Solar Panels for IPs?!

[vaughan]

Best to let it feed back into the grid during the day and get paid for it and then use things during the night to use off peak power. We were getting the PFIT at 66c and only paying about 11c for off peak so used power as little as possible during the day. This is one thing many don't understand about maximising the benefits of solar.

Those benefits have GONE. The high feed-in tariff has gone, at least in NSW, and it's now LESS than the buy cost.

I looked into it about a year ago:

http://somersoft.com/forums/showthread.php?t=73195

... and the feed-in tariff was $0.06 -- less than 1/10 of what you're getting. The numbers just don't work at those rates.

 

[wylie]

We locked into the tariff (supposedly for 20 years). I reckon the government will pull a swiftie and change their policy and whilst we supposedly are locked in, I don't trust 'em... but at least while we get the higher feed in rate, we can get the benefit of it while it lasts.

I don't know if we would have gone ahead without the sweetener of the higher tariff.

 

[Munchkin]

I guess it depends on what sort of metre you have. where we are any appliances need to hard wired to the off peak metre, otherwise you are charged peak rates no mater what time its used.

Yes that is exactly how ours was until we got solar and they put a new meter in and went to a time of use plan

 

[Munchkin]

Those benefits have GONE. The high feed-in tariff has gone, at least in NSW, and it's now LESS than the buy cost.

I looked into it about a year ago:

http://somersoft.com/forums/showthread.php?t=73195

... and the feed-in tariff was $0.06 -- less than 1/10 of what you're getting. The numbers just don't work at those rates.

You are right, that is why I added the last comment on that post about the new crappy FIT

They are about to reduce it to 8c in Vic I think so the benefits are only really there for people that already had it on the higher rates.

None of it means anything to us anymore though. The price of petrol is more relevant to our power use now!

 

[Cloudy_]

So I've spoken to a few friends that rent and they said they would be happy to pay $10-$15 more per week knowing that a) they're being greener and b) they're saving money.
Somehow the thread went from me talking about $2.5k solar to $12.5k... At $12.5k, it would take 20yrs to get back the ROI (of course not allowing for tax/depn etc) but on a $2.5k system it would obviously be much sooner.
I think with some clever wording in the ad copy from your PM, you could probably sell it well enough? Just something you don't see around is it?

 

[geoffw]

Years ago I talked with somebody who owned a small block of flats, who put solar hot water heating on just because of his own concerns for the environment.

It's just as we'll it wasn't for economical reasons. The block got eaten up by an adjacent medical centre about six years after.

 

[wylie]

Assuming my solar was working for the whole 90 days of my last bill and I saved $290, that comes to about $20 per week we have saved.

I'd be very surprised if any tenant would pay $10 or $15 extra to save $20.

Of course, our savings could be higher if we didn't turn on the TV through the day, or use power, but we are not going to go overboard with this.

 

[mattnz]

I included solar in my current advertisement for a new rental property. All part of packaging it to a corporate tenant.

 

[wylie]

I included solar in my current advertisement for a new rental property. All part of packaging it to a corporate tenant.

I think that having solar will make a house more attractive, because they know they will save money on their power usage, but I just have my doubts most renters would actually want to pay more to rent the house with solar and pay extra week in, week out as opposed to renting the house next door without solar.

I would be interested to hear from the property managers out there their thoughts on this.

 

[Sunfish]

One thing I noticed in Qld when Campbell was cutting the buy-back rate was that the contract was with the buyer, not the property. Ergo, when you sell the property the "old" 44c tariff is not transferrable.

If I read that right, there is no chance the contracts could be transferred between tenants so so any sales could not off-set the tenant's power bill, only yours.

 

[Munchkin]

One thing I noticed in Qld when Campbell was cutting the buy-back rate was that the contract was with the buyer, not the property. Ergo, when you sell the property the "old" 44c tariff is not transferrable.

If I read that right, there is no chance the contracts could be transferred between tenants so so any sales could not off-set the tenant's power bill, only yours.

We are in Vic, so it may be different, but I have just asked this question myself as we just sold our property. I was told the new owners would still get the PFIT for that property.

 

[geoffw]

Just saw an ad for solar panels for $2,500...
Is this just a no-brainer great way to add value, increase depreciation schedule figures and rental returns to an IP or is there a reason it's not spruiked as a great investment for landlords?

With a name of Cloudy, you're not going to get any value whatsoever from solar panels

 

[Dazz]

Somehow the thread went from me talking about $2.5k solar to $12.5k...

Hi Cloudy....if you look back, wylie mentioned this figure initially, and I responded to her post.

At $12.5k, it would take 20yrs to get back the ROI (of course not allowing for tax/depn etc) but on a $2.5k system it would obviously be much sooner.

Ummm - no. By definition, a 12.5K system is going to be 5 times as large as a small 2.5K system. Ergo, the system should produce 5 times the power that the smaller one produces.

Contrary to your point, it is obvious that the ROI will be exactly the same no matter how large the system. If the big system takes 20 years to pay back, so will the smaller one.

It doesn't matter whether you put 1 panel or a million panels on your roof. There ain't a dollar to be made.

As I pointed out previously, the Maths in this debate is severely lacking.

 

[Cloudy_]

Sorry Dazz, I'm probably using the wrong acronym...
What's the one where you measure the time it takes for an outlay to be re-paid? That's what I'm assessing - a $2.5k investment repaid by the extra $10-$15 per week a tenant might pay. I'm not really concerned with how much power the cells will generate, more to do with the artful way of selling the benefit to a tenant to extract more rent.
Hope this clears things up?

 

[Cloudy_]

Ps nice gag Geoff haha

 

[Dazz]

Sorry Dazz, I'm probably using the wrong acronym...
What's the one where you measure the time it takes for an outlay to be re-paid?

Some people call it 'payback time'. This is what I was discussing, the return from the panel vs the cost of buying and installing it.

That's what I'm assessing - a $2.5k investment repaid by the extra $10-$15 per week a tenant might pay.

OK...that's totally different. Other people have addressed that issue in the thread, as I did in post 3 with my third bullet point. Good luck trying to get Tenant's to pay extra.

I'm not really concerned with how much power the cells will generate, more to do with the artful way of selling the benefit to a tenant to extract more rent.

OK, different topic altogether. My mistake.

 

[mikew]

So Wylie saved $290 during winter, with 2 extra people around. Winter is clearly the worst season for solar power generation. In summer there will be much higher savings, but let's say $500, and shoulder seasons, $400. Annual savings say very conservatively roughly $1600. On a $12.5k system that's 12.8% tax free, and largely risk free. As power prices rise that return will increase. Wylie's return could easily be up around 20%. I know mine is.

So it can be a great investment and that's why nearly 1 in 10 households in Oz now have solar.

However each individual circumstance is unique - which state you are in, what retailer, on a time of use plan or not, feed-in-tariff, power consumption patterns, suitability of roof space (orientation, pitch, etc.) etc., not to mention what deal you get from your solar system supplier (don't buy cheap rubbish), so you can't make a blanket statement and say yes it's worth it without assessing the situation.

As for rentals, in some cases it would certainly be worthwhile, but again, it is entirely dependent on the particular situation.

(btw I'm in the solar business)

 

[HiEquity]

Mike

I entirely agree with you that in some (limited) circumstances the numbers do stack up. Mainly in locations where the tariffs are subsidised by other electricity consumers of course. This is where the thread has gone awry - you have some people in locations where it makes no sense stating that fact to other people in locations where it still does (perhaps just) make sense because the subsidies have not yet been fully rolled back.

BTW you're from Perth and in the solar business. What do you estimate is the current return on investment for a quality typical residential solar system bought today in Perth? It would be interesting to see your numbers...

 

[RandR]

Hi Cloudy....if you look back, wylie mentioned this figure initially, and I responded to her post.




Ummm - no. By definition, a 12.5K system is going to be 5 times as large as a small 2.5K system. Ergo, the system should produce 5 times the power that the smaller one produces.

Contrary to your point, it is obvious that the ROI will be exactly the same no matter how large the system. If the big system takes 20 years to pay back, so will the smaller one.

It doesn't matter whether you put 1 panel or a million panels on your roof. There ain't a dollar to be made.

As I pointed out previously, the Maths in this debate is severely lacking.

Come on Dazz ... think ... THINK !

Obviously if one reduces the relative cost base for the electricity they deliver the ROI and pay back timeframe will not be exactly the same no matter how large the system as you have stated.

Its blindingly obvious but think about the difference in potential cost effectiveness between someone installing a 1.5kw system and someone installing a 30kw system. You dont think it might be cheaper to source and install 100+ panels as compared to 6 when measured at price per panel ? What if you installed them raised off the ground instead of on a roof ?

and yes Dazz .. I dont think its a stretch to conclude most investors are incapable of turning a profit... heres an example ...

http://www.smh.com.au/business/property/nation-of-lossmaking-landlords-20120430-1xuh4.html

Do you really suggest its a less risky prospect for people to buy some stock with a little leverage and sit back and wait for the $$$ to roll right in ? No doubt some people have the smarts to make it work and get it right .. the majority ? There is a criminal lack of financial education among the public.

I know of one person personally who retired a couple of months ago, withdrew his super and loaded up on fortescue because twiggy forrest was doing so

My personaly opinion is that Ben Graham was 100% correct when he remarked most investors would be better off simply purchasing an index fund.

 

[Dazz]

So it can be a great investment and that's why nearly 1 in 10 households in Oz now have solar.

So more than 9 out of every 10 households are utterly unconvinced....

About 11% of people vote for the Greens as well.....or conversely, 89% of all Australians do not.

The numbers for both seem to match up quite well....as expected.

The whole concept in it's present form (technologically / contractually) is a dead duck.....but it makes those 11% feel really good....and that's the main thing from their point of view.