Thursday 21 March 2013

Solar Power: The Important Calculations

When deciding whether installing solar panels is worth it financially, you need to consider the system as a bulk purchase of electricity:  for the up-front price of the system, you are effectively getting all the electricity that it will generate over its lifetime.

The panels are reckoned to last for 25 years; after which time they will still be producing 0.8 of their rated capacity.  The inverter has no moving parts, so that should also last the 25 years.  Meaning, I will have paid just £5049 for all the electricity I am going to be producing over those 25 years.

Is that going to be worth it, compared to the price of electricity from my supplier?

My installer's  (pessimistic)  estimate is for 1400 kWh per year -- it probably will be more than that, in real life.  So over 25 years, that is a total of 35 000 kWh.  For £5049.  That works out at £0.144257143 = 14.43 p per kWh, which is less than I'm paying right now.  (I could do the calculation accounting for reduction in output, but I know that the installers' estimates are on the low side anyway.  Oh, all right.  At 25 years, the output will be 0.8 of what it is now; 1120 kWh/year.  £5049/25 for 1120 units is £0.180321429 = 18.03 p per kWh.  Due to the way this is decreasing, the most accurate average is the geometric mean -- the square root of the product.  So 16.12p.)

Even if the price of electricity doesn't go up, I am still going to come off better out of this deal :)

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