Last month we Installed a 4kW Solar Array at the Automated Home. The first thing everyone asks is how much it cost and what the payback time is. While the finances may not be your only motivation for installing solar they are important and there are several figures that feed into the equation. While some are guesstimates others are more certain. Here are the three main elements of the calculation.
1. ROC & Roll
England, Scotland and Wales have all had incentives schemes to encourage renewable energy investment (the Republic of Ireland is due to roll out their’s next year). Our similar system uses Northern Ireland Renewable Obligation Certificates or ROC’s for short and is similar to the Feed in Tariff (FIT).
The ROC value is currently £0.04. Initially incentive payments were set at a multiplier of 4 ROCs for each unit generated. That multiplier fell to 3 on 1st October 2015 which is the level we’ve got in at, so we get paid 3 x £0.04 = £0.12 for every kWh we generate (and we still get paid for it even when we use the energy ourselves). Our 3 ROC multiplier is guaranteed for the next 20 years while the value of the ROC is set each year by the utility regulator. The money is received in an annual tax-free payout.
Shortly after we installed our system the multiplier fell to a 2 (from 1st October 2016). Even with the falling incentives the cost of Solar is continuing to fall too so it should still be worth investing in solar over the coming years.
2. Export, Don’t Export
Any solar energy that you create and don’t use yourself is exported to the grid. However as we only get a measly £0.03 per kWh, exporting is pretty much the last thing you want to do.
The utility companies have a huge backlog fitting export metres so it looks like they’re just going to assume a percentage of total generation is exported (50%?) and pay that out to everyone instead. The unit price is so low though that this still doesn’t contribute much as you’ll see from the sums below.
3. Use & Save
Every unit of electricity you generate and use is one more you don’t have to buy from the grid (currently £0.1343 for us). This is probably the area that’s the most crucial to payback time, but also the most difficult to predict accurately.
Your lifestyle may favour this. If someone is at home during the entire day, perhaps a parent with young children, using a washing machine and cooking, watching TV etc then this could be ideal. Alternatively if you live alone and have a long commute that has you leaving home early and arriving back late then you’re unlikely to be able to use the power you’re making.
Currently our base line energy usage hovers between 500w and 800w meaning we get the chance to use a lot of energy even when we’re out. But that high base line is not something to be proud of and it’s one of the things we’re tackling in a later part of this review series.
I’ve reduced the self-consumption figure from our installation companies illustration from 80% to 70% in the calculations below. Even this may be optimistic with out a battery though.
The Battery Conundrum
Domestic batteries like the Tesla Powerwall or the Maslow are new and exciting, but they are expensive and pay back times are very long or even well outside the warranty life of the device. Like the rest of the solar technology though, battery prices are falling rapidly. Electric cars on UK roads have risen from 2,000 to 80,000 in the last 5 years and Nissan are working on using their Leaf EV’s batteries for home energy storage too.
But while we wait for all this stuff to make more economic sense smart home tech like the SMA Home Manager can be employed to maximise self consumption by starting your most power hungry appliances (like your dishwasher and washing machine) while you’re out. Alternatively one of the easiest options is to divert your un-used energy to the heating of hot water. We’ve fitted the Solar iBoost+ to handle this and we’ll be covering it in detail in a future part of this review series. If you normally heat your domestic hot water (DHW) using your oil fired central heating boiler then there may be a small additional saving to incorporate here.
Other Stuff to Consider
As more of us generate our own electricity the utility companies are bound to start feeling more and more pain. So in future who knows what form electricity bills will take. Power companies will need to raise cash to maintain and upgrade their networks so perhaps there will be higher fixed monthly charges just to connect to the grid, independent of the energy you actually buy from it. But they will have to be careful as this could skew the economics and tip people into going completely off-grid once storage is affordable.
While you don’t need sunshine to generate solar energy it sure does help. This graph shows a near-cloudless day in September when the system made over 18 units.
We’ve also have some really awful days. This one was just 4 days later and we made a little over 3 units.
There should be little or no maintenance with the SolarWorld panels which have a 30 year linear performance warranty.
The Bottom Line
Our system cost £5,000 including VAT and has a predicted annual generation figure of 3,400 kWh, so here are the three inputs into the calculation.
1. EXPORT: 3,400 kWh x 50% x £0.03 = £51
2. ROC: 3,400 kWh x £0.12 = £408
3. SAVINGS: 3,400 kWh x 70% x £0.1343 = £319
Payback ~ 6.4 years
If self consumption only reaches say 50% then that would add almost another year onto the payback time. Everything I’ve read says the inverter will need replaced during the lifetime of the panels. Our SMA Sunny Boy unit has a 10 year warranty so lets assume it will need replaced at some point and takes one years income. Years 8 to 20 should be all gravy after that, making us around £10,000. A third decade should be attainable but by then of course the tech will have moved on immeasurably.
The sums above also ignoring the inevitable rising cost of electricity. Operators of the controversial Hinkley Point C nuclear plant thats just been given the green light have been guaranteed double the current market price for example.
Look out for the next part of our review coming next month. In the meantime we’ll leave you with a couple of interesting documentaries on Solar and Battery tech that are worth a watch…