Solar Together is a group buying project that helps householders purchase solar panels for their roofs. It is actually a very sensible scheme and well executed. Householders can be confident that they will get a good price and that their house will not burn down due to shoddy work.
So why do I say it is a “scam”?
Solar Together does not give applicants a Value for Money analysis that compares the cost of electricity supplied by the solar panels with the cost of getting it from a normal electricity supplier. Instead they give a Price Guideline and Personal Recommendation. They suggest,
“Based on this information, the registrant is able to inform themselves and make their own decision in terms of the pricing presented and also the value for money. “
My Analysis
Solar Together Price guideline
- Typical market price for an installation of this size: £5,990
- Generated electricity in the first year: 2,416 kWh
- Number of panels: 10
My Return on Investment Calculation
My annual consumption of electricity is 5500 kWh. So assuming I consume all the electricity produced over the 10 year warranty period my cost per kWh is ~25p kWh. At present I pay 13p kWh for a green tariff.
My expected return on my £6000 investment is,
(Cost of 1 kWh Green Tariff – Cost of 1 kWh Solar Electricity) x Annual Consumption = -£290 per year
The historic return on a relatively safe 10 year investment such as Vanguard Life Strategy 20% Equity is over 5%, say, £300.
Buying solar panels would make me ~£600 per year worse off than leaving the money invested and continuing to pay for a green electricity from my national supplier.
I could assume a longer productive life for the panels or higher costs from a green tariff but these will not make much difference to this analysis.
Why does this matter?
If the State (here the Mayor of London) is going to push products to its citizens then it should be upfront about the costs and benefits.
The vast majority of people that take up the Mayor of London’s Solar Together proposal will be poorer as result and so he should not be shilling it to them.
What should the Mayor do?
Anyone who is serious about avoiding climate change should offset all their carbon production – this costs less than £100 per year for the average middle class family and advocate a carbon tax. It is probably the only way to save the planet.
Dr James Bayley 
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John77 says:
Part of this is the excessive price of a product recommended by Sadiq Khan and part of this is due to the latitude and cloudiness of London (in 2004 they were economic in southern California).
But solar water heating panels *are* economic in the UK (and have been for 40 years, so the latest versions should be profitable) and what Dr Bayley should recommend to those concerned with “saving the planet” is that those who have a south-facing roof should install solar water-heating panels.
https://www.timworstall.com/2021/03/solar-cells-still-dont-add-up/#comment-1082476
solar water heating panels are not economic given problems with them and cost unless you are able to install yourself,the percentage of energy used to heat water is much less than the amount used to heat space.
My personal experience has been as John77 suggests, solar water heating panels on a south facing roof has heated water for a family home for over 10 years with no maintenance issues at all. So in my case at least they were effective.
Would your analysis be different if the property used air source heat pump (i.e. electric powered) for central heating and hot water (probably with immersion heater to boost HW temperature from 50° to 60°)? This could eliminate a gas bill as well (and the associated volatility).
No because the economic return is governed by the cost of electricity. The Mayor’s scheme uses the figure of 25p/kwh whereas I am paying 13p/kwh for 100% renewable electricity. I could use this green electricity to power my heat pump rather than expensive solar panels.
I should say that electricity costs have rocketed due to the present gas crisis and so the 25p figure will be true for many people this year. However personally I don’t think that electricity prices will stay that high for long. A lot of the cost of electricity is tax and the government will cut that if necessary.
The essential economics of this are that resources are better employed building giant wind turbines or vast solar parks than putting a few solar panels on roofs which is labour intensive.
Is it still the case after 1 April 2022 when energy price cap is removed that Solar Panels in your analysis are loss not profitable?
My back-of-an-envelope calculation suggests that at 28p/kwh householders will break-even after allowing for the cost of capital if prices stay that high for the whole 10 years. I suggest that this is unlikely because green energy will continue to get cheaper every year as more capacity is installed.
The fundamental challenge in this project is the labour cost of an installation in London. IMHO it is always going to be cheaper to lower your carbon footprint by buying green energy from the grid. This project is “green theatre” the money spent by the taxpayer to subsidise it would be much better spent on working out how to fit heat pumps to London properties to replace gas heating.
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Have you done/are you able to link to a ROI calculation for solar water? Based on what I’ve seen they seem even worse. The Energy Saving Trust quotes the saving at around £60 for someone with a gas boiler; with the system costing at least £3000 there’s a pretty good chance I won’t live to see a penny ROI even ignoring service costs.
I have not done the calculation for solar water? If this means using black electrical solar panels to heat water then I guess that it may not be cost effective however my understanding is that the black tubes on the roof that warm your water by absorbing the suns rays are much more cost effective. In all cases the profitability is dominated by labour costs.
I have done a recent post on home battery packs https://blog.jamesbayley.com/2022/03/09/home-battery-packs-now-make-sense/ that you might find interesting. This is likely to be the best use of £3000 (or less).
And now? With the projected rises over the next year?
And how is this looking now in the light of recent events?
The price of my electricity has now gone up from 13p kWh to 28p kWh. In the article I said that breakeven was 25p kWh. So if electricity supplies remain this expensive for the entire lifetime of the install I would break-even.
However this analysis ignores the risk intrinsic to any building project. I know two friends who signed up to this project and are suffering from dodgy builders and endless delays.
I would say that on-balance that the scheme does not offer good value for money even at these higher prices but there are some benefits. The higher price of electricity does mean that the environmental and social benefits are much greater. It is possible that householders will also value security of supply and a known price for part of their energy consumption.
Let me emphasise. There is nothing wrong with well-off middle class people who want to do their bit buying solar panels or people selling them! My only concern comes when the State misleads them when making the sale.