In April 2010 the government introduced the Feed in Tariff (FiT) scheme. Under the scheme, anyone generating energy through solar panels can receive payments for that energy, whether the panels are installed on a domestic or commercial property.
The income from Solar Panels comes in three elements:
- the Feed in Tariffs (FITs), amounting to around 75%;
- the savings you make through using the electricity you make and therefore not buying it, around 20%;
- and the value of the electricity you export back to the grid when you are not using it, say 5%.
The subsidies the government currently offers to anyone installing photovoltaic (PV) panels are so generous that anyone with a south facing (or anything near south facing between east and west) can effectively get a 10% rate of return on their investment, index-linked and government guaranteed for 25 years! It’s too good to be true.
However … beware the white knights offering ‘free’ solar panels. Some large companies will offer to ‘rent’ your roof space for 25 years, giving you the ‘free’ electricity produced by the solar panels they install. They take the FITs for 25 years and you just get the electricity
A better alternative is to finance the installation of solar panels yourself. Even if you have to borrow the money, you would pay off the capital with your FITs in around 8 years, then the rest is pure PROFIT. Better in your pocket than theirs!
As an example, if you already have the money sitting in savings and you invest £10,000 in solar PV panels then you will achieve £24,333 return over 25 years. If you have to borrow the money, even after paying off the loan you will gain around £17,450.
If you accept the ‘free’ offer then you will only benefit by £7000 and the provider will profit £17000 from your roof space! Their offer also places a covenant on your house which may complicate any future sale.
OK, I’m interested. How do I receive payment for my solar energy?
Payback and future income derives from three sources.
Firstly, Feed-In-Tariffs (FITs) are paid to you (43.3p / unit produced from 1st April 2011), an amount which is index linked and guaranteed by the UK Government for 25 years!
Secondly, you benefit from using the electricity you produce and therefore not having to ‘buy’ that amount of electricity from your supplier (currently around 15p / unit).
Thirdly, any electricity you produce and do not use yourself is sold back to your supplier (up to 5p / unit).
You said “south facing roofs” … I haven’t got a suitable roof!
Admittedly, some roofs are better than others but it is a myth to presume that you must have a south facing roof. Any roof in the southerly arc between east and west will work and any pitch of roof from horizontal (flat roof) to vertical (wall) is possible to use. Of course, performance varies depending on the orientation but the following chart gives an idea of how little is lost (e.g. even a due east or west roof produces 85% of what a perfect south facing roof would produce).
To find out more about solar panel installation and to find out if your property is suitable, give us a call on 01367 718833 or 07798 684 225 or email us.