Are Solar Panels worth it?

Are Solar Panels worth it?

Are solar panels worth it?

• The cost of installing solar panel systems has never been lower and the technology has never been better
• Installing solar panels will reduce your electricity bills significantly and you will earn money through the feed in tariff
• The average price for installing a typical domestic solar panel system in Oxford is around £5,750 inc 5% VAT – fully installed.
• Depending on different factors domestic installations could cost anywhere between £3000 and £8000 inc 5% VAT
• If electricity prices rise in future then the benefit from solar panels will improve

Some real life examples

• Perfect example: South facing, no shading, large concrete roof, cheap scaffold
• Medium example: South-East facing, a little shading, limited concrete roof, normal scaffold
• Poor example: South-East facing, more shading, small slate roof, normal scaffold

Hello! My name is Owen Morgan. I am a solar panel installer based in Oxford.

I assume you are reading this article because you are trying to work out whether solar panels are a good investment for you or not. If so, great - read on…

I am sure it is obvious but I am going to come clean anyway! I’m a big, big fan of solar panels – I run a company that installs them.

However I am also passionate about trying to educate people about solar in a non-biased, informative and hopefully interesting way! I hope you find this article useful when deciding whether solar panels are a good investment for you. If you have any questions about anything I mention (or fail to mention) please feel free to contact me on o.morgan@exeoenergy.co.uk.

Article Contents

• Introduction
• Reasons why people do want to install solar panels
• Reasons why people do not want to install solar panels
• Financial considerations
• 3 detailed examples
• List of factors that affect the financial aspect
• More personal aspects to think about
• Key Points

Introduction

This article has been written with the sole intention of helping homeowners and businesses understand the reasons why solar may or may not be a good investment for them. I will draw from my experience of being involved in the solar industry for over 15 years and try and bring in some real life examples to help demonstrate the points.

Based on my experience there are two types of reasoning people use when they are thinking about investing in solar panels:

• Objective reasoning – where people want to look at the hard facts and figures. Datasheets are devoured, projections are made and the Return On Investment is key!
• Subjective reasoning – where people are concerned reducing carbon emissions, climate change, worried about rising energy prices and occasionally, from a negative perspective hating the sight of panels!

In reality of course people make decisions based on a mixture of both of these.

Reasons people do want to install solar panels

In chatting to customers over the past few years these are some of the reasons people have given me for installing solar panels:

• To reduce their electricity consumption and therefore the ongoing costs of running their property
• To get an additional income from the feed-in tariffs
• To protect themselves from future increases in electricity prices from their suppliers
• Because they would like to reduce their carbon footprint and their personal impact on climate change
• Because they are worried about resource scarcity issues with fossil fuels
• Because they want to be energy independent
• Because they are interested in new technologies
• To meet local environmental or building regulations
• For CSR (Corporate Social Responsibility) reasons
• Because the live off-grid and need power
• They are building a new property and want to future proof it as much as possible
• They see it as an investment in the future
• They see it as ‘the right thing to do’
• Their neighbours are doing it and they want to keep up!

Normally people will be motivated by at least one of the reasons above, maybe even 3, 4 or more.

Reasons people do NOT want to install solar panels

Over the years people have also given me lots of reasons why not to install solar panels! I have listed some below:

• They might move house in a few years and so are concerned they won’t see their return on investment
• They are thinking about a loft conversion in a few years and are worried installing solar panels will complicate things
• They don’t have enough spare money to invest
• They have other priorities to think about or spend their money on
• They don’t like the look solar panels
• Their roof is not suitable, too small, facing north or is shaded
• They are worried it will have a detrimental impact on the value of their house if they go to sell the house
• They had an idea of what they wanted the ROI to be and the proposed quotes do not meet that criteria
• They don’t want the disruption of the installation
• Costs were higher than they were expecting

So there we have it - a couple of lists of both objective and subjective reasons why people think solar panels are worth it or not. Hopefully going through those will have helped you to explore whether solar panels are a good investment for you.

Now let’s dive in a bit deeper and look in detail at the financial considerations.

Financial Considerations

Over the past 10 years or so two ‘objective’ measures have grown to be the most important (or at least most talked about) measures:

They are basically two sides of the same coin.

Return on investment says: How much does the system return to me each year as a proportion of the initial investment?

Return on investment = Total annual benefit / Total initial cost

And Payback Period says: How much did I spend and how long will it take me to pay it off from the income.

Payback period = Total initial cost / Total annual benefit

Basically each figure is the inverse of the other.

You can see from the equations above that the two key figures needed to work this out are:

• Total cost of the solar pv installation
• Total financial benefit per year

The first one is easy – you get a quote from your installer, you choose the option you want and it tells you what the cost is going to be.

The total financial benefit per year is a more tricky calculation as it requires us to make some assumptions. Because of this it can be open to a bit of ‘massaging’ by sales people keen to make a sale! Installers should always provide you with the figures of how they have worked out the ROI or payback – but there is no harm in double checking the figures independently.