How much does solar PV cost?
The good news is that the cost of solar panels has dropped by aaround 50% over the last 18 months. Typical systems, fully installed now cost between £4,000 and £8,000 for a residential size installation of up to 4kW generating capacity. This cost includes design, equipment and installation. At 350 Energy we undertake a structural assessment of the roof prior to agreeing to do an installation and occasionally there may be some minor strengthening work required. Unlike many of our competitors, we often choose to strengthen the roof rafters prior to an installation and we generally manage to cover this cost within our fixed price work.For commercial and community projects it depends how big the system is and the type of roof being used. We would be happy to discuss project costs on a site by site basis so please call us.
What income or savings will I make?
The value you obtain from solar PV comes in three elements: Firstly a subsidy, known as Feed-in-tariff or FIT is paid for each kWh of electricity generated by your system. For domestic size properties the FIT is currently set at 13.39p/kWh for systems installed before July 2015. So a 4kW system could earn around £450 per year from FiTs.The second element of value comes from any electricity you avoid buying as a result of being able to use your own electricity. If you currently pay around 14p/kWh for electricity you buy, then you could save around £240 per year on your electricity bill.The third element of value comes from being able to sell any electricity you generate but don’t use yourself. The electricity companies currently pay 4.85p/kWh for any electricity you supply them, so this element can add around £82 to your annual income from solar PV.
What about income tax on PV?
Income from domestic solar PV systems is not taxed. So if you are a tax payer you should remember that the tax free aspect of income from solar PV can make the investment even more attractive. For commercial and community schemes the tax payable will depend on the business owning the scheme.
What about VAT on PV?
VAT is currently chargeable on fully installed PV systems at the lower rate 5%
What about inflation?
The Feed-in tariff is adjusted each year for inflation. With inflation currently at around 3% per year, this means your income from a solar PV investment will rise at 3% per year, providing 20 years of inflation protection. Inflation rises mean that those people that purchase systems at the 13.39p/kWh FiT rate should have this increased to around 17.9p over the next 5 years.
So overall, what level of return can I expect from fitting solar PV?
This depends to some extent on how “good” your roof is and how big your system is. For a 4kW system installed on a reasonably good south facing roof, you could expect a tax free rate of return (IRR) of around 12%.
Is it worth fitting PV on an east or west facing roof?
Again, it depends to some extent on how “good” your roof is and how big your system is. However, whereas a south facing roof with a 4kW system may generate 3,400kWh of electricity per year, an east or west facing roof would generate about 80 to 85% of this figure or 2,900kWh, so in many cases it would still be worth while.
Is my house suitable for solar PV?
What make of solar PV panels are best?
The honest answer is “we don’t know until we’ve had a look”. However, the best roofs have the following features:
- They face between West through South to East. Southerly facing roofs generate around 15 to 20% more electricity than those facing due east or due west.
- They are not affected by shadows. Nearby shadows from adjacent buildings, trees or windows are a particular problem for solar PV
- They have straight roofs with no sagging or existing signs of distress (we’ll look for this if we visit!)
We can work with most types of roof materials including traditional slate and stone roofs. With traditional slate roofs we work slowly and carefully to ensure a long lasting and durable installation is achieved.
How reliable is solar PV?
Almost all solar PV panels being installed in the UK residential market at present are manufactured from crystalline silicon. Mono crystalline panels tend to be slightly more efficient than those of multi crystalline silicon, but the differences are very small. The solar panel market was led for many years by the German and Japanese manufacturers but the market has been transformed over the last 12 months by the influx of high quality, low cost panels from China and East Asia. At present the top 5 PV panel manufacturers by size are all Chinese. At 350 Energy we don’t believe one manufacturer has a particular edge in the market, but we do believe in buying only from the top end of the market. Within this top end we constantly shop around for the best deals and best physical size to fit any particular project. Our recent projects have used panels from Panasonic / Sanyo (Japan), Samsung, LG and Hyundai (Korea) and Suntech (China). We think there is some advantage to using well known brand names from diversified manufacturers and we would never consider unbranded or second tier panels. Panasonic panels are expensive but they are slightly more efficient than most other manufacturers so we use their panels when the roof space is small and the customer prioritises maximum energy generation over financial return on investment.
We believe the most important part of an installation is the inverter. This is the equipment that converts the DC electricity coming out of the panels at around 400 volts to AC electricity at the grid frequency of 50hz and 230 volts. Inverters are quite complex and they have significant impact on the efficiency of any given system. At 350 Energy we therefore believe in supplying only top quality inverters from the leading manufacturers such as SMA from Germany.
We think it is extremely reliable. There are no moving parts in the panels so they have been proven to last for decades. We expect your panels to still be working reliably even when the Feed in Tariff expires in 20 years.
What maintenance is required for solar PV?
Silicon panels do however slowly become less efficient year on year. For our own project investments we assume that each year the panel efficiency will be 0.7% less than it was the previous year. When we give you an estimate of return we make the same assumption. Panel manufacturers now provide 25 year warranties that their panels will provide at least 80% of their rated performance at the end of year 25.
As well as the panels themselves the inverter is an extremely important part of the installation. Inverters are quite complex pieces of electronics and we advise our customers to have expectations similar to when they purchase a television! It would be prudent therefore to assume you will have to replace the inverter at some point over the next 20 years and for our own projects we budget to spend £1,000 in year 15 on a new inverter. If you’d prefer you can purchase a lifetime warranty for the inverter at the time of installation.
What other costs might I incur?
Very little. On a day to day basis they require no maintenance at all. Once a quarter you will need to read the meter and send the electricity company a big bill, but many of our customers enjoy this!
You may like to consider paying someone to clean the panels every year or so as any build-up of dirt or algae will cause the system performance to drop off. You may also like to get the system electrics checked periodically in line with other electrical elements in your house.
For commercial or community based systems you’ll need to think about the insurance cost. For domestic systems you should inform your house insurer about the installation and they will often provide cover within their existing buildings cover.
Please give us a call if you have any other questions and we’ll happily talk about PV to you!