Part 1: Economics

Photograph of photovoltaic panels on a roof

We had put off buying a system in previous years as the costs were high and the pay back periods were very long. However as set out below, we now think the time is right to go ahead. We have had quotations, chosen our installer and are all set to go. 

Until the end of March 2010, there is a maximum grant of £2500 available from the Government's Low Carbon Building Programme. Then from April the Government is committed to introduce a Feed-in Tariff (FIT) scheme lasting for a period of 25 years. They have proposed a level and structure for the tariff but following a public consultation the actual levels have not yet been finalised. During the next three months there is an opportunity to benefit from both the grant and the feed-in tariff by committing to install a system with an approved installer within four months of obtaining the grant. 

We are going to install a 3.96KWp system at  an estimated cost of £16,000, that is £13,500 after grant. The estimated annual electrical yield is 3200 kwh (units of electricity). Under the proposed FIT of 36.5 pence per unit, this will produce a tax free income of £1168 pa. There is also a payment of 5p for all units exported to the grid. Lets say 50% of the electricity is exported which then generates an income of £80. Finally there is a saving for each unit consumed and not bought from our electricity supplier, Ecotricity full green tariff, at 12p per unit which equates to another £192. The total income and saving is estimated to be £1440 pa. This is a payback of 9 years and the tariff payments are set to continue for another 16 years after this. 

One alternative way of financing the cost of the panel installation could be through a mortgage over the 25 year term of the tariff. Installation of panels can add considerably to the value of a house upon resale.