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Payback Time for PV systems

I have a quote for a system:

To install 12 180wp modules.
Total System Size = 2.16kWp
This will qualify for the 0kW – 4kW Clean Energy Cashback Rate of 41.3p per kWh
This gives a projected annual yield of around 1845kWh
Predicted carbon savings 1 tonne annually, or 25 tonnes over the 25 year design life (0.54kg Co2/kWh)

Cost:
Net Total £9,714 (plus scaffold access, if required)
VAT (@ 5%) £486.00
TOTAL £10,200

Estimated Annual Benefit: £933.60
Estimated Return on Investment: 9.15%
Estimated payback period: 10.92 years
Nett Price per kWp installed: £4,722

Our assessment of the rates for the proposed installation is:
G Tariff = 1845kWh x £0.413 per kWh = £762.00 p.a.
Given the average level of electricity use during daylight hours, and the size of the proposed system, we have made the assumption that 70% of the generated electricity will be used on site:
A Tariff = 1845kWh x 0.7 x £0.12 per kWh (Based on an average cost of 12p/unit) = £155 p.a.
E Tariff = 1845kWh x 0.3 x £0.03 per kWh (Export tariff of 3p per unit) = £16.60 p.a.

T Rate or total estimated benefit from system = £933.60 p.a.
Estimated Return on Investment = 9.15%
Anticipated Capital Cost Payback period = 10.92 years

Does that make sense?

Comments

Hi

"Does that make sense?" No....but it does seem to fall in line with this sites' calcs. http://www.energysavingtrust.org.uk/Generate-your-own-energy/Sell-your-own-energy/Feed-in-Tariff-Clean-Energy-Cashback-scheme

Please let us all know the rationale behind this bizarre subsidy, and where the 1845kwh comes from?

G&E tariff is an earning, A tariff is a saving, so I would separate these, as you cant pay for the £10.2 loan with a saving.

I guess this means in the future we'll all be paying 41.3p+/kwh for our leccy...

Well, I sort of understand this stuff, and i know someone who works in the field.

To properly analyse the benefit to you, we really need to know how much electricity your household uses in a year, so go check your bills for the last year or two and let us know. Also whether you have different rates for day and night use, in which case the hours and unit charges would be useful. It is also useful to know your main source of heating during the winter (with units used and costs), and whether you have air conditioning too, and how often that is used.

However, I would say that the scheme can only make sense if the taxpayer subsidises your electricity generation at 41.3p/kWh for the amount you inject back into the electricity main (estimated at 70% of 1,845kWh/year). Clearly, therefore, you should inject 100% of the generated electricity back into the mains (getting 41.3p per unit) and then buy it back at about 12.6p/unit (including VAT). However, you are probably constrained by contract not to do that. So you will get some modest amount of electricity from the PV facility during sunny days, and so you will have to buy all your night-time electricity and that for non-sunny day-time in the old fashioned way.

Thus, effectively, the taxpayer pays most of the costs of the guy who gave you the estimate, and you pay the rest: and it's not worth it (to the taxpayer) unless 'he' counts something other than money.

In addition, for even more money, you could build a water pumping system to store the extra day-time electricity for use at night-time. It helps if you own the odd hill or valley. If you are even richer, you can build an even bigger pump store, to store summer electricity for use in winter. However, as even the national electricity companies find this not economic, I doubt your potential for a much smaller scale operation would be economic either. That's just like the PV one, only different.

Have you considered ground-source heating and even electricity generation? I have a suspicion that does better on the economics, assuming you have enough land not to damage the house's foundations. It certainly looks better, after the holes (typically 75m deep) are filled in and the lawn is put back.

Oh, and do ask your prospective supplier if he has done a proper Internal Rate of Return (IRR) calculation.

Best regards


TE- They actually pay you the 41p for every bit of electric you make. If you then use it you are substituting against the 12p electric you would have bought, if you don't use it you then get paid the 3p for each unit pumped back into the main (on top of the 41p you got for generating it.)
You therefore want to use up every bit you can yourself.

It makes sense to the owner of the property, clearly, because he's getting a huge subsidy from the plebs who can't afford these kind of capital projects.

From the point of view of the plebs, of course, the prospect is somewhat less attractive.

Like, it stinks.

It's like the windmill business - loadsamoney for rich landowners and big engineering companies, a good screwing-over for the poor bloody infantry (the taxpayers). And all for nothing.

Plus a good chance of wrecking the economy by causing widespread and unpredictable power cuts, of course.

I'm going with air source.

I know the Feed-in Tariffs can seem confusing so we have written a simple guide you can download - http://www.ownergy.co.uk/library/info/Ownergys_Simple_Guide_to_the_Renewable_Energy_Tariffs.pdf

However, to explain ultra briefly:
1. Get paid for the electricity you generate and use yourself
2. Get paid an extra amount for any surplus you sell back to the grid
3. Save money by buying in less electricity

Hence the reason you are getting a 9% annual rate of return which, btw, is Income Tax exempt.

Regards who pays for the Feed-In Tariffs, it is a levy within all our electricity bills which started on April 1st. It is part of the country's strategy to hit 15% of energy generated from renewables by 2020 - at the moment we only generate 3% and only Malta generates less by percentage.

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