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Solar Panels | Feed in tariff rates

By Edited Nov 13, 2013 0 0

At the time of me writing this, there is little more than a month left before the feed in tariff is once again reduced here in Britain. The feed in tariff is a government initiative that is supposed to incentivise people to "go green" and start producing their own electricity through investing in photovoltaic energy systems or solar panels to you and I. In return for this "green" investment, the national grid pays customers for every unit of electricity the solar panels generate and naturally they see a reduction in their energy bills too.

Currently the feed in tariff stands at 21p per unit but  as of 1st August 2012 this will be reduced to 16p. Anyone who invested in solar panels prior to March 2012 is currently benefitting from a wooping 43p per unit and has secured this rate for 25 years! Well done them I hear you say, but for the rest of us left kicking ourselves wishing we'd purchased solar panels when the rates were still this good, at 21 pence per unit this is still and attractive investment, producing a typical income of around £600 and a typical saving of £100 per year on energy bills. This translates as a 12-16 year return on initial investment timescale with a typical installation cost for a 3kw system costing between £8-10,000.

So if you have this sort of money and envisage staying in your property for at least another 16 years then investing in solar energy really does make sense, particularly when you consider energy bills have, on average, doubled in the last eight years and are forecast to continue to rise in the future. Furthermore, with banks offering such poor rates of interest and the markets' performing poorly, people are struggling to know what to do with their money.

One question people often ask about photovoltaic systemms is:  do solar panels add value to my property? Unfortunately there is no simple answer to this and this is because whilst they might alienate a certain type of buyer, as some people can regard them as an eye-saw, other potential buyers may regard them as a strong incentive to buy the property, and their energy saving benefits as a great bonus.

Sceptics are concerned about the efficiency of current solar panels and are wondering about whether photovoltaic technology, amongst other forms of renewable energy, will become more efficient and cheaper in the future. 

Whether solar panels will still be such an attractive investment once the rate has dropped to 16 pence per unit remains to be seen. Another fundamental change made on top of this will be the reduction in the timescale for which this rate will be fixed, dropping from 25 to 20 years, so this should also be taken into account by prospective buyers. Regardless of whether the numbers add up, it must also be noted that solar panels are a terrific investment in terms of their benefit on the environment.

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