Turning PV Installers into Financial Advisors
In these times of economic uncertainty, government cutbacks and low interest rates, astute consumers are looking at ways to conserve what they have and maximise their investments.
Photovoltaic (PV) installations are now a viable option when combined with government-supported feed-in tariffs. In this respect it's a wise strategy for investors to spread their portfolios to include these emerging technologies. More and more electrical installers are expanding into renewable energy technologies to capitalize on this trend. The skill is now to explain to potential customers why it makes fiscal sense to, in effect, pay for their electricity bill in advance by choosing to invest their money in PV technology. The key is always to provide potential customers with accurate, reliable information about what outputs PV systems can actually produce. This can then be compared to the performance of more traditional investments. An example of such an assessment is provided below.
(Sources: FTSE, Property, Gold) Well, not a lot. Recall the financial advisor’s mantra: ‘Share prices can go up as well as down’. In other words: ‘Who knows?’ There are too many unknown factors involved to make financial predictions: ask three money ‘experts’ the same question and you’ll get three different answers. In order to minimise uncertainty and risk, we should take a look at what else is out there for the safekeeping of that hard-earned cash. Time was you could get a decent return from a high-rate deposit account. Right now, however, the best account seems to be from both Alliance & Leicester & Santander, who currently offer a return of 5% up to £2,500, but 0.1% on balances over £2500. Also, you must pay £500-£1,000 per month into these accounts, meaning that the actual interest paid is going to be fairly negligible if you did this for 20 years. (Left, a screen shot from PV*SOL. Click it for a larger version.) Premium Bonds To quote from the popular website moneysavingexpert.com: ‘You’re actually likely to get quite a lot less than [the expected] 1.5% and there’s a negligible chance of winning a million. Take a look at the chances, but beware, it ain’t pretty reading.’ Cash Under the Mattress Assuming you don’t get robbed and your house doesn’t flood or burn down then at least you won’t lose anything by stashing a bit under the mattress. Right? Actually, you couldn’t be more wrong. As long as we have inflation (a prerequisite for economic growth), the value of the pound in your pocket will decrease over time. At an inflationary rate of 3%, your pound will be worth the equivalent of 97p next year and 54p in 20 years. So there we have it: a fairly bleak outlook, especially if you want to minimise risk and maximise your investments. But don’t despair. There is an alternative. It’s risk-free with an excellent guaranteed return on investment which is both index-linked and tax free. Sounds too good to be true in these austere times but that’s exactly what’s on offer if you invest in a solar PV system. Photovoltaic Investment Take a look at this: ‘Our initial calculations show that this level of tariff should result in 7-8% annual returns for homeowners retrofitting PV systems under 4kW. This means solar will compete with the best investment funds out there for investors’ pounds.’ Solar Feed In Tariff Website Considering this complexity, it’s essential to get good quality, industry-trusted simulation software such as PV*SOL. With these programs you just put the numbers in, select your modules and inverters from a vast database, specify the costs (including any loans) and select the location and module degradation factor due to shading, and the computer does the rest. It will also produce project reports with precise graphics and data which you can provide for potential customers: an ideal selling tool. No more back-of-envelope guesstimates and (hopefully) no more unrealistic predictions. Anything returning 5% or more guaranteed, index-linked and tax-free would be an attractive investment at present. Because of the recently introduced Feed-in Tariffs, PV technology, which has up till now been something of a fringe option for the weirdy-beardy crew, is suddenly a very realistic investment, even for those not blessed with a south-facing roof. Your customers no longer need to be green tree-hugging hippies; just savvy, well-informed investors. The successful PV installer will increasingly move part way to becoming a financial advisor. Chris Laughton is Managing Director of The Solar Design Company. He is an experienced heating engineer, author and lecturer, and a regular columnist in magazines, journals and on-line media. His latest book Solar Domestic Water Heating: The Earthscan Expert Handbook for Planning, Design and Installation was published by Earthscan last month.
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Chris Laughton
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