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The five most common solar misconceptions I experience as a solar surveyor

Posted by Gabriel Wondrausch on 17 August 2012 at 10:01 am

Working in the renewable industry can be a challenging experience, particularly over the past six months or so with the confusion surrounding the feed-in tariff. Now the uncertainty has been resolved, it appears the industry is on the up.

However, there are a number of misconceptions about solar PV that are widely believed to be true by the general public, causing understandable hesitation for consumers. Hopefully I’ll be able to clarify five of the most common.

1) If you don’t have a South facing roof it won’t work

It’s true that solar systems work best in certain circumstances: facing due South, 30 degree pitch from horizontal, and with good air circulation etc. But that’s not to say it won’t be worthwhile in other situations. According to industry specific design software; a system facing South is likely to produce around 25% more energy than an identical system with an East or West aspect. In real life this figure can be much less.

Analysing data we collect from our installed systems we can see that over the past six months a South facing system produced 9% more electricity than an identical array that faces East: 1935kWh and 1775kWh respectively. Thin film panels that work well in lower light conditions can also be specified for east or west-facing roofs. An east-facing roof for example, experiences intense direct sunshine during the morning then less intense light conditions in the afternoon once the sun’s position has moved on. These panels take in a wider spectrum of light and are able to utilise the diffuse radiation more efficiently than standard panels. Using this technology instead of the more common crystalline modules can provide you with higher yields in these circumstances.

2) Any shading and the panels will shut down

Although shading is important when considering a system its effects can easily be combated through careful design and specialist equipment. Panels can be arranged into separate strings so that the impact of shading is limited to the modules in that particular series, or even better; power boxes can be used to manage each panel’s output individually limiting the effect of shading just to the module it affects.

3) The financial returns aren’t good enough anymore

Obviously the viability of a system is completely subjective but when considering current returns against say ISA accounts that offer 4% interest, a rate of return of 8-13% doesn’t sound that bad. The feed-in-tariff was originally designed to provide An IRR of 7% and with some systems achieving 15% it is clearly an area worth exploring.  

4) Panels will keep getting cheaper

Although we may experience a small decrease in the cost of modules in the future it is unlikely to be anything like the meteoric change that occurred over the past year. Panel manufacturers were forced to reduce their profit margins by pressure from a very competitive industry, during an even more competitive time. The general consensus among industry experts is that panel prices have begun to stabilise and it is now the efficiency field that manufacturers will strive to improve.

5) Solar systems don’t need any maintenance

Maintenance is often overlooked by some installation companies. However, we feel it’s an integral part of the package. Continuous monitoring and care of your system is essential to give you its maximum energy yield and best performance. Through monitoring, potential faults can be pre-empted or quickly identified, minimising their impact on your financial return. It is also important to note that regular system maintenance can be a requirement on manufacturer guarantees and insurance requirements.

By Joe Perry, design engineer; photos SunGift Solar

About the author: Gabriel Wondrausch is founder and director of SunGift Solar, which installs solar thermal and other renewable energy systems in the South West of England.

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

5 comments - read them below or add one

Cathy Debenham

Cathy DebenhamComment left on: 7 September 2012 at 8:58 am

In its calculations for rate of return, DECC assumes that you keep the panels on your roof for 40 years. As @richmc so rightly points out, energy prices are rising fast. If they continue to go up at the rate they have over the past 10 years, 20 more years of solar generated electricity after the FIT finishes is a benefit not to be sneezed at, and should be taken into account when calculating returns.

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richmc

richmcComment left on: 6 September 2012 at 4:53 pm

What Malcolm has failed to take into account is how the energy companies will be screwing us over the next 25 years.

I was with Sse until a few weeks ago on a no standing charge low cost tarrif, the press anounced that Sse were hiking energy prices by 9%, OK thats life so time to look around, what first came to light was that Sse were going to abolish no standing charge tarrifs along with the 9% hike. As I'm a low energy user, by both hard effort and investment my consumption level meant that with the whopping £100 per fuel levy my bill was going to go up by 30%, thats right THIRTY PERCENT! If I'd stayed with them my PW that I calculated to have a payback term of 12 years would now drop to 8 years.

Although I know that now I've switched to E.on blue fixed till april 2014 I will be getting poorer customer service (already had one problem), my calculated saving without the Sse hike is around £90pa with the hike £394pa saving. I'm under no illusions that energy prices will only be going one way, UP and that each time they do the payback period for my PV will be getting shorter and shorter.

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SunGift Energy

SunGift EnergyComment left on: 21 August 2012 at 2:05 pm

Hi Both, With the aim of providing transparency for people considering a solar installation, I feel it’s necessary to run through the figures I used and calculations I made that resulted in the finances discussed in the blog.

 All the amounts are taken from real life installations that our company has designed, sold and installed. I feel that they represent a more accurate snapshot of where the industry is as a whole, compared to the prices you both discuss (£4,000 and £8,500 for a 4kWp system).

- Cost of installation: £6,800

- Annual output: 3,852kWh

- Feed-in tariff generation rate @16p/kWh: £616.41

- Export rate @ 4.5p/kWh: £86.68

- Savings from electricity bill @ 14p/kWh: £269.68

- Total financial benefit per annum: £972.78

- Break-even point: 6.99 years

- Rate of return: 14.3%

I’m unsure of where your figure of “- £382.50p” originates from, but I’d be happy to discuss where it is in my calculations, if you explain.

This system is a 4kWp array on a roof with little shading, a 30o pitch and facing a few degrees from South. Rate of return will be less on a system that has different characteristics than these.

The annual output of the system is based upon design software widely used across the industry that retrieves its climate data from local weather stations, in this particular case, one in Exeter. Solar Irradiation in this area is measured at 1,240kWh/m^2/yr.

The split of export and usage is assumed at 50% of what is generated, in line with the amount that you will receive from your FIT provider. I agree that in some cases this split may be optimistic for people that are away during the day, however for those that work from home or those that simply have a peak demand matched with the peak production of the system, this figure is low. They are likely to use more than 50% of the energy produced from system, and as it is difficult to generalise these circumstance on a blog, I feel that a 50/50 split is a reasonable assumption.

These calculations do not consider future energy cost, which DECC have published as a 7.2% rise in 2010-2011 alone as it is impossible to predict accurately. For many, protection against these rises is often a key factor in people’s decision to go solar.

The cost of a replacement inverter or panels should they break (inverters usually have life spans of 10-15 years, whilst panels are unlikely to malfunction as there are no moving parts) has not been included in these calculations. The reason for this is that this particular system breaks even in seven years, leaving you three years of profit where both the inverter and panels are within guarantee and will therefore cost you nothing to replace. Should they stop working after the 10 year guarantee period then replacement will obviously come at a cost to you, affecting your total profit, but again the cost of these parts in a decade is difficult to predict.

I appreciate your point about being able to get your money back from an ISA after five years and clearly a solar installation does not have this ability. I do feel that waiting an additional two years (in this case) to recoup your money, with it then being subject to a much higher “interest rate” for the remaining 13 years is well worth the compromise.

Most panels have performance guarantees of 25 years at 80% and although this figure will naturally derate at a quicker rate beyond this time frame. Photon magazine ran tests that identified a degradation rate of 0.7% annually and considering these figures the panels are by no means “getting close to the end of their lives” after 20 years. As previously alluded to; it is difficult to estimate future cost of parts and indeed roof work. I find wildly speculating about these costs is unhelpful and therefore am reluctant to “have a guess” but they should indeed be considered.

All of the above information is based upon first year performance tests of the panels. Payback periods, break even points and rate of returns can vary hugely as there is a vast amount of factors that are often assumed; the simple calculations above do not make any of these assumptions. These are not cheap sales tactics that distort the industry, they are based upon facts that we know to be true and represent a clear insight into the benefits of solar.

I hope that this has cleared up your queries and thanks for your comments.

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Fred1

Fred1Comment left on: 21 August 2012 at 8:13 am

Malcolm,

Agree with your methodology and comments, especially the cost/ risks of replacing an invertor and removal of panels and roof repair at end of 20 years. At a cost of £8,500 the situation is clear....

However DECC have reduced the FIT payments because costs have drastically reduced they estimate that a rate of return of around 4% can be achieved at current costs. Panels are now being sold in the £70 range, much less than in in the spring/ summer, on ebay there are several MCS accredited installers quoting 4kwp systems fully installed for £4,000 or less .

I guess if you input £4,000 into your calculation you will come up with the DECC rate of return of 4-5% (or the  salesperson "return" of 10%).Although the DECC rate of return is equivalent to an ISA return of 4% it does not appear to address the technical risk of failure in 20 years nor removal of the system after 20 years. The ISA has much lower risk and the capital remains yours can be accessed at any time.

Fred

 

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Malcolm

Malcolm Comment left on: 20 August 2012 at 10:58 pm

Yet again we have this comparison talking about 8-13% try looking at the following calcs

From 1 August 2012
Cost of installation: £8,500
Annual output: 3,400 kWh
Feed-in tariff generation rate @16p/kWh: £544
Used in the home: 1,700 kWh
Savings from electricity bill @14p/kWh: £238
Exported: 1,700 kWh
Income from export @4.5p/kWh: £76.50
Annual return: £858.50 - £382.50p = £476.00p (for 20 years, with tariff linked to retail price index)
Return on investment:  
Payback: 17.8years

 

 

All this assumes that nothing ever goes wrong with the system the panels never need cleaning they don't need replacing or repairing nor does the inverter or any of the rest of the system, for twenty years or twenty five years.  Also I feel 1,700kWh used in the home is on the generous side.  

 

Plus all the time your receiving money from the ISA you can get your capital back, at the end of the first five years penalty free.

It takes 17.8 years to equal the return with solar giving you 2.2 years at £850pa = £1,870 additional pounds. If nothing's gone wrong with the system for 20 years (and I doubt you can get a 20 year guarantee, if you can take the cost of that off the additional pounds) you've then got 20 year old panels on your roof which I would say must be getting close to the end of their lives. How many thousands of pounds will it take to replace them? or if you're not replacing them to remove them and repair your roof?

 

 

 

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