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Solar Power as an Investment

Discussion in 'General Investing Discussion' started by shaddowofadream, 8th Apr, 2010.

  1. shaddowofadream

    shaddowofadream Member

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    So I was thinking recently with the recent rises in electricity costs (and these are set to continue rising) that I wanted to reconsider how Solar Panels might work (ROI) vs simply investing in renewable energy shares (if possible, I'm a newbie at shares)

    Here are some numbers (taken from memory from a recent quote that I was given).

    1.48 kW System
    Total Cost:- $9,845.00
    Govt Discount:- $5,355.00 (called REC's now)
    My cost:- $4,490.00

    Output:- 6.7 units per day (2,445.5 per year)
    @17c/unit = $415.74 or 9.26% return on my outlay
    @20c/unit = $489.10 or 10.89% return
    @30c/unit = $733.65 or 16.34% return

    ** Note the actual buy-back cost of the energy produced will be set by the electricity company you sell-back to, (AFAIK in Western Australia Synergy buy's back the electricity for the same cost it sells out minus the GST component)

    ** Note 2 - a 1.5kW system is the base line and the government gives extra REC's for the first 1.5 kW...


    Given the government is essentially halving the cost of the investment, could investing in shares give similar results (and benefits i.e. government assistance)

    The main reason I've held back so far is the uncertainty if I would be able to "Sell" the Solar Panels at a profit down the line (i.e. adding value to the sale price of the property) but given the recent rises in energy costs (with the expectation for it to continue rising) I feel it might become a sought after addition to future buyers.

    Have I missed something here, because a guaranteed return of 9.26% seems too good to be true ?
     
  2. shaddowofadream

    shaddowofadream Member

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    Trying to do some research before committing to the installation of a Solar Power Unit (Photovoltaic Array) and have come stuck at the RECs

    RECs seem to be a trade-able commodity similar to how the stock exchange works, yet their price isn't transparent like stocks on the exchange are.

    However their doesn't seem to be a publicly viewable trade amount to ensure that when you sell your RECs to the installer at a particular price you aren't getting ripped off?

    ^ Sorry if this is a little off-topic but seems quite strange to me kind of like a blind/private stock exchange?
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Didn't Peter Garrett axe the Federal Rebate? Or it may be under some different scheme now.

    In NSW the power companies have to buy it back at 4 times the retail price which is wonderful (about 60c or so a KW/h instead of selling it at about 14c KW/h).

    Let me know how you go.

    Cheers,

    Dan
     
  4. Billv

    Billv Getting there

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  5. Chris C

    Chris C Well-Known Member

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    That sounds totally sustainable over the long term... damn government subsidies.

    :rolleyes:

    My personally opinion is that government won't keep up the commitment over the long term, they have mainly been driving this alternative energy push (along with most other western governments) at the moment to help boost the alternative industry so that it could build some economies of scale so that in the future governments and private companies will be able to utilise solar and other alternative energies to help supplement base load power.

    A big part of that process requires current businesses in the industry having customers to sell to, which requires a cost effective product, which solar panels aren't minus government subsidies.

    Call me a cynic, but I just don't think the government has been pushing this because it's a great nation building idea, at best it's a green vote winner, because solar panels a not a viable alternative to current energy sources in Australia (yet) even when considering the prospect of carbon offsets.

    So to your question, is a good long term investment, on today's figures, maybe, but I'd bet my bottom dollar policy (and those pretty subsidies) will change within 5 years... and not for the better.

    As for them adding value to a home... I would probably look at them like a nice cook top or oven - people will probably like to have them on the house their buying, but people won't be adding the retail figure for the solar panels to their offer just because you got them.

    That's my two cents about the industry, but it has nothing to do with the numbers, say take it for what it is, just an opinion.

    Also just for the record, I'm not that worried about energy prices going up that much in the long term, with the research I have done into energy, I think there are a bunch of very interesting technologies that are in pilot and mini plant stage in loads of different segments of the energy market that become quite economically viable if prices of energy drift much higher than they are today, many of them actually have the potential, with time, to probably reduce prices.

    Of course this assumption isn't factoring for inflation, but over the longer term it's anyone's bet which way that will go.
     
    Last edited by a moderator: 9th Apr, 2010
  6. shaddowofadream

    shaddowofadream Member

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    The current subsidy (at least the install subsidy) is now done through Renewable Energy Credits, which as I posted are a trade-able commodity, however power stations need to surrender a certain number of these each year with fines imposed if they don't meet quota's... this places a fairy steady demand on them.

    Obviously Supply is limited to the price people are getting paid and also how motivated people are to put back into the grid.

    That's kind of my fear, that while they bring a fairly healthy return that is guaranteed for the life of the panels the initial purchase price is essentially wasted.

    That brings it back to my original question:-

    Are there green/environmental companies in Australia that I can buy shares for and get benefits for (I remember reading somewhere that investing in Au companies gives you extra benefits or something, and investing in Green/Envrio/Tech gives benefits too) can anyone confirm/deny these theories (with regards to shares)

    Example:-
    If there is a chance I can buy some shares and get good returns with decent growth AND also enjoy some healthy govt benefits (from investing in green/enviroment/technology/australian shares) that's kind of what I'm interested in :)

    I've done HEAPS of research on Solar PV installs but want to know if I can somehow get into shares for similar start-up costs and get some decent returns too. (or is that just wishful thinking :D)
     
  7. AsxBroker

    AsxBroker Well-Known Member

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  8. Billv

    Billv Getting there

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