When faced with various solar PV installers, system sizes, and prices, consumers often opt for the cheapest installation. Being savvy can often pay off – a good initial price is key in making returns on the investment. However, a lower installation price can often indicate reduced quality or size. With Solar systems lasting in excess of 25 years, issues from installation can come back to bite in the future. Engenius work in Commercial and Home solar maintenance and installation, and spend a lot of our time fixing poor quality installations. To help you avoid these pitfalls, this page will explain why chasing the lowest price is not always the best way to make long-term, stable returns with your PV.
There are a few key things you should watch out for when chasing the best price:
- A cheaper quote can indicate a smaller system size – which means the cost of the PV is higher per kilowatt installed.
- Cheaper PV panels will often degrade much faster than higher quality modules.
- Some cheap parts often have shorter warranty periods, which can mean spending money in the future.
- Lower installation price can indicate that the installer is ‘rushing’ the work – which can result in potentially dangerous mistakes.
Reducing system size is often seen as an easy way to save money on PV. Sometimes, this is true; for instance, a large 10kW system for a bungalow with a single resident is likely over-sized because the vast majority of the power will be wasted.
However, smaller systems will generate less electricity over time, while costing more to install per kilowatt installed than a larger system. This is because certain costs in a solar installation are ‘fixed’. In a typical quote for rooftop solar work, you’ll see:
- PV panels
- An inverter
- Connecting parts
- Scaffolding costs
- Labour costs
For the most part, scaffolding and labour costs are fixed costs regardless of system size. Both 8 panel and 12 panel systems need scaffolding for roof access, roof mounts, and an electrician to connect up the system. Despite being necessary, these ‘fixed costs’ are essentially dead weight in investment terms and do not go towards making returns. In contrast, extra panels and a better inverter does. The extra panels increase the money made by the system – while also reducing the percentage that these ‘fixed costs’ are of the total installation. The result is that over time you will recoup money faster, thus making a better investment.
Equipment that doesn’t last
‘Degradation’ is the industry term for Solar PV modules slowly producing less over the years – similar to how your computer gets slower as it gets older. Degradation is a fact of life with solar power: all panels will produce less over time. It is most often given as a percentage of initial power – so for a 300W panel with a degradation rate of 1% per year, after 10 years it would have lost 10% of 300W and have an effective power of 270W.
The difference in degradation rate can translate into a significant amount of money over the next 10, 15 or 25+ years.
Panels have degradation rates between 0.2% and 1% per year. While these seems small, the difference accumulates across all panels. Using the example from before, if the 300W panel was part of a 14 panel system [4.2kW], then 10% losses after 10 years translate to around 400kWh-600kWh losses per year. This would grow to around 1000kWh after 20 years – £150 a year in losses (if the energy was used on the property).
These small increments can add up quickly. Saving £500 on price of installation by opting for poorer quality solar panels may make sense in the short term, but could potentially increase the payback time of your system.
We optimise initial cost and degradation rates using our financial modelling software. These calculate degradation specific to the model of panel used and local weather. You can run the numbers yourself using free software options like System Advisor Model (SAM) and RETScreen if you want to see how panel types affect payback – though they’re quite complicated softwares, so use at your own discretion.
‘Performance guarantees’ of to 10 years and 25 years are typical warranties of solar panels. These mean they guarantee a worse-case rate of degradation – and if your panel performs worse, you’ll get your money back. Designed to protect you against manufacturer errors, the warranties ensure generation will always be above a certain amount and make good returns.
The key issue with solar panel warranties is that they rely on the strength of the manufacturer. 25 years is a long time, and if the company goes bust within that time then they will not be able to honour the warranty.
To protect consumers against this, Bloomberg rate strong manufacturers as ‘Tier 1’. It’s worth noting that this rating has nothing to with quality; only the ability of the panel maker in honouring warranties 25 years down the line. We usually install Tier 1 panels to help protect our customers, but have organised separate insurances for our customers when required.
Inverter warranties are similar, though as more complex components than solar panels they are often much shorter; 5-10 years are typical. Of all Solar PV system parts we replace inverters the most. In most cases it is well worth extending the warranty with the manufacturer by visiting their website; here’s the one for SMA or Fronius. These extensions are usually available until the end of the initial warranty period so you can delay, but it’s worth checking with the manufacturer first.