Everyone knows solar energy is good, but the last two years have been a bit of a solar-coaster for people trying to find out just how good. Most people have a vague idea of getting money back on the energy you generate, but the specifics of the scheme are elusive. The minefield of information is not helped by sensationalist articles ringing the solar death-knell, after yet another change in government price or policy.
So what’s it all about? And is it, as the cynics say, too late to benefit from solar?
The FiT scheme
The Feed-in Tariff, or FiT, is a government incentive scheme to make solar panel installation and other renewables financially worthwhile for people. You are paid for all the energy your panels generate – not just the amount you export back to the grid. Payments are guaranteed for 20 years. The rate you receive is on a sliding scale according to the size of your solar panel installation. To qualify, you must attain an EPC (Energy Performance Certificate) with a rating of D or above.
How much will I receive?
Back in 2010, early investors in solar power received a whopping 41p/kWh. Since then there have been several drops in that rate, bringing it down to 21p/kWh at the beginning of the summer. It changed again in August to the current rate – upper rate of16p/kWh and a lower rate of 7p/kWh.
The Department of Energy and Climate Change says that reductions are necessary as the cost of installation has fallen; the public uptake has been much higher than the government had initially predicted, and the FIT scheme would not be viable at those original rates.
Will it change again?
Yes – every 3 months. The next adjustment is on November 1st, but it will only drop a tiny bit to 15.44p per kWh produced (down from 16p). Commercial solar however will remain untouched until at least February 2013.
Is it still worth it?
Yes! The forecast is still decidedly sunny for consumers. Here’s why we should be embracing solar…
• The initial investment cost has dropped considerably. The price of installation has almost halved in the last 18 months, thanks to the lower price of panels and a greater availability of cheaper options.
• It’s still one of the best investments you can make, especially in the current economic climate. For an average 4kW system costing £8,000, the system will have paid for itself within 10 years and yield 9.2% ROI over a 20 year guaranteed period
• Returns are likely to be even better than predicted, because bills are rising faster in real life than the estimates your return is based on. So, to use the example above, real-world energy price hikes mean your ROI hops from 9.2% to 11.4%, with payback after 9 years
• The generated income may be lower, but the fact of free electricity has got to be more attractive now to families than ever. Rising energy bills, seemingly non-stop increases, are a quarterly headache for most homeowners.
• Longevity – current systems are so advanced they should last around 40 years, creating a whole new generation of energy savings
• The technology itself is better than ever – more efficient, easier to install and zero maintenance (they are even self-cleaning)