Paying the price for 'Free Electricity'

There's no such thing as a free lunch. Anyone heard that one before? It's a terrible cliche we know, but it's so applicable to the 'free solar' companies working on domestic premises that it's use can't be avoided.

Let us be clear, we do not question the integrity of the companies offering these installations - far from it. In order to succeed in that market the installations have to be high grade quality, surveys have to be very accurate and installers very speedy.

What we do question is that the installations, and subsequent electricity, are 'free'.  Just because those whose roof's are used do not fork out payment at installation, does not make it 'free'.  Allow us to explain.

The overall cost of supplying and installing the type of 'free' systems being installed is approximately £4,000 - this is due to bulk buying discounts and low labour rates.  This 2kW system on a South Facing roof will generate three potential revenue streams;  two in cash - in terms of generation and export tariffs for the system provider and owner - and one in energy savings for the roof owner.  The values of which are summarised below.

Assuming RPI @ 2.5% and energy inflation @ 4.5%

 
So far so good.  You have rented the roof to your solar supplier, or their financial backer/partner and they have effectively allowed you to gain £3,500 worth of electricity over 25 years.  This represents about 10% of your electricity bills, without any up front costs. You even get the solar energy generated after the 25 year agreement is complete - not bad eh?

As with so many deals however, the true costs are in the small print.

Opportunity Cost
Having your roof filled with somebody else's solar panels mean that you cannot fill your own roof with solar panels, and neither can anyone else.  This would cost a little more to procure, say £5,600 for a decent kit, so immediately you've lost out to the tune of £20,500.

Maintenance and Home Improvements
Should you wish to undertake any maintenance to your property, perhaps the electrical system or the roof, and you have to turn off the solar system, then you must pay the supplier for his lost income and seek his permission.  What if you want a loft extension?  Good luck.  Written permission from the solar system owner will have to be sought and the final choice will always be theirs whilst the 'rent-a-roof' agreement is in place.

Selling Your Home and Redemption Penalties
Picture this; you are about to sell your home, your potential buyer likes the thought of solar panels on his new roof but he wants to own them himself and later he wants to realise the property's best value with a loft extension.  It is 20 years since the solar system was installed.  You refer to the system owner's contract to see what the penalty is for leaving the agreement five years early, it can't be much can it?  Wrong. It's £10,000 please, and that's one of the better contracts - they might not even grant you permission to sell.  Suddenly the potential buyer wants that value straight off the asking price, and who can blame him?

So like any transaction you have to weigh the real benefits against the true costs, and in most circumstances we don't think this stacks up in the home-owner's favour.

This is how we do it

There a plenty of impressive photo's online of completed Solar PV systems, glistening in the sunlight. Some of them are genuine (like those on our site) and some of them are pilfered from various corners of the world wide web, but we're not judging (needs must and all that). We've noticed a real dearth of information about the act of installation itself, and so took the opportunity to take a series of photos of a recent job in Bristol.



The slideshow above is a montage of those photos, hopefully showing our readers the various stages of installation of a 12 panel, 2.7kW Viessman. The system required two days work for 3 men on a detached house in Kingswood, Bristol. The basic stages of installation are;

1. Measuring and affixing the brackets
2. Installing the rail system
3. Laying out, affixing and connecting the panels in a series circuit
4. Siting the inverter
5. Making all necessary connections
6. Commissioning the system

Our happy customers Mr and Mrs O'Brien can expect yearly energy returns of 2,300kW/h, and a first year financial benefit (including energy savings) of £1,177. Over the 25 year FiT period they should receive an overall financial benefit of more than £29,000 - plus any inflationary increases in the generation tariff. That's about 13% per year.

Does that seem like a good return to you? Perhaps you have a comment or question on the logistics of installation or have an idea about improvements that could be made. Don't be shy, let us know your thoughts below.

- Posted using BlogPress from my iPad, what a brilliant App!

Backing the Underdog

Tesco are without doubt one of the UK's most impressive companies. Since the late 90's they have grown massively, starting with their implementation of 'extra' stores which seem to sell almost everything, then moving into local market with their 'metro' stores and more recently they are challenging the likes of Argos with their own catalogue offering.

Near Cardiff in South Wales is a village called Dinas Powys and about 3 miles away from Dinas is a large Tesco superstore in Penarth. It is the main supermarket serving the area and as far as we are aware, is always very busy - in fairness it is a very good store in a handy location for the Vale and even Cardiff Bay.

Dinas Powys has a population of around 9,000 but has a definite village 'feel' to it, mostly because it is served mostly by amenities in the surrounding towns of Penarth and Barry, with access to the city of Cardiff - but also due to the village green, or Twyn as it is locally known.

Valey View Fruit Stores, serving Dinas Powys with distinction

Within Dinas Powys is a local grocers' shop, Valley View Fruit Stores, owned by Tony and Janice Mapstone. The Mapstones have owned the shop for over 15 years and happily serve the local people with fresh fruit and vegetables, tinned goods and other groceries - as well as flowers, plants, pet food and accessories.  Only two doors down is a small Spar convenience store which trades symbiotically with the Mapstones' grocery offerings, but at the other end of the block is a large dilapidated public house of which Tesco are now the proud owners.

There is little or nothing that a local Tesco store has to offer that is not already available at Valley View Fruit Stores or the local Spar, both of which are within 100 yards of the proposed store. It begs the question, why were Tesco given permission to open such a store on this street? And what are Tesco trying to achieve by moving into the area? It's not like they don't already have a local presence, or even that they need the business. It seems that their presence will impact negatively on two businesses, owned by local people, that have served the local area successfully for years; without even bringing a discernible benefit to the local people.

Norman Environmental are not against company expansion or growth, far from it. On the other hand we firmly believe that to help the country out of recession small businesses need to be protected from the might of supermarket giants. There will be follow up blogs as the story unfolds, but we're rooting for the 'little guy'.

What do you think of the common practice of large supermarkets moving in on the territory of traditional 'local' shops? Is it the cut and thrust of fair business competition? Or should local council and government protect their constituents from big business? Let us know what you think.

- Posted using BlogPress from my iPad, what a brilliant App!