Say hello sunshine and feel the benefits of solar gain
QUESTION: For some time we have been thinking about installing solar panels. It has always been our belief that the pay-back period is so long that they are not financially viable.
However, we now understand that there may be an opportunity for us to sell surplus electricity back to our supplier and actually make a profit. Do you know how this all works and what are the costs for us to install the panels. Are you also aware of the level of savings that can be achieved? ANSWER: In common with most new technology, financial gains are not always present in the early stages of development.
However, in recent years the costs of installing solar collection have fallen while efficiency has improved. This is now an excellent way of reducing your energy bills and making some additional money while reducing carbon emissions. I am only surprised that there hasn’t been more publicity about “feed-in tariffs” (Fits), which are due to come into force in April. They give a guaranteed return that is tax-free and set to rise in line with inflation.
They were first trialled in Germany, taken up by Labour and supported by the current Government, probably because the money funding the scheme comes from the utility companies and not them. Typically, installation costs for the photovoltaic panels are around £12-£15,000. However, you are paid around 40p for every unit of electricity generated giving an average house an annual income of circa £800. Any surplus energy not used is exported back to the national grid for which you are paid an additional 3p per unit. This will give a return on your investment of around £1,000 per year. The final amount depends on a number of factors such as where you live, size and orientation of roof and your average consumption. Maximum efficiency is achieved on south facing roofs that are completely unshaded by adjacent buildings or trees.
Clearly this requires a sizeable investment, which may be beyond the reach of most families. However, there are some companies that will “rent your roof” and pay all of the installation costs. Although you don’t benefit from the feed-in tariff, you do get to use as much of the generated electricity you require for free.
Feed-in tariffs are not just restricted to the generation of electricity as there are similar benefits from installing solar water heaters. This is less well known but I understand the government’s Renewable Heat Incentive is promising to pay around £400 a year to anyone installing solar water heating on their roof. The systems cost around £5,000 but can provide most of your hot water from April to September and also contribute to raising water temperature over the remaining months. Again, a south-facing roof is required although south-east and south-west can work but not quite so efficiently. The solar panels are compatible with most heating systems but a water tank sufficient to hold two days’ usage will be needed.
It should be noted that installing the required number of panels will change the appearance of your property and although permitted development rights have been relaxed, it is still worth while checking with your local planning department before signing up. It is also unlikely to increase the value of your property, at least until the whole Fit concept becomes more widely embraced by estate agents as a very real benefit.
Joining these schemes will in part off set predicted rises in energy bills but it is also likely that the Fit payments to people who install in later years will be less generous so my advice is don’t delay. If you live in an appropriate house this is probably one of the safest and best performing investments you will ever make.