| The UK government recently introduced Feed in | | | | £36 in the first year. |
| Tariffs which mean that you can receive payments | | | | You also get the benefit of free electricity. Assuming |
| for generating electricity from photovoltaic (PV) solar | | | | you use 50% of the generated electricity and you pay |
| panels installed on your roof. You certainly won't make | | | | 12 pence per unit this gives a saving of £144 in the |
| lots of money in a short period by installing solar panels, | | | | first year. |
| but it can be possible to make a good return over the | | | | The total financial benefit from the system in the first |
| 25 years that the Feed in Tariff is guaranteed to be | | | | year is £1171.20 (plus a bit of interest earned during |
| paid for. | | | | the year). The feed in tariff payments are index-linked |
| For a fair evaluation, you need to compare the benefit | | | | so will increase each year, and electricity is predicted |
| of solar PV with what would happen if you left the | | | | to increase faster than inflation so this amount |
| cost of the system in a savings account for 25 years. | | | | increases each year. And we need to consider the |
| For example, £12000 at 5% interest would grow to | | | | interest that we gain by placing the payments and |
| £40,636 (don't get too excited, that's in future value | | | | savings into a savings account. |
| terms, inflation will reduce the buying power of this | | | | If we take these factors into account, and assume |
| amount). | | | | that inflation (RPI) is 3% and electricity prices increase |
| Now we'll look at what happens if we invest that | | | | by 6% per year, and run the calculation we get |
| £12000 in buying a solar PV system. This will buy a | | | | £82783 at the end of 25 years. This is equivalent to |
| system with around 3kWp capacity. In the average | | | | an interest rate of 8%. A considerable improvement |
| UK location this system will produce roughly 2400kWh | | | | over putting the money in a savings account, though a |
| (units) of electricity per year (it gets better the further | | | | small amount does need to be allocated to |
| south you go). | | | | maintenance - the inverter is likely to need replacing |
| Assuming you're installing the panels onto an existing | | | | during the life of the system. So yes, in some cases |
| property (rather than a new build) and you are doing | | | | you can make money by installing PV solar panels. |
| this by April 2012 then you will receive a generation | | | | You may be able to improve on these figures |
| tariff payment of 2400 x 41.3 pence = £991.20 in the | | | | depending on your circumstances and the initial cost of |
| initial year. You receive this payment on all of the | | | | your system. If you live further south than average |
| generated payment whether you use it or export it to | | | | then you can expect to generate more electricity and |
| the grid. | | | | you may be able to improve on our guideline price. |
| For electricity you export to the grid you receive an | | | | You also need to consider tax on the savings though |
| additional export tariff payment of 0.03 pence per unit. | | | | you may be able to use your tax free ISA allowance |
| A reasonable assumption is that you use 50% of the | | | | for this purpose. |
| generated electricity giving an additional payment of | | | | |