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100 years to recoup cost of solar panel installation
Wednesday, 3 September 2008
Solar panels are one of the least cost-effective ways of combating climate change and will take 100 years to pay back their installation costs, the Royal Institution of Chartered Surveyors has warned.
In a new guide on energy efficiency, Rics said that roof panels for heating water and generating power are unlikely to save enough from bills to make them financially viable in a householder's lifetime. In the case of solar panels to heat water for baths and showers, the institution estimates the payback time from money saved from electricity and gas bills will take more than 100 years – and up to 166 years in the worst case.
Photovoltaic (PV) panels for power – and domestic, mast-mounted wind turbines – will take between 50 and 100 years to pay back.
Given that the devices have a maximum lifetime of 30 years, they are never likely to recoup the £3,000 to £20,000 cost of their installation, according to Rics' building cost information service. Instead, it suggested people wanting to cut fuel bills should insulate lofts and cavity walls, install efficient light bulbs and seal windows.
Joe Martin, author of Rics' Greener Homes Prices Guide, said there was an argument for installing solar panels but it was not an economic one. "We wanted to bring some reality to this because there are a lot of missionaries out there. The whole push for household renewable power is that you can do these things and make back money but that's not true on existing property," he said.
The solar power industry accused Rics of failing to take account of the rising cost of energy and other financial benefits of renewable power in its figures. Jeremy Leggett, of Solar Century, said: "They are grossly irresponsible."
Rics assessed the cost, annual savings, disruption and payback time of various energy-saving methods and gave each an overall rating of one to five stars.
Solar panels for heating and power and wind turbines generating between 3kW and 5kW merited two stars. Smaller 1.5kW turbines of the type installed on roofs paid back in 25 years, received a three-star rating.
By contrast, cavity wall insulation had a five-star rating: spending £440 would save £145 a year in fuel bills, paying back in three years, while an investment of £325 in extra loft insulation would save £60 annually, paying back in five years.
The figures were compiled before energy companies put up bills by up to 30 per cent last month and ignore state subsidies.
Last year, the Department for Trade and Industry slashed grants for the installation of household renewable power by 83 per cent, infuriating the fledgling micro-generation industry which complained the move rendered solar panels unaffordable to all but the wealthy.
Jeremy Leggett, executive chairman of Solar Century, complained that Rics' figures failed to assume any rise in energy prices, when a conservative estimate of 10 per cent a year would transform the calculations.
In addition, Rics had failed to take account of a number of other benefits – renewable obligations certificates worth £160 a year to householders from next year; reductions in energy consumption of up to 40 per cent for schemes with a meter; the rising payments from energy companies for spare electricity put back into the national grid; and the increased value of an energy-efficient home.
He estimated the current payback of power-generating PV panels was 13 years.
Rics countered by saying it had not taken account of maintenance costs and that it deliberately chose not to include "ifs" in its figures. "I doubt however you do the sums, they [solar panels] make sense," a spokesman said.
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What if you don't have to pay for them? What if, instead, you 'rent' them? Is it really that far-fetched when it's already been done by the cell phone, satellite dish and home security industries?
Posted by Curt | 14.04.09, 00:54 GMT
sihutchuck. What I'm saying, if I didn't make it clear, is that you cannot expect consumers to assign a green or sustaining tag to their energy consumption - that has to be done by governments. It would be like asking people how much tax they would like to pay, and when to pay it. As individuals we naturally look to economise, and we should apply mathematics, not national or global concerns - that's for governments. That's not a cop out, it's just the way it is.
Posted by Barry Foster | 16.10.08, 21:02 GMT
sihutchuck. Yes, no one would disagree that we should be independent on our energy supply, and we don't want a polluted atmosphere either. However, this report wasn't about that - that's a different argument with all due respect. This was about whether or not solar panels are cost effective to the consumer - and clearly they are not. One can bring up any argument in favour of energy self-sufficiency, but RICS were focusing here on the amount of money needed on purchase and maintenance and if that is economic. The article above says that "Solar panels are one of the least cost-effective ways of combating climate change", although I don't see this mentioned throughout the rest of the article. How do we want to pay for our energy? As a nation? Then we need a source of supply like nuclear or wind'n'wave, and to re-nationalise the industry. As a consumer? Then as cheap as possible (obviously) so that rules out solar panels and heat pumps.
Posted by Barry Foster | 16.10.08, 14:40 GMT
For Pete sake!
The cost saving is not just the up front financial cost of purchasing the energy.
The whole point is that we need to reduce our carbon emissions as well as stop frittering our national wealth on paying Russia to pump gas across Europe.
Furthermore, in Germany the energy supplier has to take back electricity generated by households. This means a significant reduction in airborne pollution from power plants because the micro generation is managed, effectively, on a macro scale.
Do we want to live as filthy polluters wallowing in our toxic waste or do we want to build energy efficiency and generation in at home.
It's obvious what the answer is and the RICS is as stupid as any "Royal Institute" of closed, monopoloistic, overpaid so called profesional body.
Just ignore them.
Posted by sihutchuk | 13.10.08, 23:51 GMT
Sterling. 20 years? Yes, but that's the realistic lifetime of solar panels! The truth is that you NEVER get your money back. Here's why (and I was actually being kind to Andrew Cooper)...
Let's assume you pay the typical current rate for gas - which is 3.5p per kWh.
A solar panel will save you 55% of your hot water bill.
The average home uses 3,000 kWh per year for hot water.
That means solar would save you £57.75 per year.
Over 20 years you'll save £3,296 (after 10% energy inflation).
But you would have paid out OVER that in purchase, installation and maintenance costs.
And after 20 years it will need to be replaced!
Result: You never actually get your money back at all!
Posted by Barry Foster | 04.10.08, 20:12 GMT
100 years or more to recoup costs!? The estimates I see are around 20. Where are you getting your information?
Posted by Sterling Thomas | 02.10.08, 17:19 GMT
Andrew Cooper. Your figures (saying that you save £700) only make sense if you are using an enormous amount of energy to heat your hot water. In fact, it appears you are using some 18,000 kWh per year (which is almost the normal domestic requirement for hot water AND HEATING!).
If you're saving £700 (and we can assume 60% of your hot water requirements) then that means the remaining 40% costs you approx £470 - £1,170 per year in total for hot water. At a cost of 6.5p per kWh for gas, that's 18,000 kWh per year. You either live in a very large house with a big family (seeing as the average domestic requirement is 3,000 kWh) or you are needlessly heating your hot water cylinder/s! Or you have got your figures wrong.
Posted by Barry Foster | 21.09.08, 19:47 GMT
Energy-saving schemes are 'investments'. As is putting the money in a building society. Compare the two:
Imagine Clive Sinclair comes up with a gadget that saves ALL of your hot water gas bills over 20 years. You never pay ANY gas hot water costs again - you get free gas because this device is saving 100% of the energy costs. Mr Sinclair charges you £3,500 for it.
Typical demand for hot water for a family of four is 3,000 kWh per annum. At a cost of 6.5p per kWh that's £195
After 20 years then you would have paid £11,164 in gas (accounting for 10% per annum energy inflation) but you pay nothing at all apart from the £3,500 to buy it.
If you invested that £3,500 it would be worth £8,844 after 20 years. Your gas bill of £11,164 minus £8,844 means you are down £2,320 - but you would be down £3,500 if you had bought the device that saved ALL of your gas hot water bills over 20 years. NO energy-saving scheme saves ANY money at all against a building society - FACT.
Posted by Barry Foster | 19.09.08, 20:19 GMT
Freddie, when there are people like you around you deserve to be fed useless information! The £1300 figure is a you got from Scottish Power is an average annual consumption and is not your power consumption without the solar water panel. Your average figure may be less than the national average. You have got to compare apples with apples and not another figure which you pull out of a hat. You also have to give a current price for the installation if you want to compare pay back not one from five years ago. Thanks for the maths lesson anyhow!!
Posted by Nigel | 08.09.08, 12:15 GMT
Now Nigel, you need to read, wind your neck in and then try to comprehend what I have actually stated. I have contacted Scottish Power, my supplier and they have confirmed that my annual dual fuel usage equates to less than half the average bill of £1300 per annum. My Monthly D/D is budgeted at £47.50. I know its hard for you to believe, but figure it is a fact. Last year it was £45.00 monthly.
Now Nigel, if you mulitply £47.50 by 12 you get my annual figure, are you still following? That comes to £570. Next you take the annual average bill of £1300 minus what I use £570, that = £730.
My system, after the grant, cost was £2850. Now Nigel this is very simple. To get the average payback time, you then divide £2850 by annual average saving of £730.
Surprise surprise, as I have stated earlier that comes to 4.9 years to pay back the cost of the system.
Posted by Freddie | 05.09.08, 19:56 GMT
Freddie, I think you need to get your maths checked .If you are saving £730 a year that means that your Solar collector is producing 5200 KWh per annum. A typical UK house uses 3000 KWh for domestic hot water (DHW) use. A typical collector produces 600 KWh/m2 and typically produces 60% of DHW needs, so you would therefore need a 8.6 m2 collector!
A 2.7m2 evacuated tube collector costs £3135 installed and there is £500 grant available from clear skies and this only produces 1455 KWh - reference Action Renewables fact sheet.
So when working out payback, you need to use current costs and base that against utility costs for the next five years. It is more like a 10-11 year payback period. Ground source heat pumps is 5-7 years. PV is 50 plus years! Get you facts right. It is you that is quoting inaccurate information!
Posted by Nigel | 05.09.08, 14:00 GMT
Action Renewables is an independent, government-backed organisation in Northern Ireland. It monitors ACTUAL installations of renewable energy technologies in Northern Ireland. The data produced has been published in case studies on the Action Renewables website: www.actionrenewables.org
This data refutes the 100 - 166 years payback claim by Rics and is based on real-time performance of installations. It is unbiased and based on sound science, and is therefore the definitive source for learning about how renewable energy technologies perform in Northern Ireland.
Solar water heating systems' paybacks are dependent on the type of system installed, fuels offset, the up-to-date price of these fuels and usage patterns. Rather than 100 years, monitoring of solar water heating systems in Northern Ireland is currently demonstrating paybacks closer to 10 years and even less as fuel prices continue to rise.
Posted by Jonathan Buick | 05.09.08, 12:40 GMT
I think that the folks at the Royal Institute have made some some grossly misleading inaccurate generalisations, comparing solar water heating tubes/panel with photo voltaic panels costs and payback time.
I had solar tubes fitted 2 years ago to my 2 bed semi for under £2850 and the figures don't lie. My Gas and electric dual fuel bill has effectively halved. Even with the poor Scottish summer & current prices increases my dual D/D is £47.50 per month. Do the math, this is less than half the average bill of £1300.
basic arithmetic- Cost £2850 / £730 saving per year = 3.9 years to pay for itself. I need say no more. I would recommend this as a sound investment to anyone
Posted by Freddie | 05.09.08, 00:55 GMT
I would say articles like this do not 'slow renewable uptake progress', but make the public aware of false claims by companies selling renewable energy products. There are a lot of 'ifs' and of course you need to address the therotical vs actual average annual solar radiation, wind speed etc as well as which grant aid is available and electricity buy back options etc. Each installation must be addressed individually and independant of those who are trying to sell the technology. I have compiled an MSc thesis on the costs and benefits of renewables for domestic and commercial installations, and the technology with the highest efficiency and shortest payback period is Ground source heat pumps by a large margin. When calculating the payback period one must also consider the clauses that the grants entail, as many stipulate installation must be carried from a list of suppliers who have already inflated their costs, thus reducing the benefits of the grant and increasing the payback period.
Posted by Nigel | 04.09.08, 07:25 GMT
This is dissappointing and mis-leading information. As Mr Leggett rightly points out there are subsidies through the Low Carbon Buildings Programme (low though they are), exported units receive 4.5p per unit from NIE and ROCS are paid on generated units to the tune of 3.2p per unit currently (£32 for every 1000) units. These are not "ifs" they are reality. Nor is the constantly rising price of oil, gas and electricity, if these facts where "ifs" people would not be investing wholesale in improving energy efficiency of their homes, trying to generate their own electricty and find alternative fuel sources. There is no silver bullet. Each location should be assessed on its merits and suitable technologies installed. Definitely energy efficiency should be everyones first port of call and is cheapest but once this is done we need to generate renewable energy and find alternative fuel sources. Costs will continue to lower as demand rises but articles like this slow progress
Posted by Ruth Mc Guigan | 03.09.08, 17:48 GMT
Having installed solar panels 8 years ago to my home, i save on average approx £700 per years by not heating my hot water between April and October. Instead my hot water is heated using solar panels. My system has since paid for itself and i continue to save money annually.
Solar water heating is the most cost effective technology available and can be installed in any home. Electricity produced by solar energy is 28 times more expensive than the energy required to heat hot water, and in this case, yes the argument to install solar PV runs into a very long payback period. In addition the buy back cost for PV energy in Northern Ireland is way behind that of our neighbours in Europe.
With the recent discussion about EPC certificates and energy ratings of homes for sale, all householdersare going to seriously have to consider installing some form of energy producing technology.
Andrew Cooper
Managing Director
Renewable Energies Ltd
Posted by Andrew Cooper | 03.09.08, 13:17 GMT
Ground source heat pumps (GSHP) are the most efficient (up to 300%) way to heat your home and also has the shortest payback period of 5-7 years. This report confirms that solar and especially photovoltaic panels are not worth the installation costs and has been well researched for a long time, but marketed by salesmen which fail to tell the whole truth about the life of pv panels and their efficiencies (22% max but drop to typically 15% withing a few years and have a 25 year life max). The other thing that the wind and PV companies fail to tell you is that you only get approx 3p/KWh from NIE when you feed back into the grid but yet they charge you typically 13p/KWh plus for supply from the grid. The only renewable installation worth considering is a professionally installed GSHP system. There is too much unconfirmed statistics presented to the public regarding renewables, and it is good that a body such as Rics is able to present the real facts without a biased sales perspective.
Posted by Nigel | 03.09.08, 11:34 GMT