My experience with installing SEAI grant aided solar PV

[Baby boomer]

@Baby boomer

I as told by installer that I'm not eligible for the grant as the house is too new...

Ah, I see. In that case, it's a fairly reasonable quote. General wisdom seems to be that the panels will save you money over a reasonable time frame but the batteries have far lower payback. Might be worth putting up the panels now and waiting for battery tech to improve.

 

[Jazz01]

@Baby boomer - appreciate the follow up on that. I was thinking that the quote was high, but I guess the batteries are taking up a fair chunk of that cost...

 

[Leo]

There is a university of Limerick study that show that property prices increase with better BER ratings. https://www.rte.ie/brainstorm/2021/...ices-postcodes-size-description-features-ber/
Our BER went from C1 to B1 with the addition of the panels. If I'm reading the study correctly that could translate into 4-5% increase in the value of the house, which would be more than the cost of the panels.

I haven't read that study in detail, but unless they are looking at price differences for identical properties with/without energy upgrades, then it's largely meaningless. Many of the higher rated properties on sale will be in newer developments which are usually more desirable.

Regardless, an increase in the value of the home through energy investment only has material value if you are going to sell it, and then only if you are going to buy a house with a lower rating.

 

[AJAM]

I haven't read that study in detail, but unless they are looking at price differences for identical properties with/without energy upgrades, then it's largely meaningless. Many of the higher rated properties on sale will be in newer developments which are usually more desirable.

The study does mention that it is comparing like for like properties "Our statistical model allows us to examine the impact of property type on price per square metre while keeping all property attributes and features the same."

Regardless, an increase in the value of the home through energy investment only has material value if you are going to sell it, and then only if you are going to buy a house with a lower rating.

That's hilarious. You could equally say that the cash in your bank account has no material value, unless you withdraw it and then use it to buy something!

With solar panels, you have bought an asset, which prints tax free money (in the form of electricity bill savings), every month. Based on the last year, my internal rate of return is 6.4% tax free! So it beats the pants off leaving it in a bank account.

 

[AJAM]

Another way to look at it is that my energy bills were 383 euro lower vs the previous year.
So 383/4632 would be equivalent to an 8.3% simple interest return. Tax free. Compare that to the best interest rates in the banks at roughly 1% less DIRT at 33% and it's a no brainer.
I know not everyone has 4-5K spare, but if you do, financially it's a no brainer. Get the panels.

 

[Leo]

The study does mention that it is comparing like for like properties "Our statistical model allows us to examine the impact of property type on price per square metre while keeping all property attributes and features the same."

That is not comparing like for like. A 2015 built 3-bed semi-d will be a lot more desireable than a 1950's semi-d of the same area.

That's hilarious. You could equally say that the cash in your bank account has no material value, unless you withdraw it and then use it to buy something!

That doesn't make any sense. The cash in your bank has a set value that slowly ebbs over time with inflation. You can easily exchange it for goods and services, or invest it to obtain a return. Bar filing property tax returns or purchasing rebuild insurance, the value of your home isn't something that has relevance in your day to day life until you are looking to sell it.

Spending €5 or €10k on a solar installation may well add something to the value of your home, but it is a fraction of €5 or €10k. Spending that money with a view to increasing the value of your home is a folly. A Which study in the UK a few years back showed twice as many estate agents said solar installation actually reduced the value of the home as those who said it increased it.

With solar panels, you have bought an asset, which prints tax free money (in the form of electricity bill savings), every month. Based on the last year, my internal rate of return is 6.4% tax free! So it beats the pants off leaving it in a bank account.

You have bought a depreciating asset that may over time pay for itself through savings. Of course that payback period is longer than the warranty period of the system components and most calculations assume zero maintenance costs.

Doing most things with money beats leaving it in the bank. Investing it wisely will likely produce a much greater return than an investment in solar.

 

[jpd]

You have to be using electricity during daylight hours to make the savings

 

[Leo]

Another way to look at it is that my energy bills were 383 euro lower vs the previous year.
So 383/4632 would be equivalent to an 8.3% simple interest return. Tax free. Compare that to the best interest rates in the banks at roughly 1% less DIRT at 33% and it's a no brainer.
I know not everyone has 4-5K spare, but if you do, financially it's a no brainer. Get the panels.

At that rate, you're looking at 12 years just to recoup your investment, and that's not factoring in panel degradation (around 1% for high quality panels, greater for cheaper).

Stick the €4,632 away at 1% and after the 12 years you'd be better off by almost €400 after DIRT. The S&P has returned an average ~11% over the past 40 years, invest there and you'll more than double your money after tax.

 

[AJAM]

the value of your home isn't something that has relevance in your day to day life until you are looking to sell it.

I don't disagree with you there Leo, but your original point was that the increase in value on the property had no material value. That's simply not true. Your house is worth more money if it has solar panels, or has a higher BER rating. That is material.

Spending that money with a view to increasing the value of your home is a folly.

Again I don't disagree with you there, I was simply pointing out the fact that payback period ignores the fact that upfront investment doesn't just disappear, it adds value to your house.

Of course that payback period is longer than the warranty period of the system components and most calculations assume zero maintenance costs.

That's not true. My system has a 25 year warranty and a payback period of ~10 years.

Doing most things with money beats leaving it in the bank. Investing it wisely will likely produce a much greater return than an investment in solar.

I'm not aware of any investment that gives a 6.4% tax free return. The only thing I can think of that comes close is the stock market, but that is a much risker investment, not a guaranteed return (which solar panels are), and not tax free either (taxed at 33% CGT, 41% exit tax or 52% Dividend tax).

 

[Thirsty]

You have to be using electricity during daylight hours to make the savings

Almost all houses are using some electricity during the day, wfh increases that load and I guess charging an EV will also.

I'm reading up on this with interest; in one sense I view it much like I view buying organic fruit / veg or free range chicken. The return on investment isn't the major factor here.

It's not so much that I think organic veg is any better for me or that battery eggs will endanger my health but that I believe our food practices have to change and I'm willing to make that choice to be part (even if it's a small part) of that change.

This is not an opportunity for the thread to head off into a discussion on factory farming, I'm just making the analogy, money isn't everything!

 

[Thirsty]

We have had our South facing 3.5 KW solar array for a little over 1 year now.
10 Panels, plus the Hot Water Diverter cost us 6,432 less the 1800 grant so a total of 4,632 euro.

@AJAM - were the panels installed on your roof? Do you know of they can work around attic velux windows?

 

[Zenith63]

I'm not aware of any investment that gives a 6.4% tax free return. The only thing I can think of that comes close is the stock market, but that is a much risker investment, not a guaranteed return (which solar panels are), and not tax free either (taxed at 33% CGT, 41% exit tax or 52% Dividend tax).

You're not really making 6.4% though, as Leo says solar panels are a depreciating asset.

For example at the end of 10 years 'investment' in solar panels you'll have made your €3000 (€300/annum) but the solar panels will be worth €0 (ie. your capital is gone). Whereas put the money in a bank account, after 10 years you'll have a €4440 in cash (original €4k + €440 in interest (1% compounding)). In my example the solar panels look like they're making €300 per annum (7.5%) but in reality your investment is losing ~2% per year (it's going from €4k down to €3k over 10 years).


All made up numbers for illustration, they'll last longer than 10 years, electricity prices will be constantly increasing due to the carbon tax etc.

 

[AJAM]

@AJAM - were the panels installed on your roof? Do you know of they can work around attic velux windows?

Yes, they went on the roof. I think they can work around velux windows but it will depend on how wide your panels are vs how wide the gap between the windows are.

 

[Leo]

I don't disagree with you there Leo, but your original point was that the increase in value on the property had no material value. That's simply not true. Your house is worth more money if it has solar panels, or has a higher BER rating. That is material.

It may make you feel better, but the value of any object you possess is really only of importance if you are looking to sell it.

That's not true. My system has a 25 year warranty and a payback period of ~10 years.

You have a 25 year warranty on every single component? What system is it? What inverter, etc.

I'm not aware of any investment that gives a 6.4% tax free return. The only thing I can think of that comes close is the stock market, but that is a much risker investment, not a guaranteed return (which solar panels are), and not tax free either (taxed at 33% CGT, 41% exit tax or 52% Dividend tax).

You need to look at how to work out an investment return. Until the breakeven point (12 years at your numbers), you are actually down. Your returns are negative up to that point when they reach zero.

 

[AJAM]

I think what Leo is getting at is that solar panels are a depreciating asset. At the end of 10 years 'investment' in solar panels you'll have made your €3000 (€300/annum) but the solar panels will be worth €0 (ie. your capital is gone). Whereas put the money in a bank account, after 10 years you'll have a €4440 in cash (original €4k + €440 in interest (1% compounding)).

But that's not correct. After 10 years my panels are still making me ~€383. They are guaranteed for 25 years. whatever small degradation in performance there is will be more than offset by the rise in the price of electricity. My BER is still B1 and the value of my house is still greater than it would be without solar panels.

 

[Zenith63]

@AJAM - were the panels installed on your roof? Do you know of they can work around attic velux windows?

I have velux windows around mine, no issues, the installer just lays the panels/brackets out to suit.

 

[AJAM]

You need to look at how to work out an investment return. Until the breakeven point (12 years at your numbers), you are actually down. Your returns are negative up to that point when they reach zero.

I have a diploma in finance. I know how to claculate an Internal Rate of Return. But for those of you who want to check my math, here are the figures.

IRR	6.4%​
0​	-4632.53​
1​	576​
2​	383​
3​	383.369​
4​	383.369​
5​	383.369​
6​	383.369​
7​	383.369​
8​	383.369​
9​	383.369​
10​	383.369​
11​	383.369​
12​	383.369​
13​	383.369​
14​	383.369​
15​	383.369​
16​	383.369​
17​	383.369​
18​	383.369​
19​	383.369​
20​	383.369​
21​	383.369​
22​	383.369​

Calculated over 22 years. first year saving are 576, as thanks to covid, the ESB were not able to upgrade my meter for the first year, which meant I got paid for all the electricity that I exported to the grid that year.

 

[Zenith63]

But that's not correct. After 10 years my panels are still making me ~€383. They are guaranteed for 25 years. whatever small degradation in performance there is will be more than offset by the rise in the price of electricity. My BER is still B1 and the value of my house is still greater than it would be without solar panels.

Yeah sorry I'm not wading into the BER/property value discussion. I was just commenting on this "So 383/4632 would be equivalent to an 8.3% simple interest return.". I don't have a diploma in finance or a grasp on what IRR even means, so you'll have to forgive me, but to use your numbers to make my example more meaningful -

If you assume the panels are producing nothing in 25 years time and their value is €0. €383 savings per annum would get you to €9575 after 25 years, but the investment cost you €4632, so your profit/return is €4943 over 25 years. The compound interest rate to achieve that is 3% or simple rate 4.2%. Right?

As I say not disputing the other arguments, I'm a big solar proponent, the way you calculated that 8.3% just didn't sit right with me .

 

[Leo]

I have a diploma in finance. I know how to claculate an Internal Rate of Return. But for those of you who want to check my math, here are the figures.

You've invested in a depreciating asset which in reality you would be unable to sell.

Invest our €4632 in the S&P and after 12 years you'll have over €10k after tax. Your solar investment will just have covered the up front but will be effectively worthless.

You haven't said what system it is that is giving you a 25 year warranty on all components.

 

[AJAM]

The simple rate would be 9575/4632 which is 207% or 8.3% over 25 years. The compound rate is 2.9%
But neither of these is appropriate for measuring this type of return.

The correct way to measure return for this type of investment is Internal rate of return. You can do that calculation yourself in excel the formula is IRR and the rate is 6.4% for the figures I outlined above.