The benefit of paying for a Solar PV system
If you can finance the up-front cost of a Solar PV system, you will benefit from the free electricity produced by the panels in addition to receiving a 20 year Feed-in Tariff paid by an Energy Supplier. These savings and payments mean that you can recover the cost of the system within 8 to 10 years and make a profit for up to another 30 years after that.
The free electricity generated by the panels saves you having to buy it from the National grid. With the average electricity price being around 14p per unit, you can make substantial savings on your bills so the more of this free electricity you can use the better...
The Feed-in Tariff (FiT) is split into two parts. Firstly, there is a payment for every unit of electricity generated by the system, regardless of whether or not you can use it in the property. This is known as the Generation Tariff. As of July 1st 2015, the rate for systems under 4 kW is 12.92p per kW.
In addition to the Generation Tariff, for systems under 4 kW the Energy Suppliers will assume that 50% of the electricity generated is exported back to the grid and make a payment of 4.85p per kW exported.
Domestic Solar systems are typically in the region of 2 kW to 4 kW and cost between £3,500 and £7,000 to install. Two examples of the savings and earnings are as follows.
System Size = 2 kWp
Installation cost = £4,000
Electricity generated/year = 1,737 kW
Generation tariff payments/year = £224
Export Tariff payments/year = £42
Annual electricity bill saving = £125
Total savings/earnings per year = £391
20 year income & savings = £7,820
Payback time = 10 years 2 months
System Size = 4 kWp
Installation cost = £6,800
Electricity generated/year = 3,474 kW
Generation tariff payments/year = £449
Export Tariff payments/year = £84
Annual electricity bill saving = £250
Total savings/earnings per year = £783
20 year income & savings = £15,660
Payback time = 8 years 8 months
These examples assume a South facing roof in the Midlands using 50% of the electricity produced by the panels. Once the Feed-in Tariff payments end, you could still benefit from the free electricity produced for up to 20 more years.
As you can see, paying for a system yourself is a worthwhile investment but of course, not everyone has the funds to do so. It may be viable to take out a loan but interest rates need to be reasonable otherwise the payback period will be too long. One option to consider is extending an existing mortgage which is one of the cheapest loans available.
Those who do not have the capital or wish to borrow it can always Apply for a free Solar system.