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for great value kids toysHow We Achieved – 9% Return On Investment Using Solar Panels
We live in the UK in a smallish terrace house that gets a lot of rain and is often cloudy. Yet we went ahead with fitting two photovoltaic panels on our small roof. Now 2 years since we put these solar panels in place, they are providing just under 90% of our households power.
I’ll be honest, the initial cost is not cheap but we are now in a situation that savings make less than 0.1% interest and new UK government incentives sharply reduce the cost of solar power installation.
The system we installed was a 3kw peak system that produced just under 2,800KW hours in our first year and that was a real lousy summer.
Our household includes 4 people and our total power usage was around 3,00kwh so we had provided around 91% of our power needs through using the 4m by 3m solar panels on our roof.
Lets see how the numbers stack up:
- 3,000kwh of electricity costs around £420 ($640) based on 14 pence/kwh (.21 cents)
- The solar panels provided £400 of electricity
- Under the British governments renewable obligation certification we got around £70 per megawatt/hour which meant we received a cheque for £210.
Total savings = £590 per year
How we achieved a 9% return on investment:
The cost of our solar power system was £17,000 but the government paid for 50% which meant it only cost us £8,500 ($13,000). A return of £590 ($903) for that amount of investment equals around 9% return if you take into account that it’s untaxed.
In this economic climate you would be hard pressed to get such a return on investment.
The future
With the cost of photovoltaic panels reducing every year, choosing to purchase solar panels is becoming even more of a sound investment choice.
oh and we managed to cut our carbon emissions by half!
8 Responses to “How We Achieved – 9% Return On Investment Using Solar Panels”
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I would do this in a heartbeat if it wasn’t so damn expensive to set up. I admit $13k is cheap compared to just a few years ago though. Just don’t have that kind of cash available.
This analysis is misleading at best. ROI implicitly assumes that you get your principal back; in your case your principal is gone. Suppose that your panels last 20 years, and we neglect inflation. If you earn 600 pounds per year, you will end up with 12000 pounds, paid out over 20 years. If instead you put your 8500 pounds in an account earning even 2% per year you would have 12600 pounds at the end. You’re not earning compound interest with your panels, but you would with most other investments.
So, at best, you’re earning 2% ROI, which might be good right now but is terrible over the long term. Further, if your panels break sooner, or you have to sell your house, or your yield goes down, or the renewable obligation certification decreases, it gets even worse.
We expect our panels at least 25 years and they are guaranteed by the manufacturer for that amount of time.
We also find that solar panels often add value to the resale value of the house.
But good point about the compound interest, I totally missed that.
Thanks for commenting.
It is likely that the price of power is going to go up in the future and that future laws will favor green solutions, so while right now the panels are doing little better than paying for themselves, it is almost a sure thing that the investment will increase in relative value.
We put in 1.5kw of panels as part of our retirement investment portfolio. 2 people in a smallish house in Australia (lots of sun) and we are in credit all year. From day one they were producing 5% return on investment which has gone up each year and compared to the share market it has to be a better proposition. I get annoyed with people that calculate the viability of solar panels and years to pay back the initial outlay, being retired and knowing we will never have a power bill is a very good feeling and a wise investment.
Since Obama is now the President, I expect our energy cost will triple before 2012. Here in Austin it would make some sense to put in solar panels. And with the right incentives, your ROI should go up. But Obama’s selection to the Dept. of Energy wants us to paint our roofs white. And this guy has a PhD.
Toronto Canada, here, The price of electricity will have to go up a lot and the cost of heating gas will at least have to double before any Solar notions are practical for me. I search for advances in super-insulation, my only other hope in such a brutal climate, cold, snowy winters and hot, sometimes very hot summers. Underground dwelling seems to answer most problems, with massive solar installation for heat and light, above, but huge investments are required, with dubious returns! No matter how efficient, and beautiful you make it, no matter how close it comes to the altruistic ideal energy balanced home, one is still stuck with the stigma at re-sale time of a relatively untried, untested, unperfected notion, and retail price falls like a stone, stealing any grand energy savings with it! Friends swear by underground housing, proclaiming heating possible by incandescent light bulbs alone, and summer-time air not needed. Alas, we build McMansions above ground in Canada, heat with expensive fossil fuels and, like our American counter-parts “Hope for better times” Perhaps as the Great Repuglican Depression deepens, and an excruciating poverty replaces bail-outs and buy-outs, perhaps as Obama is put on notice by China and refused huge depression busting loans, perhaps, as even the “entitled ones” the Americans are forced face first into the bill paying realities demanded by the banksters, perhaps, we will all be reduced by the economics of the new paradigm, to build “Earthship” shelters of reasonable proportions and with realistic energy consumption in mind – underground, well drained, well insulated, and solar powered, with grid assist for the bad days only! Get out your microwave cookery technology folks, things might get so bad, hunaure will have to be saved up and stewed into bio-gas, like in Sweden and Norway, and we may even have to do our own composting, veggie gardening, aquaculture and green housing! Good time Charlie tripped and fell! The “American Dream” went to hell! “Cheap oil Era” not a catch phrase, a harbinger of out end-times and an evolution away from large manufactury cities and towards a train connected village life, yet to be clearly envisioned because the visionaries are suppressed by the civil codes, and construction lobbies of the Americas. The lobbies hold the keys. Obama swore to release their grip, will he win or lose? Can we survive, or not? Do we die by the rules, or in a fit of Anarchy break them just to breathe another day!