Solar panels are increasingly part of the British housing landscape, largely because of the Government’s Feed in Tariff which pays householders for every unit of electricity their panels generate. The Feed in Tariff means those panels mounted on your neighbour’s roof are not just eco bling, they are also an investment. The initial cost of the PV system is recouped over time through energy bill savings and through payments from the Feed in Tariff. The Feed in Tariff is index-linked, guaranteed for 20 years and is paid on a per unit basis for every unit of electricity generated, even the electricity you use yourself and never export.
The Feed in Tariff is also falling. A solar PV system installed today will be paid 14.38p/kWh. This rate will rise in line with the RPI and is guaranteed for the 20 years of the scheme but it is less than the 15.44p/kWh you would have got per kWh if you joined the scheme last year and considerably less than the 41.3p/kWh you would have got at the scheme’s launch in 2010.
So, given that your solar panel system could have earned you 41.3p/kWh in 2010 and will only earn 14.38p/kWh if you get it installed today, is it still a good investment?
The surprising answer to that question is, yes it is. The Feed in Tariff for solar is not as high as it once was but solar panels are more affordable now than they have ever been.
In addition to falling solar installation costs, the price of electricity is also rising. Installing solar panels benefits the homeowner not only through FIT income but also through savings on electricity bills.
In fact, our recent research into domestic solar PV costs and returns indicates that solar panels are a better investment now than they were at the launch of the scheme.
Are domestic solar panels still a good investment in 2014? Absolutely. Feed in Tariff income is tax-free and index-linked and the tax-free, real returns offered by well sited domestic solar are highly attractive. The scheme was designed in 2010 to provide an attractive rate of return for householders and falling installation costs have made it an even better option today.
For more information see: UK Domestic Solar Panel Costs and Returns: 2010 – 2014