I’d 100% agree with your suggestion that its a relatively few people that can afford an investment like solar & battery and completely ignore the ROI. I’d also say that the ROI calculation is going to be a massive influence on how (and how quickly) we adopt green tech. The huge increases in energy prices in the last 18 months has been a big driver in the investment in roof top solar. Its a fact that everyone likes the status-quo, until it starts costing more money than the alternative 😂
Thanks - I'm hoping that as costs continue to come down, the financial ROI case can be made by more and more people. And for those that are not able to make the case, that they benefit indirectly from cost savings to be had with an ever-increasing renewable share of the energy mix (i.e. energy price drops).
I congratulate you on your series of videos that presents information in a clear and simple way. ROI on batteries is a subject which can have several approaches depending on what you are trying to show. Your method of cost per kWh produced is useful to a degree but to use it to predict future cost of cycling the battery is slightly iffy. As soon as you cycle more, the cost per kWh changes, so it is dynamic. There is also the case of if I do zero cycles per day it has infinite cost per kWh, this is just extreme but it illustrates the point. The battery cost is more a fixed and variable cost equation. Even if I don’t use the battery, in your example I would spend an average of £1.10 per day to amortise the cost over 10 years. If I stay within my number of cycles in the warranty (6000 is common, more now are unlimited) I can cycle 1.5 time a day at no extra cost to me. So your example of costing 4.5p/kWh by charging and discharging is a bit misleading as without doing it it could cost 25 p/kWh (0.5 cycles/day) and by earning 75p (1.5 cycles/day) it would cost 9 p/kWh but the actual cost has not changed. The extra 1 cycle per day is at no real cost, just a theoretical cost but I have earned a real 75p. The point is that unless you do something that affects your warranty or reduces the life of the battery significantly the cost per kWh is purely academic once you have bought the battery.
Thank you for your kind words on my videos and also your analysis and insight - it’s very thought provoking. Moreover, it’s exactly the kind of feedback I love getting because it tests the principles I’m suggesting… I’ve been wrestling with the battery ROI topic for several weeks now - and I can’t quite get to a solid, defensible answer. At present, I see the cost per kWh purely as a crude guide on how one might use their battery, essentially showing that there is an amortisation of the cost of purchasing the battery against *when* it is used. At an extreme (and, like you, I think taking concepts to extremes is an incredible valuable operation) spending $10K on a battery and using it for just one day in its whole lifetime to charge then discharge say 5kWh means the cost per kWh is $2K. That makes sense to me. And so using it more will lower the cost per kWh, hopefully to the point where it becomes profitable. And that profitability will vary on *how* the battery is used as well as when. Is the discharge to the home or the grid, for example. To me, the cost per kWh is useful for those calculations. But that’s where its usefulness ends I think. The actual battery ROI calculation over time (years) won’t use cost per kWh at all. Instead, it’ll simply be the initial cost of the battery and monies actually saved or made over time with the battery being present in the solar setup. Let me chew on your thoughts a bit more, and I’d be interested in your thoughts on mine above 👍🏻 thanks
Hi Gary. Thanks for another insightful video. Seeing the ROI displayed as you did is a great way of visualising the effects of finacial changes over time. Very helpful when trying discuss solar with my partner.
Thanks for doing what you do Gary, so informative. I am at the beginning of my solar journey and am currently having quotes. I have learnt so much from your video's and they have contributed to my plan. Thank you 😊
Hi Steve - it's my pleasure. I was in the same position as you in fact, and it's why I started this channel. It's really great that I've been able to help you on your journey! :-)
You also need to take into consideration interest rates. For example if you did not buy the solar installation then how much compound interest you would have earned on that money if it was still in your savings account. Even at 3% it makes a difference. However, you also need to calculate your savings in the same way ie. calculate compound interest on the savings as you make them.
Always look forward to a video from you Gary. Very informative. Can I make a suggestion, your intro and exit piece, would it be possible to lower the volume on it. I normally watch your videos at night on the TV and it blasts through 😂.
Hi Michael, I've been turning the volume down on the intro/outro music each time in the last few videos - I'll turn down a little more for the next one too. Thanks for pointing out!
Hi Gary, sorry if it’s been mentioned before but another consideration is import electricity is eligible for VAT, whereas export doesn’t attract the same. So e.g. import at 7.5p per kWh is actually 7.875p with 5% VAT. Love the videos 👍🏻👍🏻👏🏻👏🏻
Hi Gary I initially bought a 3.2Kw array with a 3.2Kw battery and quickly discovered I needed a second battery certainly in the summer months, not sure about the winter yet. At £2,500 per battery this was exspensive but hey interest rates are rubbish so why not, mind you £2,500 worth of electricity is a lot so wondering was it really worth it. Anyway at my age I will not see a return on my install but my son certainly will after my days. Got to start somewhere.
Funny but I am exactly tha same! I am bit unhappy with the installer as with their knowledge and my usage data they should recommend confidently bigger battery straight away! Would save me 700£😢
I don't have a battery, but during the worst days in winter my 3.27 kW rated system barely makes enough power to meet my house's base load (circa 60 watts). As an example, last December my generation averaged 3 kW hr per day (all those short, dark, cloudy days). That can be compared to 14 kW hr in a typical summer month. So my take is that a battery would be pretty useless for 3 months of the year, unless you combine it with a time of use tariff that lets you charge it with cheap electricity overnight.
@@roberthuntley1090That's exactly what I do now autumn is upon us. My setup is essentially acting as 2 separate systems. The pv array does its thing, offsetting electricity costs during the day and I go to grid over night. The battery charges in the peak period, sits full during the day and then sells back at peak rate between 1600 and 1900.
Whenever I've been asked is having a battery "worth it", I always respond with "what is YOU'R definition of worth" .. for us we value the independence and not caring about the Government's incompetence in managing energy needs. We bought a cheaper house in order to be able to afford to install a solar and battery set up, so Whenever we mention the costs of the solar and battery I tell them not to see it as an seperate purchase but view it as the total amount we bought the house for. Plus not only are we Bill free but the utility company pays us month for extra solar feed in
Great thoughts. For us, we are knowingly not getting the 'maximum' solar return, so our calendar roi will probably be 12 years, but the security is quite helpful with peace of mind.
Hi Gary, In your previous video I didn't agree, or rather thought it was problematic, to isolate the battery from the rest of the system in your formula. In your table you calculated 12p/kWh cost for using the battery over 10 years and I thoughtut what if your solar PV generated enough electricity to pay for the PV plus battery in five years? Surely that should bring the calculation to 0p/kWh at the five year point and -24p/kWh over the five to 10 year period where it pays for itself again? That's what you have in your excellent dissecting graph lines illustration. That's definitely the way to go. In fact it gets more complicated still considering other things like heat pumps making the best cost effective use of your generated PV and getting rid of gas consumption and standing charge, exporting in summer, banking the surplus in the account for use in winter at cheap rate (long term storage!) and of course any grants available making some of it free or low cost. I worked out that even increasing the size of your battery could also pay for itself over winter by making the most of the cheap rate at night and minimising the peak use from when a smaller battery may run flat. The "pay back" time didn't seem to change much. I prefer to work out the total saving of the whole system (PV+ battery+ heat pump) compared to previous combined gas and electricity which could be perhaps 75% and from that working out return on investment per year as a percentage (just because it compares so well to any savings accounts these days!) and then pay back time. The pay back for a gas boiler by the way was not shoveling coal and the pay back for coal fires was not chopping wood. The pay back for heat pumps plus solar and battery is not a physical toil advantage but financial and the invisible lack of C02. We've come a long way from burning a pile of sticks on the floor with a hole in the roof to let the smoke out.
Hi John, yes - you're right. I was trying to get across the point that the purpose of calculating and using a "Cost per kWh" for the battery is purely to determine *how* to use the battery at any point in time (my next video - part 2 of smart tariff strategies - will show this in action). Then, for the ROI on the solar and battery installation as a whole, we include all financial aspects - so yes, your solar generation goes towards the original cost of the battery. And yes, we have indeed come a long way! :-)
Had my solar an batteries put in 3 years ago when the per kWh prices were 12p per kWh. I’m now on 39p per kWh With what I’m exporting and what I’m using it will be fully paid off in 15 months
I use ROI in yet another way in that I know what I want to do (export all day, import at night to do my best for the environment) so use ROI as a way to choose the tariff that gives the best return when doing that. Same approach, just different reason - and input variables. Also, I see a number of comments about installations that never break even and wonder if this is a problem of scale. Panels themselves are cheap compared to the other components needed so just a couple of kWp might be a poor investment whereas (if you can) a bigger array costing very little could offer a good return.
Your ROI graph was very insightful Gary, thanks for the video. I would like to see a similar scenario where the pv battery system meets 150% of your daily use. Here in Australia we get what is called a "feed in tariff" which is quite low, usually less than $0.08 per kw hr, but it adds up (we currently buy power @ $0.40 per kW hr). By my own calculations a system like this for myself would generate $1000 annually, and we don't have an ever increasing electricity bill, and we don't have to purchase fuel for our ev either, which totals approximately $7000. Admittedly a system that provides all of our needs, and some, is expected to cost about $30k, so not "cheap" by any standard. So by my estimate, $7k +$1k gives us a break even point of less than 4yrs. Let's also assume that our battery is substandard and only lasts 8yrs (& solar panels @ 25yrs), I would imagine that home batteries will be better and far cheaper as time goes on too, just like $1.5k VHS video players that you could eventually buy for less than $100. Just my thoughts from going through a similar cost analysis roi recently.
The feed in tariff you’re on sounds very good indeed. Is that still available to new customers. Here in the UK, there was a similar system, running from 2010, but it closed to new customers in 2019.
Completely correct there is a return an investment of everything, granted most are negative. But people should take this into consideration before buying anything
Yes, most definitely worth the time and effort in working out the expected ROI before making the jump - and hopefully my videos and utilities help in this regard...
Agreed - there is an extra cost, but I'm hoping that with the latest batteries on the market having built-in EPS (see my video here for details on those: th-cam.com/video/x83t1iCMXxw/w-d-xo.html) the installation effort should be easier and therefore costs of that - and the batteries - will continue to come down.
The Huawai needs an extra power control box to enable automatic fail over and back to grid. It's a couple of hundred Euros (In Spain) but the installers generally have no idea about it or how to use it because they are "trained" on simple grid tie systems.
Good explanation! I think a battery system is useful for keeping the lights and internet Router on and heating on in the event of a Power Cut (Outage) atleast while we are sill burning Gas! obviously if you change to Heat Pump later You'll need a bigger Battery!
Yes spot on with the motivations behind ROI. And love the chart. This is a conversation I have with lots of people thinking about solar (and electric cars). I tell them ‘do the maths’ and you’ll see that it makes sense. I could say ‘do the maths and use a chart’. Some will be motivated purely by the financial savings but for others it can make ‘doing the right thing’ affordable too.
I need a 10 year or less return. If I invest the money in a cash bond at 4% and use that as my actual investment. I calculate at the 10 year mark I will be producing at 53p per KWh. It's better to invest which I'm doing....
Hi, one of the things that doesn't really get discussed is how we evolve our installation over several years. That means buying different generations of PV, solar battery etc, possibly from different manufacturers and then trying to get things to work. I'm on an orignal FIT from 2016 (approx 12.6p per kwh), The PV array was connected to a Samsung ESS (DC battery/inverter) a year later in 2017, which is still operational. I'm now in the MyEnergi ecosystem with Eddi, Zappi and a new Libbi for battery storage. The Libbi is standalone and is charged offpeak, as my installer could see no way to get it to work alongside the Samsung ESS, which remains directly connected to the PV array. The MyEnergi app does offer some level of control and a dashboard for me to understand how much excess solar is available and then and divert this to charge the Libbi, Zappi, Eddi. But there is a a very real need for some level of standardisation/integration. These things are very expensive; PV arrays are supposed to last 25+ years; batteries over 10. Manufacturers need to make it far easier to swap out and replace things.
Hi Cliff, you raise a very good point. We're really still at the stage of an immature market, and there is little desire for manufacturers to work towards a standard interface between system elements. It will come eventually, but typically requires a catalyst - perhaps one of the manufacturers forcing the issue, or compelling external management software requiring such. Let's see how things go over the next few years....
Thanks Gary. Your videos are the best on the web in offering concise explanations of solar in terms non-specialists can readily understand. I installed a 12 kw system on my house 5 years ago, with another 3 kw added two years ago in anticipation of my purchase of an EV. I wish that I had the guidance of your videos in planning my system, which would have helped me make somewhat better decisions. Nevertheless my experience with my solar installation has been overwhelmingly positive. Here in the US Desert Southwest a good ROI is easy to achieve as long as one works with a reliable contractor. The most frequent mistakes I see involve naive customers who get lured in to no money down 20 year leases with exorbitant buy out provisions should one wish to terminate the lease. I’m wondering if there is a similar “lease trap” problem in UK (or other countries).
Hi Richard, that's high praise indeed about my videos - thank you! :-) I was over in your part of the world last year with my wife on vacation and I loved it there! Plenty of sun, certainly! Yes, in the UK we had similar schemes (maybe 10 years ago) and I think they worked out badly for a lot of people. I don't see many (if any) of these schemes now. I guess with any new market, there are always companies ready to scam people :-/ All the best with your (growing) installation. I am hoping to get an EV myself before long!
@@GaryDoesSolar I’m still pondering the question of “to battery or not to battery.” My utility’s rate structure has recently changed to favor batteries for new installations. I am currently on a time of use plan that is much better than anything offered now, which complicates the decision of making changes in my system configuration. Electric service is a so-called regulated monopoly in the US so we are at their mercy when it comes to rates and system approvals. Layered on top of all this are developments in battery technology and cost. So for the present time I am watching and waiting for the stars to align. Concerning EVs: I went ahead and bought a Tesla Model Y largely because it appears there may be a long wait for the competition to catch up with Tesla’s software technology and charging infrastructure. I will be turning 75 in a couple of months and I wanted to make sure that I had a full EV experience before it’s too late. If I were 10 or 15 years younger I probably would wait a bit before plunging into the purchase of an EV. But for now my combination of home solar and EV charging is a match made in heaven. My marginal cost of charging the Tesla is about $0.03 per kilowatt hour (the measly amount the bandits at SoCal Edison pay me for excess production).
@@richardcoughlin8931 Thanks for your additional thoughts, and great to hear you're having a great experience with your Tesla. I see prices are starting to come down on pretty much all EVs at the moment in the UK, so hopefully it won't be long before I get one 😃 SoCal will hopefully wake up one day and see that it actually would benefit them to take a lead in this space!
Two items that are not included in your model are the income from exporting - only significant in summer - and the Feed-in-Tariff. For our solar - 3.6kW - we calculated that the ROI is 9 years. FiT runs for 20 years so the income phase is more significant. We are in a village without mains gas, so the cost of electricity for all our energy needs v electric plus LPG/Diesel, using solar/battery/ASHP/solar thermal makes ROI very difficult to calculate as a whole system. Our estimate for our set up is 9yr for solar, 10yr for battery, 5yr for solar thermal panel and 4.5yr for ASHP (includes RHI).
Hi Phil, anyone who's on the UK Feed-in-Tariff (FiT) scheme certainly snagged the golden ticket :-) But I can't include that in my videos as that scheme is no longer available to people. Of course, you can include the benefits of that in your own ROI calculations. Regarding income from exporting - yes, they would be part of the ROI (and I include this in my utility here: garydoessolar.com/utilities/dailymodellingutility/ In my case, on the UK's Octopus Flux tariff, my green line went down over the summer as a result of all the exporting! :-)
Yeah, there is a problem with trust. There is a lot of promises and new trends but do those really work? Thank you Gary for your unbiased explanatory work. It is worth supporting.
Hi Gary, love your videos and this one is quite useful as well. Your point about the further investment in solar changing the slope of the cost is well made and I'm assuming that's the cost of adding battery storage rather than panels? One thing I feel I should point out is that if the original slope changes due to an increase in grid prices, it should also impact the solar investment slope, though to a lesser extent.
Thanks, and yeah, you'e absolutely correct - I should have increased the slope of the green line to show that. I'll add a comment in the post-publication notes in the video description.
Going to be interesting as new battery technologies become available. A 10kW flow battery for domestic installations has been announced by a German company - it'll probably be ridiculously expensive, but affordable ones will appear eventually and they don't have the degradation issues of conventional battery technology.
Thanks for the video, very interesting. I think what some people forget about R.O.I for solar and battery is that in a normal house without solar and battery, electricity is delivered to the house without the need for extra devices, unlike gas where you need at least a boiler to heat your home, so the solar and battery do need to pay for themselves over time to break even. One thing I haven’t seen discussed much is whether solar and a battery is financially sensible based on a persons usage. I’ve looked into a solar and battery installation which could possibly cost £20,000 but I currently only spend approximately £1000 a year on electricity. Even if I covered every kw of my usage with the solar and battery (probably unlikely), it would take 20 years for my R.O.I at which time the system maybe on its last legs, especially the battery, so I’ve decided to invest the £20,000 at 5% interest which will pay me about £1000 interest a year, so covering my electricity bill and I will still have the £20,000 after the 20 years. I realise this is quite simplistic and interest rates may decrease but hopefully solar and battery installations will also get cheaper and I will investigate then. Obviously this is just a financial perspective and doesn’t include the environmental aspect but thought I’d add it as an alternative view. Thanks again and keep up the good work 👍🏻
Hi Peter, you're most welcome, and thanks for taking the time to comment. You make a good argument for an alternative approach to achieving an electricity saving via a financial investment - especially as this could be limited to just a few years until solar and battery prices come down to a point, where the ROI for an installation surpasses.
£20,000 is a huge amount of money for a system that only needs to cover 10kWh/day (assuming you're in the UK). Our 5.4kWp with 20kWh of batteries cost much less than that, and that completely covers our 18kWh/day usage for 6 months with solar, and 6 months with combined solar & overnight battery. It also covered the car charging for May/June/July.
Thanks for the reply Simon, maybe I need to shop around a bit more, but difficult where I live (Essex) to find reputable installers. I know quite a few people who’ve had nightmare installations with little comeback and it seems the whole solar industry has gone mad with substandard installers as there’s so much money to be made. Also, prices seem to have increased a fair amount in the last year because of inflation (and demand for solar I would imagine). I think as I’m a low energy user currently and don’t have an electric car yet I’ll keep monitoring the solar landscape for a while.
Thanks - I'll let you into my secret. I use PowerPoint for all the graphics and animations - particularly, the "Morph" slide transition feature, which I happened to come across a month ago! :-)
Great visualisation. I would add though that when the purchase price changes part way through, it changes for both the original model and the new solar model so the angle of the green line should also deflect at that point although not by as much as the original line because not as much electricity is being purchased. The only time this would not happen would be if you were able to go fully 100% self sufficient and therefore not import any electricity which would put the green line completely horizontal
Thanks for the follow up. In terms of the aim to reduce carbon emissions, the calculation there is whether the purchase of solar is a better investment to reduce carbon emissions than using offsetting. One advantage of solar is that you can be sure of the effectiveness - it is on your own roof and your own usage. If you spend money to save or plant trees somewhere you don't know if those trees were really not going to be there without your support and you don't know if they will be secure in the long run against unauthorized logging or (the seemingly increasing number of) forest fires. I often wonder if the ROI calculations should include the offsetting savings too! Perhaps as an option?
Thanks for taking the time to comment, Doug. Good points! I guess there are a number of ways to calculate ROI and so I’m hoping to provide a relatively straight-forward basis that people can build upon if they choose. Thanks for watching my videos, and keep an eye out for my further work on ROI in due course! 👍🏻
I got a solar PV array and home battery _specifically_ _because_ it made my bills cheaper (in the long run)! No other reason. The fact that it's also "greener" is utterly immaterial to me. The UK contributes less than *1%* to the worlds carbon emissions, so me changing to solar etc won't make a blind bit of difference. I just wanted cheaper bills (in the long term), and independence from the vagaries of the electricity rates going up and down like they have done in the past year or so. With the change of feed-in tariff on Octopus Intelligent to 15p/kWh my *ROI* has just improved dramatically!
The ROI was low priority for us, we work from home, having the house on a UPS. Saves me having to go into work in case of powercuts, where we live about 6 times a year it happens.
Adding a battery does completely change the cost per kWh of your solar generation, for the simple fact that you'll be using a lot more of your own generation and exporting less. So it's the same cost for the solar install but you use more of the output.
And complicated all the more by the higher export rates being offered these days in many countries. I think the only practical way to model all this is using a utility like the one I created here: garydoessolar.com/utilities/dailymodellingutility/
Thanks for your help. Long term investment Hopefully batteries will be cheaper in AUS on 8-10 years. My panels are between 8 and 3 years old. So they will see me out..maybe. Pat
That is the best graphical display of benefits I have ever seen. Excellent. Can I say for the nuclear promoters nuts as people leave grid useage the fixed and running costs of the grid remain but the amount of draw from the grid reduces and so the units of electricity used have to be more expensive. Connection daily charges will also increase. Nuclear generation is a decades to start up and then 6 to 10 decades of operation. Nuclear operators are much more expensive than the millions of people that can install PV panels. The big battery in EV is "free" with the vehicle. Nuclear operators will also be 3shifts 24/7/365/100 years, plus holiday shifts plus sick leave and training and ....... maintenance.... Plus demolition at plant end of life and disaster insurance costs and government guarantees on cash flows and bigger grid transmission construction and more power plants in the full electricity future. 😮😮😮😮😮😮😮😮😢 Actual cost of the pv system is cheaper than windows $/m2 in Australia. And the V2G big battery is "free" with vehicle purchase. Climate destabilisation will be deadly and expensive. Battery technologies are evolving rapidly. You are doing a great service 👏 👍 😊 ROI brilliant, climate change is a big big big money matter for the nuclear people and the little guy is being undermined to save their massive business model. Big business knows, Elon Musk knows, auto manufactures know. V2G is a 2 for the price of one and no humongously expensive extra transmission grid capacity construction.
@@GaryDoesSolar 9billion people on the planet. 80%in dictatorships. We must add the exploding military defence budgets to the nuclear proliferation solution. Australia can export millions of tonnes of uranium ore to every country's nuclear industries and make a fortune, ezi pezi. The sunniest country on the planet and our nuclear promoters want 80 SMRs, but the experts say 5times more electricity and so generation, 400 SMRs. And the humongously expensive extra electricity transmission grid capacity. 5 national grids. Gary get the length of UK national grid grid and poles and wires to the streets and homes and businesses and industries and buildings and.... Multiple each mile by £1million/mile x 5 = ......... Fossil fueled are extremely energy dense. Nobody does the maths or thinking. A video on this simple overlooked matter. It would make a valuable contribution to our thinking about how valuable Renewables can be. I do like your work.
@@GaryDoesSolar notice I do not speak about the common hot topics. It is an economic failure, stranded assets at massive government costs. Bankrupts do not clean up, Bankrupts walk away.
I think ROI is/should be an essential part of the decision for most people. Unfortunately costing the ROI on panels and/or batteries is really complicated and has many variables. You mentioned Inflation, but didn't mention either loss of investment income if self-funded, or cost of loan, if funded that way, Over a long period, this is a significant factor. Try as I might, for my use I can not make a financially rational decision to go solar, with or without battery. What might swing it will be emotion or power security and those won't appear in a spreadsheet. And just at the moment, I can't make the jump and invest (but probably will). As an after-thought, would investing in using less electricity have a better ROI at household level? For some, I'm sure it would, and others not...... There's another can of worms to add in.
Gary, what software did you use to draw the ROI graph - particularly that animated piece where there was a step-price increase in the price of electricity?
As one gets older a ROI is less relevant but what is indisputable is if you have the cash, Solar / battery offers a secure return which is way better than any other secure return and it is tax free. The one fly in the ointment is you need dual tariff to get the best out of it
@@GaryDoesSolar no, I meant off peak. Because of my roof profile I only have 10 panels 4.2Kw made up 6 panels on SE and 4 on SW so my peak is only around 3.5kW in ideal conditions so in the winter I may be relying on 20kW of battery off peak at 7.5p which still gives me 23p saving on 7,000kW p.a.
I'd be interested to know Gary's views on the new 'mote efficient 'solar panel technology that's supposed to mean the end of grid power within a decade. It there any likelihood Gary
So, panel efficiencies are between 20-23% today (meaning only that percentage of the sun's energy can be usefully converted to electricity). I've heard there is a physical limit to that percentage of 50% - so even if all of today's installed panels were replaced with those working at 50%, it's still only (at best) a 4-5 fold increase in generation. In the UK, solar is maybe 5-8% of the instantaneous energy mix today, so in the above thought experiment that could rise to 25-40%. So, in conclusion I don't see the end of grid power within a decade at all. But I do see battery technology improving markedly to the end of the decade, and this is going to make all the difference. Storage is the actual problem, not generation.
Hi Gary, should the green line not have a steeper slope to represent the interest you’re paying on the initial sum or the interest you would have earned especially as it’s quite high atm
That’s a very good point. If the funds were not at hand at the time of the investment and instead, were borrowed, there would likely be interest payable for the duration of the loan. And you’re right, that would increase the slope of the green line. If I do get round to making a utility (or spreadsheet) I’ll make sure to include that as an option. Thanks for highlighting 👍🏻😀
@@gavlarrrrr … but that 6% only keeps you in line with inflation, whereas the benefits of a solar investment increase with inflation over time. Just a thought…
My current daily usage is £2.80 according to my smart meter , I calculated ROI would happen around the time the panels and battery life’s span would end . Pre 2020 it would of returned much earlier unfortunately wars and phantom roses have negated solar benefit unless you are a grid that needs capacity to charge cars without building new power stations then solar roofs are only good for a short term good feeling about eco terms .
Yeah, you have a relatively low usage, and the base price of any solar and battery system (in the UK again) is £10K or more, which doesn't help make the ROI. Prices are coming down all the time though (and energy prices don't seem to be coming down at all) so worth keeping an eye on the market...
@@GaryDoesSolar if the standing charge and price hike hadn’t applied in 2021 then we could of got ROI in 5 years . Unfortunately UK has 100 terra watt deficit to charge EVs efficiently . Some say they hope solar homes will relief that and they can charge the same for 20 percent we need from grid as they did for 100 percent and use the capacity gained to help charge EVs and not have to invest in new power stations . Of course the home owners now pay for solar. Pay for price increase. Pay for charging EV and in 30 year pay for new nuclear sites lol we are kinda being bummed all round
Great video Gary. My DNO (national grid) has put a restriction on my export limit (6.6kW) in response to my G99 application. I'm fine with this, but they have also put a restriction on the total inverter sizes added together. They stated I cannot have a planned 5kW Solis string inverter and the GivEnergy AIO battery (6kW inverter output) together as my total inverter size has to be 9.3kW or less. I'm now in a dilemma having picked the AIO battery to get best ROI. I can have the GivEnergy AIO + smaller 3kW string inverter, or 5kW Hybrid inverter and DC coupled battery! Any help as never known restriction of inverter size when they have already put an export restriction?
Thanks. Now, is your DNO allowing your AIO to limit the export via software? Worth a chat with your installer as they will be able to list all your options... good luck!
If I'm getting 1:1 net metering in IL, why would I need a battery outside of grid outages (which are very few per year for me - maybe two per year for 20-40 minutes each)? I just put excess power on the grid and pull it back whenever I need it. My utility (Comed) has said I can't buy at night, store in the battery, and sell back during the day. They don't allow battery energy to be sold.
The concept of net metering is really interesting to me. Some countries like you own have this. Other countries had it, but then discontinued it or restricted it. And other countries (like the UK in the form of the Intelligent Octopus Flux tariff) are starting them up! You're right - with a net metering style tariff, it essentially replaces the need for a battery. I may have to do a video soon! Thanks :-)
Hi Gary, very informative channel. Like your clear and concise delivery. Have taken the ‘plunge’ and signed up to Octopus, so £50 credit for you and £50 credit for me! Many thanks.
Hi Henrik, thank you for your very kind words - that means a lot to me. And thank you for thinking of me with regard to your Octopus referral - also very kind! :-) I'll keep the videos coming...
One thing my friends have pointed out to me, after my solar install, is that similar ROI can be achieved by putting the initial investment into stocks and shares. In your line graph, it means the orange line would be not as steep because it is subsidised by gains from shares. How would you respond to this kind of thinking?
@@bill_heywood generally, historically, stock and shares out perform cash in savings and inflation. Over a very long time with a wide portfolio, the risk is minimal. But yes, investing in own solar and battery is lowest risk and pretty much guaranteed ROI.
Yes, although for a stocks and shares investment, it's better to look longer term (10 years or more)... A solar investment is shorter-term (maybe 6-8 years) and so a stocks and shares investment could have negative returns in that timeframe. Also, the ROI of a solar investment is more certain, in my view.
Hi Gary, I’m a big fan of solar with over 200 kw over a commercial portfolio. I have just moved to a Grade 2 listed house, my first instinct is to fit solar, but it’s a bit of a faff with aesthetics, distance from the house and planning. I have two EVs so am on the Octopus Intelligent tariff at 7.5p off peak, I do have space for a battery, do you think it is a proposition to just get a larger battery and charge off peak from the grid? I have the option to connect to 3 phase.
That's a relatively simple calculation isn't it? Ignoring the cars, you just take the cost of battery installation and divide by the savings. So, with Octopus, savings are 23p per kWh, batteries are £300/kWh, a simple non-solar inverter is £500, and installation maybe £1000. So for various usages: 10kWh/day - spend £4500, save £985/year. Break even 4.5 years. 15kWh/day - spend £6000, save £1478/year. Break even 4 years. 20kWh/day - spend £7500, save £1971/year, Break even 3.8 years. Obviously the installation cost will vary with how complex it is for your house, but it doesn't change the picture much.
@@SimonRGates thanks, I'll dig in with finding our non EV usage. It does gaul me having 175 kW on two cars and having to buy more for home use. Roll on V2G.
Never any good at maths... but i can see from my bills this time last year to this year, only 6 week into the solar expereamce, my electricity draw from the mains is down a third.. Now it will go up as iv converted to electric rads.. but am off setting this with the money not used on gas heating. Also using less water because of the eletric water heater under the sink.. and can controll each room as needed.. am going for anyother battery next year and at least 4 more PV units..
ROI is one thing but you have to account for lost opportunity cost. If you invested the money for the solar array instead you would still have interest. The solar array doesn't come out ahead until you have also saved any interest you would have gained. Secondly you can imagine inflation as it affects both sides equally. Increase in electricity prices over and above or below inflation does need to be considered but that is high on impossible to forecast.
Considering the risk of failed batteries and degradation, would it not just be better to export solar at 15p/kWh and then buy it back when you need from the grid on a tariff like Octopus Tracker that has averaged close to 20p/kWh?
Certainly, with the higher export rates available in countries like the UK, you could make an argument that the requirement to get a battery is slightly less, but everybody's situation is different. That's one of the reasons I developed the Solarazma utility, so that people could model different solar and battery combinations to see what the daily return would be: garydoessolar.com/utilities/dailymodellingutility/
Part of the reason why I installed solar panel is because I am retiring soon. With upcoming reduced incomes, I better start reducing my expenditures as well.
Great idea, and I hope you'll see the returns of that very soon. Have a great retirement (I'm hoping to soon as well, so I can concentrate more on my TH-cam work) :-)
I have had blackouts and surges destroy my fridges, tvs where the surge protection didn't protect it etc. What annoys me is I just want something that will backup for about 3hrs and prevent temporary blackouts and trick my solar to work in daylight if blackouts happen during day hours. Not 10K installs
You can find some hybrid solar inverters that creates its own micro grid to allow the solar panels to keep running the house during the day if there is a Blackout. I think Fronius Gen 24 inverter may do it to some extent without a battery, not 100%
They're 10K installs today, but prices are coming down all the time. I feel your pain though - it's a lot to pay for something you really shouldn't have to pay for...
The problem is a your inverter either needs to be able to control the panel output (as an expensive Hybrid or Off grid inverter does) or it needs someowhere to dump excess power into which is what a grid tie inverter does. Effectively a grid tie inverter sees the grid as an infinite battery and when that battery isnt there the only option it has is to cut the solar panels off completely. What you need is a HYBRID inverter that can control the solar panel output between house load, battery and (optionally) grid as needed and effectively "turn down" the panel output to match load. Of course you'd still need some battery storage for when the grid is off at night and to supplement solar power during the day. But with a few kWp of panels a £600 hybrid inverter (eg Voltronic VMIV) and maybe two 3.55 kWh pylontech batteries you;d get exactly what you wanted...total hardware cost ~£4 - £5k Now your problem is finding an installer that understands that rather than some ex-mcdonalds employee whos done a 2 hour online course on grid tied systems and become a "certified installer"
Just about to invest about 15k in a solar and battery set up plus an ev charger I guess my only concern is im constantly seeing headlines of new breakthroughs in solar panel tech And the last thing i want is to find out in a years time my setup is now the equivalent of a nokia 3310 😅 (Although i guess in battery life terms thats probably a good thing 😅)
Yeah, agreed. Technology is always advancing, and whenever you make the jump, there will always be something better coming along shortly after. I guess unless the decision to buy is never, it might as well be now 😀 good luck with whatever you decide! 👍🏻
It is a fair thought, but remember, every month you wait is another month paying full whack for your grid electricity, so you are losing a little all the time you don’t go for your installation
Dry good presentation! As governments have embarked on the great green energy transition, the enormous cost of building the green energy generation, storage, and transmission network will undoubtedly be passed on to the end user. Furthermore, as most governments have set unrealistic and for the most part, unrealistic transition targets, we are more than likely to see blackouts as the network base load drops off the proverbial cliff of bad, ill informed government policy making. It is no small thing to re-boot the national grid after a blackout and the re-boot timeline may in some cases take in excess of 24 hrs. May I suggest therefore, that a battery storage solution will in some measure protect you from the worst vagaries of bad government green energy transition policy making. It is hard to put a cost on energy security when calculating ROI.
Re your benefit 1, batteries are not particularly 'green'. They are actually more likely to increase your carbon footprint than reduce it. The main 'green' benefit is in helping the grid by reducing demand peaks.
@@GaryDoesSolar (Third attempt at posting!) No reference, just a thought experiment. Costs come from (1) the embodied energy that needs to be amortised over the lifetime discharge, and (2) the charging efficiency causing extra electricity consumption. (1) A lithium battery is approx 100 kgCO2 per kWh capacity (I have seen estimates of up to 200 kgCO2/kWh). Allowing a life of 6,000 cycles that is 17 gCO2/kWh discharged. (2) Assume the round trip charging efficiency is 90% and the grid intensity at charging time is at 180 gCO2/kWh, the additional carbon cost is 180(1/0.9-1) = 20 gCO2/kWh discharged. making a total cost of 37 gCO2/kWh discharged. The only potential savings I can think of are (1) avoiding curtailment on the grid, (2) avoiding wasting solar energy when your battery is not yet full but you have reached your export limit, and (3) charging when the grid is low carbon and discharging when it is high. (1) Could happen, but the battery would have to be managed specifically to minimise carbon to do it, and most batteries aren't. (2) Never happens with my solar system-the battery is always fully charged before the inverter starts clipping/reaches the export limit. Likely to be the same for most people? That leaves (3) to compensate for the costs. Again it might work but you would have to manage your battery specifically to minimise carbon. For those using overnight charging the grid is typically cleaner at night than during the day, but this difference has to be consistently more than 37 gCO2/kWh to be saving carbon overall. I don't have any data for this but it would be interesting to test. Thoughts?
I am 71 years of age. I have 44 panels on my roof and separate solar hot water. I have just got a price on batteries (19.92kw) at a price of $21,000 (AUS). The electricity supplier limits this year's electricity cost to $2,600.00, but this is also made up with Government incentives. If batteries last say 10 years, I will be 81 years old. Is buying the batteries a ROI. I know there is other considerations (electricity supplier rate, input tariff rates, inflation etc.) but is it financially viable. It is a big upfront cost. It has also been suggested that I go to an electricity wholesaler. I liked your ROI video, and it explained it better than the salesperson. What your thoughts. Is the battery install financially viable taking age, ROI upfront costs and changing to a wholesaler that operates in Australia.
Thanks for your kind words regarding the video. As you're in Australia, you can hopefully benefit from the "solar sponge" tariffs available in parts of the country - electricity is priced very low (or even free) then and if you have a battery, you can soak all that up for self-use during the peak import periods. My question would be, what's your daily usage? If it's less than 20kWh, you might not such a large battery install, especially given all the solar generation you'll have...
Can you do a video on cost/savings on implement a battery without solar? Could it be more cost effective just to pull in all your energy at the lower rate?
I can answer that as when I first decided on a system I was not going to have Solar, but when I included Solar the VAT disappeared app £2.5k and it reduced the number of batteries by one app £2k which almost covered the cost of the Solar part of the installation and the ongoing benefit of Solar v off peak electricity and the often forgotten reduced cycle of the batteries therefore preserving useable life and warranty in my view makes the Solar a very wise decision
I’m not sure I agree that all of the initial investment is a sunk cost, solar installations add value to a property. That value depreciates over time but there is perhaps other points at which it becomes profitable. The line is probably more bouncy than straight. For me personally I'm only making the investment because it has an ROI, it's just doesn't seem important when that is as it's too far to really have a material impact on finances. It will pay for itself in terms of CO2 within a couple of years, and it will pay for it's financial cost before it stops working. Forecasts are so speculative, betting on weather and future electricity prices makes a forecast worthless. There is an innate pleasure in self-sufficiency, I'm not sure if that was covered by one of your 4 reasons.
Hi Steven, you raise some great points here, thanks! And I think you’re right - the solar and battery installation has intrinsic value that can be realised at a time the property is sold. That value would be based on the annual estimated savings the system provides (against the cost if the system was not there) multiplied by the estimated remaining lifetime. An easy sell I’d argue 😎
Could you do a video on how to use solar and batteries when the grid falls over. My installation currently goes offline if there is a power cut and I've been wanting to add to the array and add batteries but the loss of all power when the power grid fails is putting me off.
You just need a battery with EPS capability and an appropriate installation to go with it. A good option would be a Tesla Powerwall. Fit it and forget it...
Depends on your system, but I have added 1.6kW extra panels that only charge the battery directly via Victron MPPT charge controllers , so during a daytime power cut I still get some charge.
Indeed - I always say everyone should get the maximum number of panels on their roof as they can first, then add things like battery etc. I've never heard anyone say they had too many panels... :-)
@@GaryDoesSolar a neighbour has 17kw rooftop solar system. I think it is 3phase with 3 x 6.6kw systems and no EV. !!!!! I think that the 20million buildings in Australia, all connected to the national grid had only 6.6kw systems then that would be 660Gwh every day at the ends of the National Electricity Grid 😳 😀 Australian fossil fueled generation is 600Gwh daily if you are lucky. So actually 32m2 of rooftop is all that is needed nationally, 20million buildings. EV batteries are the biggest need. Just my thoughts.
@@stephenbrickwood1602I am sure this also applies in UK. I have suggested to HMG ( more than once!) that if building regulations were amended to require all new domestic or commercial buildings to have their roofs fitted with max possible solar panels and batteries then the effect of diffusing generation and reducing input from the grid would probably mean that little or no extra base load generating capacity would be need in UK and the massive grid upgrade might be avoided as well. Of course the bill would fall to householders and business but the huge potential Government' ( 2:00 our money of course) investment could be recycled to provide support for the initial capital costs.
@michaelblackmore883 The UK is at colder latitudes than Australia. But the climate is warming also. If the rooftop solar PV and EVs plugged in 23 hours a day are short for a month, then emergency use of fossil fuels would cause little harm. 32m2 for solar panels in Australia and maybe 60m2 in UK. The grid is fragile, TELL THE WORLD, and took 100years to build. Massive national wealth. The future is 5times more electricity to remove all high energy density fossil fuels. THAT IS 5TIMES BIGGER NATIONAL ELECTRIC GRID. People are stupid to not talk about this failure of centralised generation.
@@GaryDoesSolar if you Google, ore ask Tesla.. how long does the model s last ,, You get a answer like .. if you drive 260/270 miles a week that’s about 40/45 kWh of 66kwh tt .. your Tesla battery can last for 30/32 years.. than the new improved Panasonic ncr18650bd/ga has no need of SOH if you charge to 4,15v ☝️and slowly, not fast charge it .. the battery’s I build (2x 14s200p. 51,2v … 646ah .. 2000a discharge ( 4000a total) are connected to a hybrid 6,2 kw inverter , doing max 125a … I put it on, diy battery on fb a few times.. I’m sorry Garry bud this one can do it!.. this setup are basically 6 Tesla powerwall’s running as one, on max 15% capacity,,
A colleague of mine recently spent £12k on solar panels & storage battery. I spend about £550/year on electricity, once the standing charge is deducted. If having solar reduced my electricity consumption to zero I'd be saving £550/year at most. Take into account the opportunity cost of £12k, I could earn 3% nett return, that's £360/year, so overall savings are £190/year. Would I spend £12k to save £190/year? Obviously not. For me, the system would have to pay for itself within 5 years.
There is also the possibility of making money as well, given the lucrative export rates. In the summer, despite my heavier than average usage, I was making £100/month over the summer on the UK's Octopus Flux tariff. That would make a large (positive) impact on your calculations I suspect... :-)
@@GaryDoesSolar In principle, I don't believe that the electricity generation and supply network should be run by private companies that put profits before the public need. The ludicrous pricing mechanism we have now that allows people to profit from speculating on the spot price of electricity should be abolished. The money paid for exporting power to the grid just gets added on to someone else's bill.
@@brendanpells912 Actually, the money paid for exporting power comes from the savings made by the energy companies from not having to buy the expensive fossil fuels they would have to do otherwise... I agree though, that the way the energy market is run has to change. Note: Octopus Energy (number 2 provider in the UK) deliberately makes zero profit.
@@GaryDoesSolar It's also expensive to keep gas-fired stations running on hot standby ready to pick up the load as wind turbines drop off the grid. What should happen is that wind-farm and solar farm operators should be required to provide back-up generating capacity at their cost, instead of relying on legacy plant that someone else has paid for.
@@brendanpells912this is precisely why home batteries are an excellent way of supporting renewables like wind and solar cope with the quiet periods. I don't think we should penalise any renewable or non renewable source - we do need a mix and imo nuclear is a great addition to the pot also. The more the better - we're not going to need less electricity in the next few generations as EVs etc ramp up that's for sure.
No business would ever calculate ROI like this and business decisions on investment are really no different from investment decisions you make as an individual if you are looking at whether financially you would be better off making the investment. A business would always give a value to the investment at the point of installation and then include the depreciation of the asset as a cost. These calculations assume the value of the battery and solar installation is zero once installed which is clearly not true. A house with a battery and solar installation is worth more than one without, it's worth a lot more according to an estate agent I know. According to him it could increase the value of your house by as much as the amount you spent on the installation. Just because you can't liquidate the asset easily doesn't justify giving it zero value and you certainly can't argue that for battery installations which could be resold easily. This is important because calculations done like this give returns on investment which are years longer than they really are.
Your first sentence is so authoritative and yet clearly wrong. Just read the comments on this video- many individuals see the value of the way I suggest to calculate ROI. And individuals and businesses absolutely do not look at ROI in the same way. Depreciation of assets is primarily for tax purposes and future business sale. I'd argue that most people are not planning on selling their home - especially if they've just spend £10-20K on a solar installation, so the asset is to all intents and purposes worth zero to them. I agree with you though, a solar installation does add value to a house in the event of a sale, but not in the way you think. The buyer doesn't care what you paid for it - they will make a determination of worth based on energy savings per year and expected remaining lifetime of the system.
The ROI narrative was pushed by the utility companies to make sure people understand their important role back then and in the future. Distributed systems cannot compete against their superior cost efficiency and people should not do stupid things like rooftop solar. The cost efficiency and the ROI of centralized smokestacks go unparelleled and we’d be better off by just keep sending our money to their way. Why ROI was such a nice tool to delay rooftop solar installations? Because all investments in centralized system had earlier and always been all about the return of it. The status quo was under threat. And then the ”impossible” happened. Rooftop solar became extremely cheap. And the prices can still come down by 90%. Same goes with batteries. You’ll end up to same cost when building a new home if you replaces roof tiles with panels and hot water boiler with batteries. Utilities are in their Kodak moment. 📸💣 They should have provided PV+BESS as a service a decade ago already.
Absolutely impossible to get a return. As you say all of your other examples give tangible return that is not measurable financially. If you take solar/ battery as an investment you have to compare it with investing your money in a bond of some kind. I worked out that if you compound the money at 4% and use one of my quotes. That taking a 10 year payback was impossible. I'm 77 and may not last that long certainly won't be in this house in 10 years time. It worked out that 1 KWh of solar would cost me 53p to produce for a 10 year projection. I could get 15 p for export and I pay 20p for import. Numbers which are startling. I don't believe that co2 is causing climate change. I don't think climate change is as bad as it's being hyped up to be.
Many people get a return after 6-8 years, so I can't see how you conclude "absolutely impossible". It's also a shame that you don't believe CO2 is causing climate change and that climate change itself is not as bad as it's hyped up to being. Your views are increasingly in the minority, I'm afraid.
@@GaryDoesSolar Not if they live in Scotland. :-) with a West facing roof If you include the amount you get from investing your money at 4% compound. It makes an interesting calculation. My system was priced at £11.5k which over 10 years is a shade over £17 With my expected production. 53p per KWh. Currently importing at about 20p and max export at 15p I'd need to make £1700 pa out of, from memory, an estimated, 3600 KWh pa production. If I ignored the compounding I still need to make £1200 pa about 30p per KWh I'm 77 I need that payback. I'm investing in Ripple and putting some into a bond.
I’d 100% agree with your suggestion that its a relatively few people that can afford an investment like solar & battery and completely ignore the ROI. I’d also say that the ROI calculation is going to be a massive influence on how (and how quickly) we adopt green tech. The huge increases in energy prices in the last 18 months has been a big driver in the investment in roof top solar. Its a fact that everyone likes the status-quo, until it starts costing more money than the alternative 😂
Thanks - I'm hoping that as costs continue to come down, the financial ROI case can be made by more and more people. And for those that are not able to make the case, that they benefit indirectly from cost savings to be had with an ever-increasing renewable share of the energy mix (i.e. energy price drops).
Superb video again Gary! You have a lot of talent in what you do and might not realise it :)
That's so very kind of you to say - thank you! :-)
I congratulate you on your series of videos that presents information in a clear and simple way.
ROI on batteries is a subject which can have several approaches depending on what you are trying to show. Your method of cost per kWh produced is useful to a degree but to use it to predict future cost of cycling the battery is slightly iffy. As soon as you cycle more, the cost per kWh changes, so it is dynamic. There is also the case of if I do zero cycles per day it has infinite cost per kWh, this is just extreme but it illustrates the point. The battery cost is more a fixed and variable cost equation. Even if I don’t use the battery, in your example I would spend an average of £1.10 per day to amortise the cost over 10 years. If I stay within my number of cycles in the warranty (6000 is common, more now are unlimited) I can cycle 1.5 time a day at no extra cost to me. So your example of costing 4.5p/kWh by charging and discharging is a bit misleading as without doing it it could cost 25 p/kWh (0.5 cycles/day) and by earning 75p (1.5 cycles/day) it would cost 9 p/kWh but the actual cost has not changed. The extra 1 cycle per day is at no real cost, just a theoretical cost but I have earned a real 75p.
The point is that unless you do something that affects your warranty or reduces the life of the battery significantly the cost per kWh is purely academic once you have bought the battery.
Thank you for your kind words on my videos and also your analysis and insight - it’s very thought provoking. Moreover, it’s exactly the kind of feedback I love getting because it tests the principles I’m suggesting…
I’ve been wrestling with the battery ROI topic for several weeks now - and I can’t quite get to a solid, defensible answer. At present, I see the cost per kWh purely as a crude guide on how one might use their battery, essentially showing that there is an amortisation of the cost of purchasing the battery against *when* it is used. At an extreme (and, like you, I think taking concepts to extremes is an incredible valuable operation) spending $10K on a battery and using it for just one day in its whole lifetime to charge then discharge say 5kWh means the cost per kWh is $2K. That makes sense to me. And so using it more will lower the cost per kWh, hopefully to the point where it becomes profitable. And that profitability will vary on *how* the battery is used as well as when. Is the discharge to the home or the grid, for example. To me, the cost per kWh is useful for those calculations.
But that’s where its usefulness ends I think. The actual battery ROI calculation over time (years) won’t use cost per kWh at all. Instead, it’ll simply be the initial cost of the battery and monies actually saved or made over time with the battery being present in the solar setup.
Let me chew on your thoughts a bit more, and I’d be interested in your thoughts on mine above 👍🏻 thanks
Hi Gary. Thanks for another insightful video.
Seeing the ROI displayed as you did is a great way of visualising the effects of finacial changes over time. Very helpful when trying discuss solar with my partner.
Cheers - and I'll be building on these concepts in time as well. Great to hear it's useful to you :-)
Thank you Gary for another superb content about solar and battery. My favorite content creator in renewable energy.
You're too kind, but thank you! I'll keep the videos coming... :-)
Thanks for doing what you do Gary, so informative. I am at the beginning of my solar journey and am currently having quotes. I have learnt so much from your video's and they have contributed to my plan. Thank you 😊
Hi Steve - it's my pleasure. I was in the same position as you in fact, and it's why I started this channel. It's really great that I've been able to help you on your journey! :-)
You also need to take into consideration interest rates. For example if you did not buy the solar installation then how much compound interest you would have earned on that money if it was still in your savings account. Even at 3% it makes a difference. However, you also need to calculate your savings in the same way ie. calculate compound interest on the savings as you make them.
Fair point.
Always look forward to a video from you Gary. Very informative.
Can I make a suggestion, your intro and exit piece, would it be possible to lower the volume on it. I normally watch your videos at night on the TV and it blasts through 😂.
Hi Michael, I've been turning the volume down on the intro/outro music each time in the last few videos - I'll turn down a little more for the next one too. Thanks for pointing out!
Hi Gary, sorry if it’s been mentioned before but another consideration is import electricity is eligible for VAT, whereas export doesn’t attract the same. So e.g. import at 7.5p per kWh is actually 7.875p with 5% VAT. Love the videos 👍🏻👍🏻👏🏻👏🏻
Ah yes - very good point! Luckily, it doesn’t alter things too much but definitely one to take account of! Thanks for highlighting 🙏
It's worth comparing to the Opportunity Cost of the battery investments ie. putting money in to the bank.
Absolutely - that same money could be invested in many other ways 👍🏻 lots to weigh up!
Good explanation and video. Yes, I'd like the addition of the cumulative cost over time graph in Solarazma Pro. Thanks.
Thanks for letting me know - cheers! 👍🏻
Hi Gary I initially bought a 3.2Kw array with a 3.2Kw battery and quickly discovered I needed a second battery certainly in the summer months, not sure about the winter yet. At £2,500 per battery this was exspensive but hey interest rates are rubbish so why not, mind you £2,500 worth of electricity is a lot so wondering was it really worth it. Anyway at my age I will not see a return on my install but my son certainly will after my days. Got to start somewhere.
Funny but I am exactly tha same!
I am bit unhappy with the installer as with their knowledge and my usage data they should recommend confidently bigger battery straight away! Would save me 700£😢
I think you did the right thing :-)
I can sort of understand, however everyones situation is different, so difficult to work out usage plus amount of sunlight falling on roof.
I don't have a battery, but during the worst days in winter my 3.27 kW rated system barely makes enough power to meet my house's base load (circa 60 watts). As an example, last December my generation averaged 3 kW hr per day (all those short, dark, cloudy days). That can be compared to 14 kW hr in a typical summer month.
So my take is that a battery would be pretty useless for 3 months of the year, unless you combine it with a time of use tariff that lets you charge it with cheap electricity overnight.
@@roberthuntley1090That's exactly what I do now autumn is upon us. My setup is essentially acting as 2 separate systems.
The pv array does its thing, offsetting electricity costs during the day and I go to grid over night.
The battery charges in the peak period, sits full during the day and then sells back at peak rate between 1600 and 1900.
Whenever I've been asked is having a battery "worth it", I always respond with "what is YOU'R definition of worth" .. for us we value the independence and not caring about the Government's incompetence in managing energy needs. We bought a cheaper house in order to be able to afford to install a solar and battery set up, so Whenever we mention the costs of the solar and battery I tell them not to see it as an seperate purchase but view it as the total amount we bought the house for. Plus not only are we Bill free but the utility company pays us month for extra solar feed in
A great way of thinking about things - thanks for sharing!
Yes I agree. The ROI displyed as you show is, i think, the best way to look at a system over time. Thanks again, most helpfull.
Thanks Peter - and I'll be thinking about some kind of utility (or spreadsheet) that people can use as a starting point to track ROI themselves.
Great thoughts. For us, we are knowingly not getting the 'maximum' solar return, so our calendar roi will probably be 12 years, but the security is quite helpful with peace of mind.
Thanks :-)
Hi Gary,
In your previous video I didn't agree, or rather thought it was problematic, to isolate the battery from the rest of the system in your formula. In your table you calculated 12p/kWh cost for using the battery over 10 years and I thoughtut what if your solar PV generated enough electricity to pay for the PV plus battery in five years? Surely that should bring the calculation to 0p/kWh at the five year point and -24p/kWh over the five to 10 year period where it pays for itself again?
That's what you have in your excellent dissecting graph lines illustration. That's definitely the way to go. In fact it gets more complicated still considering other things like heat pumps making the best cost effective use of your generated PV and getting rid of gas consumption and standing charge, exporting in summer, banking the surplus in the account for use in winter at cheap rate (long term storage!) and of course any grants available making some of it free or low cost.
I worked out that even increasing the size of your battery could also pay for itself over winter by making the most of the cheap rate at night and minimising the peak use from when a smaller battery may run flat. The "pay back" time didn't seem to change much.
I prefer to work out the total saving of the whole system (PV+ battery+ heat pump) compared to previous combined gas and electricity which could be perhaps 75% and from that working out return on investment per year as a percentage (just because it compares so well to any savings accounts these days!) and then pay back time.
The pay back for a gas boiler by the way was not shoveling coal and the pay back for coal fires was not chopping wood. The pay back for heat pumps plus solar and battery is not a physical toil advantage but financial and the invisible lack of C02. We've come a long way from burning a pile of sticks on the floor with a hole in the roof to let the smoke out.
Hi John, yes - you're right. I was trying to get across the point that the purpose of calculating and using a "Cost per kWh" for the battery is purely to determine *how* to use the battery at any point in time (my next video - part 2 of smart tariff strategies - will show this in action). Then, for the ROI on the solar and battery installation as a whole, we include all financial aspects - so yes, your solar generation goes towards the original cost of the battery.
And yes, we have indeed come a long way! :-)
Had my solar an batteries put in 3 years ago when the per kWh prices were 12p per kWh. I’m now on 39p per kWh With what I’m exporting and what I’m using it will be fully paid off in 15 months
Wow - that's great! :-)
I use ROI in yet another way in that I know what I want to do (export all day, import at night to do my best for the environment) so use ROI as a way to choose the tariff that gives the best return when doing that. Same approach, just different reason - and input variables.
Also, I see a number of comments about installations that never break even and wonder if this is a problem of scale. Panels themselves are cheap compared to the other components needed so just a couple of kWp might be a poor investment whereas (if you can) a bigger array costing very little could offer a good return.
I like the way you’re thinking about this 👍🏻
Your ROI graph was very insightful Gary, thanks for the video.
I would like to see a similar scenario where the pv battery system meets 150% of your daily use. Here in Australia we get what is called a "feed in tariff" which is quite low, usually less than $0.08 per kw hr, but it adds up (we currently buy power @ $0.40 per kW hr). By my own calculations a system like this for myself would generate $1000 annually, and we don't have an ever increasing electricity bill, and we don't have to purchase fuel for our ev either, which totals approximately $7000.
Admittedly a system that provides all of our needs, and some, is expected to cost about $30k, so not "cheap" by any standard. So by my estimate, $7k +$1k gives us a break even point of less than 4yrs. Let's also assume that our battery is substandard and only lasts 8yrs (& solar panels @ 25yrs), I would imagine that home batteries will be better and far cheaper as time goes on too, just like $1.5k VHS video players that you could eventually buy for less than $100.
Just my thoughts from going through a similar cost analysis roi recently.
The feed in tariff you’re on sounds very good indeed. Is that still available to new customers. Here in the UK, there was a similar system, running from 2010, but it closed to new customers in 2019.
Completely correct there is a return an investment of everything, granted most are negative. But people should take this into consideration before buying anything
Yes, most definitely worth the time and effort in working out the expected ROI before making the jump - and hopefully my videos and utilities help in this regard...
@@GaryDoesSolar they really have detailed content and rational reasoning in the videos of yours I have seen. Good job keep up the great work Gary
On energy security - you typically have to pay extra for the installation if you want power cut fail over, and many installers are reluctant.
Agreed - there is an extra cost, but I'm hoping that with the latest batteries on the market having built-in EPS (see my video here for details on those: th-cam.com/video/x83t1iCMXxw/w-d-xo.html) the installation effort should be easier and therefore costs of that - and the batteries - will continue to come down.
The Huawai needs an extra power control box to enable automatic fail over and back to grid. It's a couple of hundred Euros (In Spain) but the installers generally have no idea about it or how to use it because they are "trained" on simple grid tie systems.
Good explanation! I think a battery system is useful for keeping the lights and internet Router on and heating on in the event of a Power Cut (Outage) atleast while we are sill burning Gas! obviously if you change to Heat Pump later You'll need a bigger Battery!
Thanks, and agreed - my on EPS simply keeps the lights on and the router.
Yes spot on with the motivations behind ROI. And love the chart. This is a conversation I have with lots of people thinking about solar (and electric cars). I tell them ‘do the maths’ and you’ll see that it makes sense. I could say ‘do the maths and use a chart’. Some will be motivated purely by the financial savings but for others it can make ‘doing the right thing’ affordable too.
Thanks and I agree with all your points.
I need a 10 year or less return.
If I invest the money in a cash bond at 4% and use that as my actual investment. I calculate at the 10 year mark I will be producing at 53p per KWh.
It's better to invest which I'm doing....
Hi, one of the things that doesn't really get discussed is how we evolve our installation over several years. That means buying different generations of PV, solar battery etc, possibly from different manufacturers and then trying to get things to work. I'm on an orignal FIT from 2016 (approx 12.6p per kwh), The PV array was connected to a Samsung ESS (DC battery/inverter) a year later in 2017, which is still operational. I'm now in the MyEnergi ecosystem with Eddi, Zappi and a new Libbi for battery storage. The Libbi is standalone and is charged offpeak, as my installer could see no way to get it to work alongside the Samsung ESS, which remains directly connected to the PV array. The MyEnergi app does offer some level of control and a dashboard for me to understand how much excess solar is available and then and divert this to charge the Libbi, Zappi, Eddi. But there is a a very real need for some level of standardisation/integration. These things are very expensive; PV arrays are supposed to last 25+ years; batteries over 10. Manufacturers need to make it far easier to swap out and replace things.
Hi Cliff, you raise a very good point. We're really still at the stage of an immature market, and there is little desire for manufacturers to work towards a standard interface between system elements. It will come eventually, but typically requires a catalyst - perhaps one of the manufacturers forcing the issue, or compelling external management software requiring such. Let's see how things go over the next few years....
Thanks Gary. Your videos are the best on the web in offering concise explanations of solar in terms non-specialists can readily understand. I installed a 12 kw system on my house 5 years ago, with another 3 kw added two years ago in anticipation of my purchase of an EV. I wish that I had the guidance of your videos in planning my system, which would have helped me make somewhat better decisions. Nevertheless my experience with my solar installation has been overwhelmingly positive. Here in the US Desert Southwest a good ROI is easy to achieve as long as one works with a reliable contractor. The most frequent mistakes I see involve naive customers who get lured in to no money down 20 year leases with exorbitant buy out provisions should one wish to terminate the lease. I’m wondering if there is a similar “lease trap” problem in UK (or other countries).
Hi Richard, that's high praise indeed about my videos - thank you! :-)
I was over in your part of the world last year with my wife on vacation and I loved it there! Plenty of sun, certainly!
Yes, in the UK we had similar schemes (maybe 10 years ago) and I think they worked out badly for a lot of people. I don't see many (if any) of these schemes now. I guess with any new market, there are always companies ready to scam people :-/
All the best with your (growing) installation. I am hoping to get an EV myself before long!
@@GaryDoesSolar I’m still pondering the question of “to battery or not to battery.” My utility’s rate structure has recently changed to favor batteries for new installations. I am currently on a time of use plan that is much better than anything offered now, which complicates the decision of making changes in my system configuration. Electric service is a so-called regulated monopoly in the US so we are at their mercy when it comes to rates and system approvals. Layered on top of all this are developments in battery technology and cost. So for the present time I am watching and waiting for the stars to align. Concerning EVs: I went ahead and bought a Tesla Model Y largely because it appears there may be a long wait for the competition to catch up with Tesla’s software technology and charging infrastructure. I will be turning 75 in a couple of months and I wanted to make sure that I had a full EV experience before it’s too late. If I were 10 or 15 years younger I probably would wait a bit before plunging into the purchase of an EV. But for now my combination of home solar and EV charging is a match made in heaven. My marginal cost of charging the Tesla is about $0.03 per kilowatt hour (the measly amount the bandits at SoCal Edison pay me for excess production).
@@richardcoughlin8931 Thanks for your additional thoughts, and great to hear you're having a great experience with your Tesla. I see prices are starting to come down on pretty much all EVs at the moment in the UK, so hopefully it won't be long before I get one 😃 SoCal will hopefully wake up one day and see that it actually would benefit them to take a lead in this space!
Two items that are not included in your model are the income from exporting - only significant in summer - and the Feed-in-Tariff.
For our solar - 3.6kW - we calculated that the ROI is 9 years. FiT runs for 20 years so the income phase is more significant.
We are in a village without mains gas, so the cost of electricity for all our energy needs v electric plus LPG/Diesel, using solar/battery/ASHP/solar thermal makes ROI very difficult to calculate as a whole system. Our estimate for our set up is 9yr for solar, 10yr for battery, 5yr for solar thermal panel and 4.5yr for ASHP (includes RHI).
Hi Phil, anyone who's on the UK Feed-in-Tariff (FiT) scheme certainly snagged the golden ticket :-) But I can't include that in my videos as that scheme is no longer available to people. Of course, you can include the benefits of that in your own ROI calculations.
Regarding income from exporting - yes, they would be part of the ROI (and I include this in my utility here: garydoessolar.com/utilities/dailymodellingutility/
In my case, on the UK's Octopus Flux tariff, my green line went down over the summer as a result of all the exporting! :-)
Yeah, there is a problem with trust. There is a lot of promises and new trends but do those really work? Thank you Gary for your unbiased explanatory work. It is worth supporting.
You are most welcome - thanks for the kind words. I want to remain objective and therefore trusted.
Good work. More power to you 👍
Thank you, brad :-)
Hi Gary, love your videos and this one is quite useful as well. Your point about the further investment in solar changing the slope of the cost is well made and I'm assuming that's the cost of adding battery storage rather than panels?
One thing I feel I should point out is that if the original slope changes due to an increase in grid prices, it should also impact the solar investment slope, though to a lesser extent.
Thanks, and yeah, you'e absolutely correct - I should have increased the slope of the green line to show that. I'll add a comment in the post-publication notes in the video description.
Going to be interesting as new battery technologies become available. A 10kW flow battery for domestic installations has been announced by a German company - it'll probably be ridiculously expensive, but affordable ones will appear eventually and they don't have the degradation issues of conventional battery technology.
Yeah, I'm keeping an eye on new battery technologies at the moment. I have a feeling there are going to be some dramatic moves forward soon! :-)
Thanks for the video, very interesting. I think what some people forget about R.O.I for solar and battery is that in a normal house without solar and battery, electricity is delivered to the house without the need for extra devices, unlike gas where you need at least a boiler to heat your home, so the solar and battery do need to pay for themselves over time to break even.
One thing I haven’t seen discussed much is whether solar and a battery is financially sensible based on a persons usage. I’ve looked into a solar and battery installation which could possibly cost £20,000 but I currently only spend approximately £1000 a year on electricity. Even if I covered every kw of my usage with the solar and battery (probably unlikely), it would take 20 years for my R.O.I at which time the system maybe on its last legs, especially the battery, so I’ve decided to invest the £20,000 at 5% interest which will pay me about £1000 interest a year, so covering my electricity bill and I will still have the £20,000 after the 20 years. I realise this is quite simplistic and interest rates may decrease but hopefully solar and battery installations will also get cheaper and I will investigate then.
Obviously this is just a financial perspective and doesn’t include the environmental aspect but thought I’d add it as an alternative view.
Thanks again and keep up the good work 👍🏻
Hi Peter, you're most welcome, and thanks for taking the time to comment. You make a good argument for an alternative approach to achieving an electricity saving via a financial investment - especially as this could be limited to just a few years until solar and battery prices come down to a point, where the ROI for an installation surpasses.
£20,000 is a huge amount of money for a system that only needs to cover 10kWh/day (assuming you're in the UK). Our 5.4kWp with 20kWh of batteries cost much less than that, and that completely covers our 18kWh/day usage for 6 months with solar, and 6 months with combined solar & overnight battery. It also covered the car charging for May/June/July.
Thanks for the reply Simon, maybe I need to shop around a bit more, but difficult where I live (Essex) to find reputable installers. I know quite a few people who’ve had nightmare installations with little comeback and it seems the whole solar industry has gone mad with substandard installers as there’s so much money to be made. Also, prices seem to have increased a fair amount in the last year because of inflation (and demand for solar I would imagine). I think as I’m a low energy user currently and don’t have an electric car yet I’ll keep monitoring the solar landscape for a while.
Hello Gary, how do you create those beautiful graph animations?
Thanks - I'll let you into my secret. I use PowerPoint for all the graphics and animations - particularly, the "Morph" slide transition feature, which I happened to come across a month ago! :-)
Great visualisation.
I would add though that when the purchase price changes part way through, it changes for both the original model and the new solar model so the angle of the green line should also deflect at that point although not by as much as the original line because not as much electricity is being purchased. The only time this would not happen would be if you were able to go fully 100% self sufficient and therefore not import any electricity which would put the green line completely horizontal
Agreed - good spot! And thanks for the great feedback 👍🏻
Thanks for the follow up. In terms of the aim to reduce carbon emissions, the calculation there is whether the purchase of solar is a better investment to reduce carbon emissions than using offsetting. One advantage of solar is that you can be sure of the effectiveness - it is on your own roof and your own usage. If you spend money to save or plant trees somewhere you don't know if those trees were really not going to be there without your support and you don't know if they will be secure in the long run against unauthorized logging or (the seemingly increasing number of) forest fires.
I often wonder if the ROI calculations should include the offsetting savings too! Perhaps as an option?
Thanks for taking the time to comment, Doug. Good points! I guess there are a number of ways to calculate ROI and so I’m hoping to provide a relatively straight-forward basis that people can build upon if they choose.
Thanks for watching my videos, and keep an eye out for my further work on ROI in due course! 👍🏻
Thanks a lot for your knowledge Gary.... it is really well explained, and allow us to create r abetter world through renewable energies :)
Cheers Antonio! That's great feedback :-)
I got a solar PV array and home battery _specifically_ _because_ it made my bills cheaper (in the long run)! No other reason. The fact that it's also "greener" is utterly immaterial to me. The UK contributes less than *1%* to the worlds carbon emissions, so me changing to solar etc won't make a blind bit of difference. I just wanted cheaper bills (in the long term), and independence from the vagaries of the electricity rates going up and down like they have done in the past year or so. With the change of feed-in tariff on Octopus Intelligent to 15p/kWh my *ROI* has just improved dramatically!
I can't argue with this. Fair reasoning.
The ROI was low priority for us, we work from home, having the house on a UPS. Saves me having to go into work in case of powercuts, where we live about 6 times a year it happens.
Yeah, energy security is just as, if not more important than the financial returns. Your case is a good example of that.
Adding a battery does completely change the cost per kWh of your solar generation, for the simple fact that you'll be using a lot more of your own generation and exporting less. So it's the same cost for the solar install but you use more of the output.
And complicated all the more by the higher export rates being offered these days in many countries. I think the only practical way to model all this is using a utility like the one I created here: garydoessolar.com/utilities/dailymodellingutility/
Thanks for your help. Long term investment
Hopefully batteries will be cheaper in AUS on 8-10 years. My panels are between 8 and 3 years old. So they will see me out..maybe.
Pat
Yeah, I'm seeing battery prices steadily come down. And your panels should last a good many more years yet, as I hope you do too (and me!) :-)
That is the best graphical display of benefits I have ever seen.
Excellent.
Can I say for the nuclear promoters nuts as people leave grid useage the fixed and running costs of the grid remain but the amount of draw from the grid reduces and so the units of electricity used have to be more expensive.
Connection daily charges will also increase.
Nuclear generation is a decades to start up and then 6 to 10 decades of operation.
Nuclear operators are much more expensive than the millions of people that can install PV panels.
The big battery in EV is "free" with the vehicle.
Nuclear operators will also be 3shifts 24/7/365/100 years, plus holiday shifts plus sick leave and training and ....... maintenance....
Plus demolition at plant end of life and disaster insurance costs and government guarantees on cash flows and bigger grid transmission construction and more power plants in the full electricity future. 😮😮😮😮😮😮😮😮😢
Actual cost of the pv system is cheaper than windows $/m2 in Australia.
And the V2G big battery is "free" with vehicle purchase.
Climate destabilisation will be deadly and expensive.
Battery technologies are evolving rapidly.
You are doing a great service 👏 👍 😊
ROI brilliant, climate change is a big big big money matter for the nuclear people and the little guy is being undermined to save their massive business model.
Big business knows, Elon Musk knows, auto manufactures know.
V2G is a 2 for the price of one and no humongously expensive extra transmission grid capacity construction.
Thanks for the kind words. I'd argue we do need nuclear though, despite its drawbacks and expense.
@@GaryDoesSolar 9billion people on the planet.
80%in dictatorships.
We must add the exploding military defence budgets to the nuclear proliferation solution.
Australia can export millions of tonnes of uranium ore to every country's nuclear industries and make a fortune, ezi pezi.
The sunniest country on the planet and our nuclear promoters want 80 SMRs, but the experts say 5times more electricity and so generation, 400 SMRs.
And the humongously expensive extra electricity transmission grid capacity.
5 national grids.
Gary get the length of UK national grid grid and poles and wires to the streets and homes and businesses and industries and buildings and....
Multiple each mile by £1million/mile x 5 = .........
Fossil fueled are extremely energy dense.
Nobody does the maths or thinking.
A video on this simple overlooked matter.
It would make a valuable contribution to our thinking about how valuable Renewables can be.
I do like your work.
@@GaryDoesSolar notice I do not speak about the common hot topics.
It is an economic failure, stranded assets at massive government costs.
Bankrupts do not clean up, Bankrupts walk away.
I think ROI is/should be an essential part of the decision for most people. Unfortunately costing the ROI on panels and/or batteries is really complicated and has many variables. You mentioned Inflation, but didn't mention either loss of investment income if self-funded, or cost of loan, if funded that way, Over a long period, this is a significant factor. Try as I might, for my use I can not make a financially rational decision to go solar, with or without battery. What might swing it will be emotion or power security and those won't appear in a spreadsheet. And just at the moment, I can't make the jump and invest (but probably will).
As an after-thought, would investing in using less electricity have a better ROI at household level? For some, I'm sure it would, and others not...... There's another can of worms to add in.
Yeah, lots in the mix. Good point about the costs of funding, which should be added in too!
And comparison with just putting the money into a cas bond for 10 years.
Compound interest really adds up
@@GaryDoesSolar
I calculate that each KWh would cost me 53p
Gary, what software did you use to draw the ROI graph - particularly that animated piece where there was a step-price increase in the price of electricity?
Would you believe, I'm only using PowerPoint, and for that particular animation I used the "Morph" slide transition feature :-)
@@GaryDoesSolar Looks great.
As one gets older a ROI is less relevant but what is indisputable is if you have the cash, Solar / battery offers a secure return which is way better than any other secure return and it is tax free. The one fly in the ointment is you need dual tariff to get the best out of it
Totally agree with your first sentence, Mike. Now, when you say dual tariff, do you mean gas as well?
@@GaryDoesSolar no, I meant off peak. Because of my roof profile I only have 10 panels 4.2Kw made up 6 panels on SE and 4 on SW so my peak is only around 3.5kW in ideal conditions so in the winter I may be relying on 20kW of battery off peak at 7.5p which still gives me 23p saving on 7,000kW p.a.
@@mikejoseph425 Ah yes, that make sense now - thanks 🙂
I'd be interested to know Gary's views on the new 'mote efficient 'solar panel technology that's supposed to mean the end of grid power within a decade. It there any likelihood Gary
So, panel efficiencies are between 20-23% today (meaning only that percentage of the sun's energy can be usefully converted to electricity). I've heard there is a physical limit to that percentage of 50% - so even if all of today's installed panels were replaced with those working at 50%, it's still only (at best) a 4-5 fold increase in generation. In the UK, solar is maybe 5-8% of the instantaneous energy mix today, so in the above thought experiment that could rise to 25-40%.
So, in conclusion I don't see the end of grid power within a decade at all. But I do see battery technology improving markedly to the end of the decade, and this is going to make all the difference. Storage is the actual problem, not generation.
Hi Gary, should the green line not have a steeper slope to represent the interest you’re paying on the initial sum or the interest you would have earned especially as it’s quite high atm
That’s a very good point. If the funds were not at hand at the time of the investment and instead, were borrowed, there would likely be interest payable for the duration of the loan. And you’re right, that would increase the slope of the green line.
If I do get round to making a utility (or spreadsheet) I’ll make sure to include that as an option. Thanks for highlighting 👍🏻😀
Equally if you did have the money to hand you could earn 6% interest on a fixed term deal
@@gavlarrrrr … but that 6% only keeps you in line with inflation, whereas the benefits of a solar investment increase with inflation over time. Just a thought…
My current daily usage is £2.80 according to my smart meter , I calculated ROI would happen around the time the panels and battery life’s span would end . Pre 2020 it would of returned much earlier unfortunately wars and phantom roses have negated solar benefit unless you are a grid that needs capacity to charge cars without building new power stations then solar roofs are only good for a short term good feeling about eco terms .
Yeah, you have a relatively low usage, and the base price of any solar and battery system (in the UK again) is £10K or more, which doesn't help make the ROI. Prices are coming down all the time though (and energy prices don't seem to be coming down at all) so worth keeping an eye on the market...
@@GaryDoesSolar if the standing charge and price hike hadn’t applied in 2021 then we could of got ROI in 5 years . Unfortunately UK has 100 terra watt deficit to charge EVs efficiently . Some say they hope solar homes will relief that and they can charge the same for 20 percent we need from grid as they did for 100 percent and use the capacity gained to help charge EVs and not have to invest in new power stations . Of course the home owners now pay for solar. Pay for price increase. Pay for charging EV and in 30 year pay for new nuclear sites lol we are kinda being bummed all round
Great video Gary. My DNO (national grid) has put a restriction on my export limit (6.6kW) in response to my G99 application. I'm fine with this, but they have also put a restriction on the total inverter sizes added together. They stated I cannot have a planned 5kW Solis string inverter and the GivEnergy AIO battery (6kW inverter output) together as my total inverter size has to be 9.3kW or less. I'm now in a dilemma having picked the AIO battery to get best ROI. I can have the GivEnergy AIO + smaller 3kW string inverter, or 5kW Hybrid inverter and DC coupled battery! Any help as never known restriction of inverter size when they have already put an export restriction?
Thanks. Now, is your DNO allowing your AIO to limit the export via software? Worth a chat with your installer as they will be able to list all your options... good luck!
If I'm getting 1:1 net metering in IL, why would I need a battery outside of grid outages (which are very few per year for me - maybe two per year for 20-40 minutes each)? I just put excess power on the grid and pull it back whenever I need it. My utility (Comed) has said I can't buy at night, store in the battery, and sell back during the day. They don't allow battery energy to be sold.
The concept of net metering is really interesting to me. Some countries like you own have this. Other countries had it, but then discontinued it or restricted it. And other countries (like the UK in the form of the Intelligent Octopus Flux tariff) are starting them up! You're right - with a net metering style tariff, it essentially replaces the need for a battery. I may have to do a video soon! Thanks :-)
Hi Gary, very informative channel. Like your clear and concise delivery. Have taken the ‘plunge’ and signed up to Octopus, so £50 credit for you and £50 credit for me! Many thanks.
Hi Henrik, thank you for your very kind words - that means a lot to me. And thank you for thinking of me with regard to your Octopus referral - also very kind! :-) I'll keep the videos coming...
One thing my friends have pointed out to me, after my solar install, is that similar ROI can be achieved by putting the initial investment into stocks and shares.
In your line graph, it means the orange line would be not as steep because it is subsidised by gains from shares.
How would you respond to this kind of thinking?
Shares can and do go to zero overnight, that isn’t the case with a solar/battery investment. So how would you price in the risk?
@@bill_heywood generally, historically, stock and shares out perform cash in savings and inflation. Over a very long time with a wide portfolio, the risk is minimal.
But yes, investing in own solar and battery is lowest risk and pretty much guaranteed ROI.
Yes, although for a stocks and shares investment, it's better to look longer term (10 years or more)... A solar investment is shorter-term (maybe 6-8 years) and so a stocks and shares investment could have negative returns in that timeframe. Also, the ROI of a solar investment is more certain, in my view.
Hi Gary, I’m a big fan of solar with over 200 kw over a commercial portfolio. I have just moved to a Grade 2 listed house, my first instinct is to fit solar, but it’s a bit of a faff with aesthetics, distance from the house and planning. I have two EVs so am on the Octopus Intelligent tariff at 7.5p off peak, I do have space for a battery, do you think it is a proposition to just get a larger battery and charge off peak from the grid? I have the option to connect to 3 phase.
That's a relatively simple calculation isn't it? Ignoring the cars, you just take the cost of battery installation and divide by the savings. So, with Octopus, savings are 23p per kWh, batteries are £300/kWh, a simple non-solar inverter is £500, and installation maybe £1000. So for various usages:
10kWh/day - spend £4500, save £985/year. Break even 4.5 years.
15kWh/day - spend £6000, save £1478/year. Break even 4 years.
20kWh/day - spend £7500, save £1971/year, Break even 3.8 years.
Obviously the installation cost will vary with how complex it is for your house, but it doesn't change the picture much.
I'd like to see battery prices come down a little further, then I think ROI on a larger battery becomes far easier.
@@SimonRGates thanks, I'll dig in with finding our non EV usage. It does gaul me having 175 kW on two cars and having to buy more for home use. Roll on V2G.
Hi Gary, will you be at Solar & Storage Live next week? I don’t see you on the attendee list. Rob
Week after next, yeah, planning to be :-)
@@GaryDoesSolar could we have a chat there about Big Solar Co-op? It’s a bit Ripple like and has potential for similar impact on renewable growth
@@robjones8950 Does Big Solar Co-op have a stand there? And are you connected with them?
Never any good at maths... but i can see from my bills this time last year to this year, only 6 week into the solar expereamce, my electricity draw from the mains is down a third.. Now it will go up as iv converted to electric rads.. but am off setting this with the money not used on gas heating. Also using less water because of the eletric water heater under the sink.. and can controll each room as needed.. am going for anyother battery next year and at least 4 more PV units..
All sounds great 😀
ROI is one thing but you have to account for lost opportunity cost. If you invested the money for the solar array instead you would still have interest. The solar array doesn't come out ahead until you have also saved any interest you would have gained.
Secondly you can imagine inflation as it affects both sides equally. Increase in electricity prices over and above or below inflation does need to be considered but that is high on impossible to forecast.
Good point, and this needs to be factored in...
Considering the risk of failed batteries and degradation, would it not just be better to export solar at 15p/kWh and then buy it back when you need from the grid on a tariff like Octopus Tracker that has averaged close to 20p/kWh?
Certainly, with the higher export rates available in countries like the UK, you could make an argument that the requirement to get a battery is slightly less, but everybody's situation is different. That's one of the reasons I developed the Solarazma utility, so that people could model different solar and battery combinations to see what the daily return would be: garydoessolar.com/utilities/dailymodellingutility/
@@GaryDoesSolar Great app! Thanks for sharing!
Part of the reason why I installed solar panel is because I am retiring soon. With upcoming reduced incomes, I better start reducing my expenditures as well.
Great idea, and I hope you'll see the returns of that very soon. Have a great retirement (I'm hoping to soon as well, so I can concentrate more on my TH-cam work) :-)
It might be worth putting the graph bit at the end into a short
Interesting idea… thanks 🙏
I have had blackouts and surges destroy my fridges, tvs where the surge protection didn't protect it etc. What annoys me is I just want something that will backup for about 3hrs and prevent temporary blackouts and trick my solar to work in daylight if blackouts happen during day hours. Not 10K installs
You can find some hybrid solar inverters that creates its own micro grid to allow the solar panels to keep running the house during the day if there is a Blackout. I think Fronius Gen 24 inverter may do it to some extent without a battery, not 100%
They're 10K installs today, but prices are coming down all the time. I feel your pain though - it's a lot to pay for something you really shouldn't have to pay for...
The problem is a your inverter either needs to be able to control the panel output (as an expensive Hybrid or Off grid inverter does) or it needs someowhere to dump excess power into which is what a grid tie inverter does. Effectively a grid tie inverter sees the grid as an infinite battery and when that battery isnt there the only option it has is to cut the solar panels off completely. What you need is a HYBRID inverter that can control the solar panel output between house load, battery and (optionally) grid as needed and effectively "turn down" the panel output to match load. Of course you'd still need some battery storage for when the grid is off at night and to supplement solar power during the day.
But with a few kWp of panels a £600 hybrid inverter (eg Voltronic VMIV) and maybe two 3.55 kWh pylontech batteries you;d get exactly what you wanted...total hardware cost ~£4 - £5k
Now your problem is finding an installer that understands that rather than some ex-mcdonalds employee whos done a 2 hour online course on grid tied systems and become a "certified installer"
Just about to invest about 15k in a solar and battery set up plus an ev charger
I guess my only concern is im constantly seeing headlines of new breakthroughs in solar panel tech
And the last thing i want is to find out in a years time my setup is now the equivalent of a nokia 3310 😅
(Although i guess in battery life terms thats probably a good thing 😅)
Yeah, agreed. Technology is always advancing, and whenever you make the jump, there will always be something better coming along shortly after. I guess unless the decision to buy is never, it might as well be now 😀 good luck with whatever you decide! 👍🏻
It is a fair thought, but remember, every month you wait is another month paying full whack for your grid electricity, so you are losing a little all the time you don’t go for your installation
@bill_heywood fair point
Well it will be done before Xmas
Dry good presentation! As governments have embarked on the great green energy transition, the enormous cost of building the green energy generation, storage, and transmission network will undoubtedly be passed on to the end user. Furthermore, as most governments have set unrealistic and for the most part, unrealistic transition targets, we are more than likely to see blackouts as the network base load drops off the proverbial cliff of bad, ill informed government policy making. It is no small thing to re-boot the national grid after a blackout and the re-boot timeline may in some cases take in excess of 24 hrs.
May I suggest therefore, that a battery storage solution will in some measure protect you from the worst vagaries of bad government green energy transition policy making.
It is hard to put a cost on energy security when calculating ROI.
Yeah, this video was about financial return, but reducing your carbon footprint and having backup capability is also important 👍🏻
@@GaryDoesSolar Gary, my comment had a typo ( blasted predictive text). Replace “Dry” with “Very”. Keep
Up the good work 🎅
@@tomking5855 Haha - no worries Tom 😃👍
Re your benefit 1, batteries are not particularly 'green'. They are actually more likely to increase your carbon footprint than reduce it. The main 'green' benefit is in helping the grid by reducing demand peaks.
Sources for your battery claims please...
@@GaryDoesSolar (Third attempt at posting!)
No reference, just a thought experiment. Costs come from (1) the embodied energy that needs to be amortised over the lifetime discharge, and (2) the charging efficiency causing extra electricity consumption.
(1) A lithium battery is approx 100 kgCO2 per kWh capacity (I have seen estimates of up to 200 kgCO2/kWh). Allowing a life of 6,000 cycles that is 17 gCO2/kWh discharged.
(2) Assume the round trip charging efficiency is 90% and the grid intensity at charging time is at 180 gCO2/kWh, the additional carbon cost is 180(1/0.9-1) = 20 gCO2/kWh discharged.
making a total cost of 37 gCO2/kWh discharged.
The only potential savings I can think of are (1) avoiding curtailment on the grid, (2) avoiding wasting solar energy when your battery is not yet full but you have reached your export limit, and (3) charging when the grid is low carbon and discharging when it is high.
(1) Could happen, but the battery would have to be managed specifically to minimise carbon to do it, and most batteries aren't.
(2) Never happens with my solar system-the battery is always fully charged before the inverter starts clipping/reaches the export limit. Likely to be the same for most people?
That leaves (3) to compensate for the costs. Again it might work but you would have to manage your battery specifically to minimise carbon. For those using overnight charging the grid is typically cleaner at night than during the day, but this difference has to be consistently more than 37 gCO2/kWh to be saving carbon overall. I don't have any data for this but it would be interesting to test.
Thoughts?
I am 71 years of age. I have 44 panels on my roof and separate solar hot water. I have just got a price on batteries (19.92kw) at a price of $21,000 (AUS). The electricity supplier limits this year's electricity cost to $2,600.00, but this is also made up with Government incentives. If batteries last say 10 years, I will be 81 years old. Is buying the batteries a ROI. I know there is other considerations (electricity supplier rate, input tariff rates, inflation etc.) but is it financially viable. It is a big upfront cost. It has also been suggested that I go to an electricity wholesaler. I liked your ROI video, and it explained it better than the salesperson. What your thoughts. Is the battery install financially viable taking age, ROI upfront costs and changing to a wholesaler that operates in Australia.
Thanks for your kind words regarding the video. As you're in Australia, you can hopefully benefit from the "solar sponge" tariffs available in parts of the country - electricity is priced very low (or even free) then and if you have a battery, you can soak all that up for self-use during the peak import periods.
My question would be, what's your daily usage? If it's less than 20kWh, you might not such a large battery install, especially given all the solar generation you'll have...
Can you do a video on cost/savings on implement a battery without solar? Could it be more cost effective just to pull in all your energy at the lower rate?
Yeah, I'm slowly heading towards such a video... Just waiting for battery prices to drop a little more, so that the ROI is easier.
I can answer that as when I first decided on a system I was not going to have Solar, but when I included Solar the VAT disappeared app £2.5k and it reduced the number of batteries by one app £2k which almost covered the cost of the Solar part of the installation and the ongoing benefit of Solar v off peak electricity and the often forgotten reduced cycle of the batteries therefore preserving useable life and warranty in my view makes the Solar a very wise decision
I’m not sure I agree that all of the initial investment is a sunk cost, solar installations add value to a property. That value depreciates over time but there is perhaps other points at which it becomes profitable. The line is probably more bouncy than straight.
For me personally I'm only making the investment because it has an ROI, it's just doesn't seem important when that is as it's too far to really have a material impact on finances. It will pay for itself in terms of CO2 within a couple of years, and it will pay for it's financial cost before it stops working. Forecasts are so speculative, betting on weather and future electricity prices makes a forecast worthless. There is an innate pleasure in self-sufficiency, I'm not sure if that was covered by one of your 4 reasons.
Hi Steven, you raise some great points here, thanks! And I think you’re right - the solar and battery installation has intrinsic value that can be realised at a time the property is sold. That value would be based on the annual estimated savings the system provides (against the cost if the system was not there) multiplied by the estimated remaining lifetime. An easy sell I’d argue 😎
Could you do a video on how to use solar and batteries when the grid falls over. My installation currently goes offline if there is a power cut and I've been wanting to add to the array and add batteries but the loss of all power when the power grid fails is putting me off.
You just need a battery with EPS capability and an appropriate installation to go with it. A good option would be a Tesla Powerwall. Fit it and forget it...
@@GaryDoesSolarOK but probably the most expensive option!
@@michaelblackmore883 Fair comment, but I note their prices are falling consistently of late 👍
Depends on your system, but I have added 1.6kW extra panels that only charge the battery directly via Victron MPPT charge controllers , so during a daytime power cut I still get some charge.
@@howardadams4072 Good idea but you do need some spare roof!
If you added more panels then the green line would jump up higher but turn down steeply.
😊😊😊😊
It is cheaper to add panels than home batteries.
Indeed - I always say everyone should get the maximum number of panels on their roof as they can first, then add things like battery etc. I've never heard anyone say they had too many panels... :-)
@@GaryDoesSolar a neighbour has 17kw rooftop solar system.
I think it is 3phase with 3 x 6.6kw systems and no EV. !!!!!
I think that the 20million buildings in Australia, all connected to the national grid had only 6.6kw systems then that would be 660Gwh every day at the ends of the National Electricity Grid 😳 😀
Australian fossil fueled generation is 600Gwh daily if you are lucky.
So actually 32m2 of rooftop is all that is needed nationally, 20million buildings.
EV batteries are the biggest need.
Just my thoughts.
@@stephenbrickwood1602I am sure this also applies in UK. I have suggested to HMG ( more than once!) that if building regulations were amended to require all new domestic or commercial buildings to have their roofs fitted with max possible solar panels and batteries then the effect of diffusing generation and reducing input from the grid would probably mean that little or no extra base load generating capacity would be need in UK and the massive grid upgrade might be avoided as well. Of course the bill would fall to householders and business but the huge potential Government' ( 2:00 our money of course) investment could be recycled to provide support for the initial capital costs.
@michaelblackmore883 The UK is at colder latitudes than Australia.
But the climate is warming also.
If the rooftop solar PV and EVs plugged in 23 hours a day are short for a month, then emergency use of fossil fuels would cause little harm.
32m2 for solar panels in Australia and maybe 60m2 in UK.
The grid is fragile, TELL THE WORLD, and took 100years to build.
Massive national wealth.
The future is 5times more electricity to remove all high energy density fossil fuels.
THAT IS 5TIMES BIGGER NATIONAL ELECTRIC GRID.
People are stupid to not talk about this failure of centralised generation.
Look the most important thing is the battery..
that is the thing that makes you energy independent..
and you need one that last you 30 years!!!!!
Maybe one day batteries will last that long, but perhaps not yet... I see many battery warranties going up from 10 years to 12 though... it's a start!
@@GaryDoesSolar if you Google, ore ask Tesla.. how long does the model s last ,,
You get a answer like .. if you drive 260/270 miles a week that’s about 40/45 kWh of 66kwh tt .. your Tesla battery can last for 30/32 years.. than the new improved Panasonic ncr18650bd/ga has no need of SOH
if you charge to 4,15v ☝️and slowly, not fast charge it ..
the battery’s I build (2x 14s200p. 51,2v … 646ah .. 2000a discharge ( 4000a total) are connected to a hybrid 6,2 kw inverter , doing max 125a … I put it on, diy battery on fb a few times.. I’m sorry Garry bud this one can do it!.. this setup are basically 6 Tesla powerwall’s running as one, on max 15% capacity,,
@@dennydewaal137 Ok, this sounds promising - I'll look into this - thanks for point it out 🙂
A colleague of mine recently spent £12k on solar panels & storage battery. I spend about £550/year on electricity, once the standing charge is deducted. If having solar reduced my electricity consumption to zero I'd be saving £550/year at most. Take into account the opportunity cost of £12k, I could earn 3% nett return, that's £360/year, so overall savings are £190/year. Would I spend £12k to save £190/year? Obviously not. For me, the system would have to pay for itself within 5 years.
There is also the possibility of making money as well, given the lucrative export rates. In the summer, despite my heavier than average usage, I was making £100/month over the summer on the UK's Octopus Flux tariff. That would make a large (positive) impact on your calculations I suspect... :-)
@@GaryDoesSolar In principle, I don't believe that the electricity generation and supply network should be run by private companies that put profits before the public need. The ludicrous pricing mechanism we have now that allows people to profit from speculating on the spot price of electricity should be abolished. The money paid for exporting power to the grid just gets added on to someone else's bill.
@@brendanpells912 Actually, the money paid for exporting power comes from the savings made by the energy companies from not having to buy the expensive fossil fuels they would have to do otherwise... I agree though, that the way the energy market is run has to change. Note: Octopus Energy (number 2 provider in the UK) deliberately makes zero profit.
@@GaryDoesSolar It's also expensive to keep gas-fired stations running on hot standby ready to pick up the load as wind turbines drop off the grid. What should happen is that wind-farm and solar farm operators should be required to provide back-up generating capacity at their cost, instead of relying on legacy plant that someone else has paid for.
@@brendanpells912this is precisely why home batteries are an excellent way of supporting renewables like wind and solar cope with the quiet periods.
I don't think we should penalise any renewable or non renewable source - we do need a mix and imo nuclear is a great addition to the pot also. The more the better - we're not going to need less electricity in the next few generations as EVs etc ramp up that's for sure.
I have 16 to 19kw per day.
Do you mean 16-19kWh usage or generation?
No business would ever calculate ROI like this and business decisions on investment are really no different from investment decisions you make as an individual if you are looking at whether financially you would be better off making the investment. A business would always give a value to the investment at the point of installation and then include the depreciation of the asset as a cost. These calculations assume the value of the battery and solar installation is zero once installed which is clearly not true. A house with a battery and solar installation is worth more than one without, it's worth a lot more according to an estate agent I know. According to him it could increase the value of your house by as much as the amount you spent on the installation. Just because you can't liquidate the asset easily doesn't justify giving it zero value and you certainly can't argue that for battery installations which could be resold easily. This is important because calculations done like this give returns on investment which are years longer than they really are.
Your first sentence is so authoritative and yet clearly wrong. Just read the comments on this video- many individuals see the value of the way I suggest to calculate ROI. And individuals and businesses absolutely do not look at ROI in the same way. Depreciation of assets is primarily for tax purposes and future business sale. I'd argue that most people are not planning on selling their home - especially if they've just spend £10-20K on a solar installation, so the asset is to all intents and purposes worth zero to them.
I agree with you though, a solar installation does add value to a house in the event of a sale, but not in the way you think. The buyer doesn't care what you paid for it - they will make a determination of worth based on energy savings per year and expected remaining lifetime of the system.
The ROI narrative was pushed by the utility companies to make sure people understand their important role back then and in the future. Distributed systems cannot compete against their superior cost efficiency and people should not do stupid things like rooftop solar. The cost efficiency and the ROI of centralized smokestacks go unparelleled and we’d be better off by just keep sending our money to their way.
Why ROI was such a nice tool to delay rooftop solar installations? Because all investments in centralized system had earlier and always been all about the return of it. The status quo was under threat.
And then the ”impossible” happened. Rooftop solar became extremely cheap. And the prices can still come down by 90%. Same goes with batteries. You’ll end up to same cost when building a new home if you replaces roof tiles with panels and hot water boiler with batteries. Utilities are in their Kodak moment. 📸💣 They should have provided PV+BESS as a service a decade ago already.
Ok
Absolutely impossible to get a return.
As you say all of your other examples give tangible return that is not measurable financially.
If you take solar/ battery as an investment you have to compare it with investing your money in a bond of some kind.
I worked out that if you compound the money at 4% and use one of my quotes. That taking a 10 year payback was impossible. I'm 77 and may not last that long certainly won't be in this house in 10 years time.
It worked out that 1 KWh of solar would cost me 53p to produce for a 10 year projection.
I could get 15 p for export and I pay 20p for import. Numbers which are startling.
I don't believe that co2 is causing climate change. I don't think climate change is as bad as it's being hyped up to be.
Many people get a return after 6-8 years, so I can't see how you conclude "absolutely impossible". It's also a shame that you don't believe CO2 is causing climate change and that climate change itself is not as bad as it's hyped up to being. Your views are increasingly in the minority, I'm afraid.
@@GaryDoesSolar
Not if they live in Scotland. :-) with a West facing roof
If you include the amount you get from investing your money at 4% compound. It makes an interesting calculation.
My system was priced at £11.5k which over 10 years is a shade over £17
With my expected production. 53p per KWh. Currently importing at about 20p and max export at 15p
I'd need to make £1700 pa out of, from memory, an estimated, 3600 KWh pa production. If I ignored the compounding I still need to make £1200 pa about 30p per KWh
I'm 77 I need that payback. I'm investing in Ripple and putting some into a bond.
I'd genuinely like a reply
@@allan4787 I get that, but you know I'm a busy guy - perhaps give me a bit longer than 15 hours to reply...?