Yes we know some one who will have to wait 12 years to get back what they have outlaid.
That's about right only if there's zero inflation over the next 12 years. Possible but I doubt it...
Here's the maths for those interested.
Total cost is about $12,800.
Your taxes will be paying $8000 of this (that ends after 30th June, hence my reason for doing it now).
Electricity consumers, via the Mandatory Renewable Energy Target, will be paying another $800 or so of my costs.
That leaves me to pay $3975 (quote I've obtained). I've arranged finance for this (not committed as yet) as follows:
50% financed at 0% (fixed) with no fees, repayable over 2 years.
Remaining 50% financed at 0% for just under two months, then transferred to a rate of just under 5% (variable) which I plan paying off in about 3 years time (hopefully).
So, your taxes and power bills are paying almost 70% of the total cost. I'm paying the rest, using some free finance to make a few $ along the way.
Electricity production will be about 1500 kWh per annum which will save about $275 on power bills assuming no change in rates.
So all up it's about a 7% yield on a very conservative investment. Unless electricity prices crash for retail consumers (I'll get one of those flying pigs if that happens...) there isn't much that can really go wrong as long as the sun keeps shining and I've got the panels insured against theft or damage. There's a 25 year warranty on the panels and they ought to last longer than that.
Looking ahead, I'm outright bullish on energy prices in the long term. Climate change / carbon, rising gas prices globally and under investment in new low cost generation in Australia doesn't point to lower prices. Nor do the politics - for purely political reasons it's possible that we'll see premium rates paid back for solar-generated power once the government's funding of such systems ends. That's speculation but the idea is certainly out there and once the government funding of the grant ends, there's more chance of it happening I'd say.
Return of my capital? Obviously it's an illiquid investment but I'd assume it will add at least some value to the house. Changes to the rules will more than double the cost of such a system in 3 months time and it will be about triple in a few years (excluding any change in the actual cost of materials and labour). So I don't think we'll see too many of these being installed, thus keeping it as a reasonably unusual feature of the house. No guarantees, but if I sold the house I'd probably get at least something back from my solar investment. Not that I'm planning to sell, but anyway...
I've argued pretty stongly elsewhere on ASF that putting solar panels on roofs isn't really a sensible thing either technically or financially when there are far cheaper forms of centralised renewable energy generation. I'm not at all keen on the idea in that sense because it just doesn't stack up as a means of generating power (financially).
BUT if the taxpayer is footing 70% of the bill and I'm getting 100% of the profit from selling electricity back at 4.5 times its actual value then it becomes a reasonable proposition for me to do it. Worst case we get no inflation and I'm stuck with a low return investment. But if we get high inflation then I'll look a lot better just like those old hydro schemes that now return well over 100% pa on the original investment due to the effects of inflation. Solar's very similar to hydro financially - all the costs up front and it basically just sits there once it's built with not much needing doing to keep it running. That's a pretty good hedge against inflation.
And I just like the idea of having a power station on the roof - note my avatar (control panel from a real power station) and my numerous posts in various threads on the subject of power.
As for the original question of insurance, I haven't confirmed this officially yet but it seems they would be considered part of the building and are insurable as such. So if that's correct then I just need to add a bit to the insured value of the house which, I'm assuming, will make very little difference to the premium (I'll check before going ahead with this whole idea though).