford permalink
    August 3, 2017 10:58 pm

    And don’t forget that at the latitude of Northern Europe solar panels consume more energy in their manufacture and fitting than they produce in 25 years of operation.

  17. August 4, 2017 3:42 pm

    Instead of blowing 10K on solar roof panels, simply invest the 10K in FTSE100 and make £800 per annum +/-, without damaging your roof.

    • Jack Broughton permalink
      August 4, 2017 6:48 pm

      How do I make 8% interest please?

  18. August 6, 2017 4:13 pm

    Reblogged this on ajmarciniak.

  19. jimash1 permalink
    August 8, 2017 3:25 pm

    We’ve had two serious offers of solar panels, with “subsidies”
    One offered 60% of capacity , day time only.
    No one will sell you a battery system here unless you are paying full price.
    The other one, isn;t even connected to the house. It connects to the grid, and you get a discount on your bill for the energy it adds to the system. Still no batteries, and no way to power even in the daytime in a power outage, such as we had here for two weeks in 2012.
    Pursuing this awful deal, they wanted us to cut down tres so there wok be more sun n the roof. I told them that wasn;t vey green and I wouldn;t do it.
    Final offer was 4 panels granting a savings of $2.00 per month on my bill.

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