by Will Vooght, Head of Research, Good Energy
Following the introduction of the Feed-in Tariff in April 2010, many people took the view that putting your money on your roof in the form of solar PV (panels for generating electricity) could be a wiser alternative than sticking it in the bank.
PV isn’t cheap – which is why the payment for small solar generators has been set high. This brings it in-line with other generation technologies and encourages investment. But not everyone’s got £10,000 or more to invest in their own renewable generator, so several schemes have recently sprung up offering individuals the chance to ‘rent out their roof’ to a PV installer. The householder benefits from free electricity while the installer collects the FIT payments – a concept known as ‘PV-for-Free.’
So are you better off paying to install your own system, or taking advantage of a PV-for-Free scheme?
Well, if you’ve got the cash and are planning on staying in your property for a while, investing in your own generator is not only a sound environmental practice – it’s a good economic one too. For a modest-sized, well-positioned system, (say, 2.5 kilowatt peak, costing around £12,000) you could expect a return of around £1,000 a year. Taking into account the money you’d also save on your electricity bill, your investment should pay for itself in around 10 years. And payments are guaranteed for 25 years so you’ll be in profit for another 15 – more than doubling your initial outlay.
If you haven’t got cash to invest upfront, accessing a decent loan might be the next best option. Say you are paying back the loan at a typical rate of 8%, your PV should have covered its costs over a 15-16 year period. That gives you around 10 years of interest-free earnings.
However, if you don’t want to invest your own money or accept the risks of borrowing money, PV-for-free can be an attractive option. In return for ‘renting’ your roof, the investor claims the FIT and exported energy payments, but all the electricity you generate and use from the panels is free. This could save around £140-£150 a year on your bills, more if you are able to increase your electricity usage during the daytime when the panels will be generating most and reduce it at night.
While the quantitative arguments appear to favour installing your own system, there are qualitative reasons for PV-for-Free. For example, installing and maintaining the systems are someone else’s responsibility and it’s in their best interests to make sure it’s working optimally. Some companies also give you the option to buy the system from them once they’ve installed it so you can ‘try before you buy’.
Good Energy is really pleased that there’s now such a big choice available for homeowners interested in generating their own solar power: our advice is to make sure you fully understand your options so you can determine which is the right choice for you.
To find out more please visit www.generateyourown.co.uk, and if you have specific questions please email fit@goodenergy.co.uk
