Understanding the Economics and Future of Solar Panels with Paul Hutchens

And in terms of getting your money back, that was always a question, wasn't it? What are the economics like on that now?

So, you know, now, I mean, you're talking probably less than 10 years on a house. But if, you know, for a good commercial rooftop, you could be talking where you can get to use all the electricity, maybe in a factory or something, you could be talking as little as, you know, 3 to 5 years to get your money back. And they last for 25, 30 years. So, you know, over their lifetime, they're going to produce significantly more more than you paid for them.

Hello and welcome to Rethink What Matters, the podcast dedicated to aligning the economy with the ecology and everyone for improved business performance, stronger families, and a greener, cooler planet. And today I'm joined by Paul Hutchins, CEO of Ecota Solar Limited, and we're going to be discussing Solar Panels.

So if you could tell us a little bit more about Eco2Solar then, please, Paul.

Eco2Solar are an installer of solar PV and associated technologies, and we work on new-build properties across the whole of mainland UK. Last year, for example, to give a bit of context, we installed solar onto about 8,000 properties.

Okay. And what was your journey into working with solar panels?

I've worked in business for many, many years, worked for many, many IT and software companies, for example, lots of sales and marketing and international experience. And following a small business that I launched myself back in the early 2000s, which I sold not for very much in the mid-2000s, I kind of decided I needed to do something a bit more interesting and something that kind of fueled— passion would be too strong a word, but certainly something I believed in and I thought was worthwhile, plus would catch a, you know, a new trend of what would be a good thing to do. And solar energy came up. I went out and researched it, and cut a long story short, after talking to a number of people and looking at multiple websites, reading lots of papers, I launched the company in early 2007.

Now, are there different types of solar panels?

The difference has kind of merged over the years, really, and become a little bit less transparent as technology's improved. But as a result of that, some are a little bit more efficient than others and would generally be reflected in the price. PV panels are priced per watt, not per panel. So if you're getting a more efficient panel, you generally find you'll pay a little bit more per watt for that panel.

What would you say sort of the 80/20 is? 80% of solar panels that are installed, say last year, what sort of type would they be?

In terms of solar panels, there's always a sweet spot.

And that's—

that varies over time. So it was, you know, it was 200 watts for a while, then it was 250. Currently it's probably about 400 to 450 watts. If you want stuff that's much bigger than that, you'll tend to pay a premium for it.

And do we know the carbon footprint of a solar panel?

The carbon footprint of a solar panel can vary quite significantly on the basis it's quite carbon intensive, or rather it's energy intensive to make them. So, but a lot of the companies that manufacture solar panels in the Far East generally are investing in renewable renewable technologies to provide the energy. So many of them have got lots and lots and lots, I mean, many, many tens of thousands of solar panels on their roof to provide the energy to produce the solar panels. It's like solar-powered solar, if you like. So as a result of that, and I did a bit of research on this to see what was the latest figures on this, but generally speaking, the carbon payback, if you like, on a solar panel is between 1 and 4 years depending on how they've been produced. So bear in mind, they last for 25, 30 years. You know, they pay for themselves from a carbon perspective many times over during their lifetime.

And I'm just curious, actually, are solar panels powered? Do they have a power input to them?

Solar panels are completely self-power generating from the sun. So the photovoltaic effect, which comes from the cell, sends irradiant energy, fires up the whole system. The solar PV panels don't require any energy at all to run them.

So what's the difference between solar thermal heating and solar panels?

They're very different. I mean, solar panels or solar photovoltaic PV panels, as they are technically known, produce electricity. Solar thermal heating panels produce heating. They are very, very different in terms of their kind of, you know, physics and makeup. So a solar thermal panel is basically a heat, a heat accepting object. So basically a dark colored material, which is a conductor, which creates heat from the sun. and that then gets transmitted by normally some kind of fluid, um, to a hot water system or a heating system or something. Where solar PV panels are actually relying on two layers of silicon, which create what's called the photovoltaic effect. Um, what that does is the, the difference between the positive and negative creates a flow of electrons, um, which then can be used to, to power things. So effectively it produces DC power, which can be inverted via an inverter to AC power that can be used in any building.

What are the challenges installing solar panels? Are they significant or is it very, you know, becoming quite straightforward now to install these solar panels?

The solar panels themselves are actually relatively easy to install in some ways once you know what you're doing. You know, you've got solar panels sitting on, say, a roof, for example. You've got some cables to an inverter that inverts the DC to the AC via some switches and things. Either got a cable to your meter on your consumer board, which produces electricity. So theoretically speaking, they are fairly straightforward. So the difficulties around it really are around the regulation of it. So obviously it's an electrical thing, so you've got to make sure it doesn't— it's got to be in line with the regulations to make sure it doesn't catch fire or doesn't do anything it shouldn't be doing. And also it's fastened to the roof. So, you know, if it flies off the roof and hits somebody, it wouldn't be very pleasant. So there's regulation around that as well. You know, there's quite a bit of regulation around doing it properly.

Gotcha. Gotcha. So what is the situation with incentives and grants now in solar panels? Are there any still?

There are not many, none at all really for commercial or non-residential other than any sort of local schemes that might be available from, you know, from a local authority, for example, a specific grant scheme. For homes, there's a thing called the Smart Export Guarantee. Which means that your energy supplier will offer to pay you an amount of money per kilowatt that you export to them. And they'll install a meter so it meters it and they'll send you some money once a quarter based on it. And that amount will vary depending on the energy supply you choose. Some are kind of better than others, rightly or wrongly.

Okay. And does everybody have that facility if they want to have it then, to be able to feed energy into the grid and get paid for it?

Yes, residential customers. Yes, since the feeding tariffs finished, the grant scheme finished back in March 2019, sorry. And since then, the Smart Export Guarantee system has been in place.

And in terms of getting your money back, that was always a question, wasn't it? What are the economics like on that now?

So now, I mean, you're talking probably less than 10 years on a house. But if you know, for a good commercial rooftop, you know, you could be talking where you can get to use all the electricity, maybe in a factory or something, you could be talking as little as, you know, 3 to 5 years to get your money back. And they last for 25, 30 years. So, so, you know, over their lifetime, they're going to produce significantly more than you paid for them.

What are they like? How do they degrade? Do they degrade over time significantly or not really?

They degrade over time. And they have fairly long guarantees on them in terms of the performance. So, so a solar panel generally is is it has a performance warranty for about 25 years on average. So they vary by module manufacturer. But generally speaking, they would guarantee that at the end of 25 years, you'll have between 80 and 85% of what it was to start with. So if it was 100 watts, for example, you'd expect it to still be 80 or 85 after 25 years.

Sounds good to me. I'd be happy with that, I think. You know, I've got very much—

Absolutely. It's very reliable technology, to be fair. You know, it kind of does what it says on the tin, and we can predict with some accuracy what you'll get from it. Not on a daily basis, of course, because the sun shines when it wants to, but over a year we can reasonably accurately predict what you're going to get. Okay.

And are you finding that you're installing them sort of combined solutions more and more now with batteries and heat pumps?

Yeah, absolutely. So it depends, that depends what market you're in. So for example, if you're in a commercial environment, we're installing for, let's say, a factory, for example, the expectation would be they'd use all the electricity, so there's no point in putting a battery in. And if, but if you're installing for, say, a residential, what we call retrofit, so installing in somebody's home, probably 50% of those now anecdotally are getting batteries, much less in new build because it's that the regulation doesn't dictate it at the moment. But it probably will for the next set of building regulations. That there's a new set just coming into force, there's another set coming in a couple of years, and that will probably probably because we haven't seen the details yet, require or expect batteries.

So is legislation at the moment that new builds have to have solar panels, or is there something?

There is, yes. So it will be the case. It's not directly the case. In other words, there's nothing in the legislation that says, or regulator says, you have to have solar panels. But the most advantageous way of achieving the relevant regulatory requirements under the Standard Assessment Protocol, called SAP, generally for 80% of homes, it's best to put something like solar panels plus some other bits and bobs as well. Right. But it doesn't specify. In the next set of regulations, it's going to be even more significant, I think. But the new regulations that come into place force now in England, they're already in force in Scotland. We would expect that probably 80% of new build properties from, let's say, the end of this year will have solar on them. Okay.

Do they need cleaning? Because I'm thinking, you know, you look at your roof, it doesn't look clean, does it, after 10 years? What about solar panels? Do they need cleaning?

They do and they don't, in the sense that they are designed to be self-cleaning. So providing on a pitch that the rain and any water that hits them will clean most of the debris off. You would get an incremental benefit maybe every few years to getting somebody to get up there and clean it, but it's unlikely to be enough to be worthwhile paying somebody to do it. So if you've got a big commercial roof, for example, or I don't know, you've got fields of them where it's worth getting somebody to do it, then, then yes. But if you've got a normal residential house with, let's say, 10 or 15 panels on there, it wouldn't be worth erecting, you know, scaffolding and stuff and getting somebody up there to do it. It might cost you a few hundred pounds. You're only going to get a benefit of, you know, tens of pounds, if you like. So there is some benefit, but it's relatively small.

What about the manufacturing and the making of these solar panels and the materials that they use? Is there anything in there that we, you know, we're going to run out of? Any minerals? There's obviously, I think there's silicon in there, is there? Is there anything else that we need to be thinking about?

Yeah, I mean, the basis of what they're made is silicon, which ultimately comes from, you know, a sand-type material which is mined. There's glass in it, which obviously comes from a different but similar kind of source. And the rest of it really is, you know, a bit of copper and some aluminium to make the frames.

Yeah, yeah. And I heard not so long ago that solar panels can get too hot. And as they heat up, become less efficient.

Is that how they do? It's relatively small, but they— there is a linear curve on this. So basically, the cooler you can keep the solar panels, the more efficient they are. So actually, if you get a sunny day at, you know, -40 in the Antarctic, they work really, really well. And if you put them in a— in the desert, they work well in the sense there's a lot of irradiation, but they will lose some efficiency because it's very hot. So yeah, either way around is not prohibitive. In other words, you know, they don't need to be terribly cold. But on the other hand, you know, if it does get very, very hot, so that's one of the reasons why, you know, having them in the desert isn't necessarily that much better than having them in a reasonably warm country that has sunshine.

And then when they, after 25 years, we need to throw them away, what happens to them at the moment? You know, once they, their lifespan, do they get recycled? Can they be taken apart?

Yes, they can be recycled. There is a scheme for recycling and we've just sent some broken panels, and we install a lot of panels, and we don't break many panels. It might be one a week or something on a scaffold or something where they've been dropped or whatever, or the forklifts done what it shouldn't do, but they've mounted for a period of time. So we sent those off for recycling. We have to pay for that, and they go off to be recycled properly. But it's not a big issue at the moment because people didn't start installing solar panels in any quantity until about probably 12, 13 years ago. So bear in mind, they last for 25 years or so. There will be a bigger requirement for recycling them probably from about the middle of the 2020s onwards.

Right. Okay.

Okay.

And then what's happening with solar panels then? Where's the technology going? Is it evolving very quickly or is it sort of hit a bit of a bottleneck at the moment? Is there something new that needs to happen to keep the technology moving forward?

It's constantly, it's constantly evolving. There's, there's new types of panels that have become subtler, I suppose, in the sense, you know, they put the contacts on the back, I suppose, instead of the front. These slightly different technologies for sort of bonding the cells and different ways of doing things. They've got some, for example, that they call bifacial products, which basically will— there's some radiance ability, some absorption ability on the back. So effectively what you do is you install it on a roof where it's not obviously actually against the roof. So anything that's reflecting up from the roof would be able to be absorbed in the form of electricity. And so they're working on that. They're also working on combining different technologies as well to make things generally more efficient. So there's a lot of work going on around the different technologies to take things forward. But it is, I have to say, it's quite incremental. It's not, you know, it's not, it's not 30% a year or anything like that. It's small amounts every year, but currently getting better all the time. And obviously, generally speaking, apart from the recent issues with inflation, generally speaking, you know, the price of these things will come down.

And Tesla's got these solar roofs, haven't they, that look like roofs?

Yeah, I've got my own views on this, which are sort of personal views really, which are in no disrespect to anybody or even to my own company. We don't install them. They're not actually technically available in the UK and they are, they're quite expensive because they haven't produced volume of them yet. So whilst it's a great idea, it's really not cost effective and certainly not cost effective enough to be even available in the UK at the moment. So solar tiles have been around for a long time since, you know, probably 15 years or so, but never really taken off because of the additional cost.

So they're solar tiles. Okay. Right.

Gotcha.

So yeah, you build your roof out of these solar tiles. And wire them all up.

Absolutely. We install mostly in-roof solar panels so that they look like a slightly larger Velux window.

Right. Okay.

So they're actually in the roof so that they don't sort of stick above the roof and they're very, they're very dark. They're all black. They call them these days, everything's black. So if it's against a black tiling system, you wouldn't see it very, you know, very much from a distance.

Right. And how dependent are they on the direction that they face for their efficiency?

Not as much as you'd think. So, you know, the two things that people talk about is the direction they face, do they face south or not, and what's the pitch. And, you know, the pitch would be anywhere between, I guess, you know, sort of 10, well, certainly between 20 and 45 degrees. It's not really much different. And if they're facing south, that's best. But if you face them southwest or southeast, you probably lose maybe 5% efficiency. And even east and west, you're talking 80-85.

And so, uh, what about people that have got existing properties? Are there considerations for people who want to retrofit?

Yeah, it's generally possible, um, and there are guidelines now for— so we've done a lot of residential retrofits over the years, we just don't do them anymore. Um, but you, you would need a survey of the roof, so we need to have a come and have a look at it. But most, most modern roofs are, are okay for putting solar panels on. You know, the snow loading would be sufficient of that, but you can generally So if you're worried, you can get a structural engineer to have a look at it. And if it's an unusual roof in some ways, if it's a very old roof, for example, or the roof's not in good condition, it would be worth getting a structural report. But I would say probably for a large proportion of British roofs, they're suitable for putting solar panels on.

What's your biggest frustration, do you think, then?

I think the biggest frustration is people not understanding, or rather not appreciating the value enough to say, well, I'm going to spend some money on it. I mean, solar is very, very very popular in the UK. It has about 80% approval rating. So when you ask people, you know, do you like solar or not like solar, 80% of people say they do, which is the highest of all of the renewable technologies, almost much, much higher than any fossil fuels. But when it comes down to it, very often I don't think people are vociferous enough in terms of either, you know, wanting to pay out the money to put it on their own roof, or even when they're moving into a new build home to say, you know, my neighbours have got solar panels, or my friend that bought a new-build property down the road had one, why haven't I got them? People are still happy that if they can buy a 3-bedroom house in the area that they want for the price they want, they'll go with it whether it's got the solar on it or not. And I think people should be a bit more demanding.

Are there solar panels used in a community way where they're installed, you know, on a park somewhere and everybody taps into it? Is that possible?

Yeah, absolutely. I mean, there's quite a lot of themes around like that. There's this, um, publicly funded schemes where you have that kind of thing, or maybe it sits on a, you know, in a village hall, for example, that provides a sports center or something, provides energy for people generally to use. And there's also been schemes where, you know, maybe a whole host of properties have been given the opportunity to have solar at maybe a reduced rate because there's economies of scale from lots of stuff happening. And there's also companies, they call them community benefit societies, for example, that will raise money via shares to install solar panels onto village halls, hospitals, leisure centres, whatever. And they will then sell the energy at a reduced rate to the incumbents and get a return back.

Right. Okay. That's good to know. I think I heard Musk say once that, you know, if you had about whatever it was, 10 football fields of probably 100 football fields of solar panels, that would be enough to power the entire world.

You can, you could absolutely. I mean, there's a very small— there's a map you can find on the internet where there's a very small part of the Sahara Desert. If you covered that with solar panels, that would be enough for everybody to use. And anecdotally, every single minute of every single day, 5,000 times as much energy as we need in every minute hits the Earth in the form of solar energy. Right. And so there's a lot of it. The issue you've got there, if you concentrate it in one place, of course, you've got a distribution problem. Right. You know, it's a bit like water, isn't it? There's enough water to go around. Yes. And people are flooded in Scotland and they're parched in, you know, North Africa or something. It's moving it around. It's not a small consideration. So if you want to move lots of energy around from that concentrated area, that would be the constraint and the cost.

So we're going to come down to storage at the end of the day, isn't it? How effectively we can develop batteries.

Yes, storage and smart. So it comes down to, you know, if you can generate the energy from the sun, you can store it. But what you can also do is send it where it needs to be at the right time. So as I say, you know, if I'm able to generate energy, but I don't need it, if my neighbor can use it or the school can use it or the local factory can use it, you know, that's much, much better. So if you're able to use energy intelligently, as opposed to everybody, you know, producing energy at midday and then coming home at 6 o'clock in the evening and wanting to use it then when maybe it's, you know, in the winter particularly it's dark. That's not an intelligent way to use energy. We need to smooth it out as well.

And when you do your installations, is that a part of what you install, some smart switching that switches in the solar panel and then switches maybe over to wind when it's a windy day and it's cloudy?

We, not directly like that, but we do do some smart technology, yes. And that's becoming more prominent. Certainly smarter ways of using, let's say, for example, your solar with your heat pump and your EV charger, for example, or your immersion heater. So when there's solar available, it uses that energy to go and charge your car or to heat up your water or something. Those are quite popular. And those technologies are becoming more ubiquitous now, I think. And they will be installed, I think, possibly in the next set of regulations, there'll be a lot of that being installed for new build homes.

Okay. And so the biggest objections people have to installing solar panels, if we go back to retrofit, because I think obviously with new build, it's sort of built into the, built into the business. With retro, we are talking price really, aren't we?

Absolutely. Absolutely. And I think that there does need to be over time, I think probably finance models to, to make that easier. And there are some things out there, you know, some green mortgages and things you can get. And they are getting cheaper, of course, you know, you know, the solar panel system that might cost you 20 grand 15 years ago might only cost you, you know, £5,000 or £6,000, but it's still a chunk of money people got to find. And I think there's more work needs doing on that personally.

So what's your view on things just becoming more local? We need to be more local, don't we? Local grids, local heating, local, you know, rather than everything being generated by wind farms off the North Sea.

I think there's a two-stream thing to that. The answer is yes. I think we're doing both. So there'll be more wind farms. And there'll be more solar farms that produce electricity. And, you know, a similar model to power stations, really. You've got a great big facility producing power that then gets sold into the, into the grid, um, and people buy it in the normal way. Um, but I think the, um, for me anyway, the, the focus should be around microgrids. It should be around the home, the street, the housing estate, the village, town, and making energy as local as possible. And that does involve generating as much as you can locally, storing as much as you can locally, and moving it around locally to people that need it when they need it, using various smart technologies as well as financial instruments really that allow you to sell things to other people, peer-to-peer arrangements, that kind of thing, and arbitrage to sell back to the grid. So, but yes, I think it did. The more we can make it local, the better. And for me personally, I'm not against solar farms and solar fields, but for me, you know, we should be covering the roofs with solar first, you know, at least while we're doing everything else, if not before.

In terms of monitoring the performance of the solar panels, is that something you can do?

Yes, it is. I mean, it's true at all levels. You know, if you've got a utility scale or a large commercial one, it's quite important because you've basically invested in an asset and you're expecting, you know, a return of X and you need to make sure it's, you know, at least X plus something as opposed to X minus. So that's very important. With regards to the homes, most systems now will have some kind of monitoring device on them. So you can monitor, I mean, I've got, as you probably expect, being a bit of a geek anyway, I've got about 3 or 4 apps on my phone. There's one for my car charger, there's one for my, 2 for my solar because I've got 2 different systems on 2 different buildings, one for the heat pump. And, you know, see, there's more from a battery as well. I've got a battery. So, you know, and all of those kind of link together to one extent or another, to the extent that you realize actually interoperability for these things is potentially an issue. So actually I could, For example, I could charge my car using solar, using my app that controls my solar panels, my app that controls my battery, or my app that controls the EV charger. So you've got to kind of pick one. Right.

Okay. Give us an idea of what's the ideal installation in your view then?

Yeah, it depends on what you're looking to achieve. I mean, solar is— I'm probably a bit biased, but I've been working with it for years now, and I know that Solar's really reliable, lasts 25 years, and it kind of does what it says on the tin. We know what it's going to give you over that period of time, and they give you very little trouble. So solar's a bit of a no-brainer in some senses, I think, in terms of these technologies anyway. EV chargers are very popular with people now because obviously a lot of people want to drive electric vehicles. That really is quite a driver. Very often people getting solar, I've got an EV, I'm going to put an electric vehicle on my drive, I need an EV charger for that. Actually, oh gosh, my electricity bill's going to go up, let's get some solar. So those, those are kind of givens. Batteries are also very popular as well. So probably 50% of residential retrofits get batteries. I think that's as much an emotional decision as anything else. People want to feel that they're able to use all their energy and not sell it to the grid. They want to feel that they're more independent, if you like, of the grid, which I think is important. And the payback on those and the returns are getting much, much better. And things like heat pumps, for example, are really dependent upon the site and the type of building. Work better on well-insulated houses, for example, than they do with very old houses. But again, great technology. I have a heat pump here, and, you know, we've had heat pumps in, in my house for the last, you know, 12 years or so, and they're very reliable, they produce great heat, and they're very cost-effective. So I'm a fan of all of those things.

Thanks very much, Paul, for spending your time with us.

Thank you very much, it's been a pleasure. I've enjoyed it, so thank you for your time.