Well, hold on, isn’t this blog about retiring early? What does solar panels have to do with that then? Well, read on and find out!
What are solar panels?
Well- most of the time when people talk about solar panels they are actually talking about photovoltaic cells (PV). On a very basic level- they convert sunlight into electricity. You can read more here
Didn’t the government change the subsidies recently?
Yeap- over the past few years, they have changed subsidies from a grant, to feed-in-tariffs & export rates to…….. nothing. That’s right- at this moment in time, you get literally nothing from installing solar. Well, hold on, why would you get solar if there wasn’t a return? Read on…
So, if there is no subsidy- why get solar installed?
Well, there are a number of reasons- not just from a financial point of view.
- Will really reduce your electricity bill- especially if you are home during the day- or make small changes to your usage (like running the washing machine when its sunny)
- They can help you be self-sufficient- to live either entirely off grid, or even just slightly.
- You can help the electricity grid get greener.
- You can charge your car from the excess power.
- You can heat your hot water with the excess power.
- There is at least one provider willing to pay for the energy you export…
So, is it financially worth getting them installed?
Well, like most things- it depends, but some things to consider:
If you are going to move within 10 years, you are unlikely to get your money back
If you have low/no usage during the day- you are unlikely to make it worthwhile
If the government changes the rules again- you might lose out, they have previously changed the tax rates for commercial properties- though it’s unlikely, they could do something similar for residential
Some figures to consider
The average unit of electricity (kWh) is about 15p- the average house uses about 4,000kWh give or take. With the standing charge as well, this equates to about £650-£700 on a yearly basis
An average installation of approx 4kWh of solar panels will cost between £4000-5000 (depending on labour/difficulty of installation etc). If you can install it on a garage- you can avoid scaffolding costs. The panels themselves are so cheap now- most of the cost is now the “other costs”, labour, mounting, inverter, cabling etc. By handy coincidence- these will generate about 4,000kWh- but please don’t think they will cover 100% of your energy needs (overnight, winter etc)
Currently there is only 1 provider that is paying for exported energy.- Octopus Energy (note: this is a referral link- £50 for both us!). Their tariff “Octopus Outgoing”- is currently paying 5.5p per kWh – which is actually higher than the old “Feed in tariff” (FIT). But do note- this is a constantly changing situation- this rate may disappear/change at any moment.
All things being average, the payback is approximately 8-10 years, depending on how much of the energy you can use yourself- rather than exporting to the grid. Since every unit you can use in your home- is going to save you whatever the current cost of energy is (approx 15p per kWh currently).
So, how do I go about getting them installed?
Contact your local solar installers- get multiple quotes. Ask them for references, do your due diligence- they should give you system performance estimate. This will contain information about the energy generation, & return on investment.
So, what does it have to do with F.I.R.E then?
F.I.R.E is all about both having enough money/investments to survive- alongside spending less. Well, if you can reduce your electricity bill from £650-700 down to £300, then you suddenly need £10,000 less in assets. Well under half the cost of having the system installation. Apart from the inverter (approx £300 every 10 years), nothing in the system should need replacing in over 20 years, if not even longer. Though, do note that the solar panels do degrade slightly year on year, this is less than 2% now.
If there is enough interest- I’ll write more on the topic.