Is Solar Power A Bright Investment?
A standard 4 kw system costs between £7,500 - £8,500 to install on your roof, but new tariffs should give you a return of at least £25,000. So what's the catch? There isn't one.
If the government offered to pay you £1,000 a year for the next 25 years, in return for an up-front investment of £8,500, you'd snap it up in a second. Well, that's pretty much the deal on offer after the government finally revealed what it will pay those who install electricity generating solar panels – in and around their homes – through the new "Feed-in Tariffs" (FITs).
After years of campaigning by environmental groups, the government has finally agreed to reward households and businesses installing electricity-generating measures with enough of a return to make it a serious financial, as well as an environmental, investment. If you've got the money and a sunny, south-facing roof, you can earn a 7%-10% tax-free return, an income that will rise in line with inflation. At the same time, you get to do more than your fair share in reducing the UK's carbon¬ emissions.
Ofgem, warned the nation to expect 20% electricity price hikes by 2020, and warned future supplies were in jeopardy, investors in solar panels will have the added benefit of being a net provider of electricity, and largely insulated from future price hikes that could see household bills top £2,000 a year by 2020.
Feed In Tariff
The feed-in tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past.
The government announced a number of tariffs – including what the government will pay those installing wind turbines – the one that will appeal most to the average UK householder will be for installing photovolatiac (PV) solar panels – at a typical cost of £5,500-£12,500.
From 1 April to 1st July 2012, households with approved¬ schemes ( EPC of band D or bettter ) will be paid for the electricity they generate, even if they use all of it themselves.
The level of payment depends on the technology and whether it is being fitted to an existing¬ home, or installed as part of newbuild. Importantly, future payments are guaranteed for the next 25 years and have been, unexpectedly, linked to inflation.
Anyone fitting a typical 4 kW PV system to their existing home will initially be paid 21 p per kilowatt hour (kWh) generated. Enough to reward them with up to £1,000 in the first year on top of a £140-a-year saving on their bills.
The measure, which is inevitably quite complicated, is designed to reward those who reduce their own electricity consumption by installing low-energy lighting and A-rated white goods, and to ultimately export excess electricity generated back to the grid.
Households get an extra 3p for each kWh they export on top of the 21 p they get paid for all units generated. The fact that the payments are not taxed make it a particularly rewarding investment for higher-rate taxpayers – those earning more than just over £43,000.
Regulated Payments
The payments will physically come from your existing electricity supplier, but will be overseen by the regulator Ofgem. Homeowners need a largish (8m2), unshaded, south-facing roof, or similar place to mount panels.
Feed-in tariffs are going to be a big boost for the industry and for the first-time, homeowners will see a decent financial return. It is estimate homeowners can save and earn more than £1,000 per year for 25 years, increasing with inflation, giving a payback in around 10 years.
Homeowners with flat roofs may well find they can install a system, as will those with conventional roofs that face a few degrees either side of south, east or west. Panels perform best in unshaded sites angled towards the sun at a pitch of 30-40 degrees.
Prior to this , grants of up to £2,500 had been available to those installing PV panels under the terms of the government's Low Carbon Buildings Programme. There are still grants available for other green technologies. FITs now provide the entire financial incentive for PV installers.
Green Energy North Wales Cover The Following Areas:
Solar PV Liverpool - Solar PV Cheshire - Solar PV Manchester - Solar PV North West
We supply and fit solar PV in homes and businesses, call us on 01745 355399 or 07813774043 to learn more.
