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Are Solar Panels Worth Investing In?

Sam
2018-12-14

In 2010, the Government financially incentivised homeowners to start generating their own electricity so that they could reduce their carbon footprint. The scheme worked really well and, by 2018, nearly one million British households had solar panels installed on their properties.

However, from next April, the government is scrapping that incentive on new installations and the chances are that nothing’s going to replace it.

So, are solar panels still worth investing in? The CompareCompanies team has looked into it.

How much do solar panels cost?

Including parts and labour, when we last wrote an article about solar panel installation in July, these are estimates for the range of prices you might pay.

The size of the overall solar panel installation in m2 The number of panels on your roof The maximum power output of the solar panel (kWh) The approximate cost of a solar panel installation of this size
14 or fewer 8 2 £2,800 to £5,200
15 to 21 12 3 £4,800 to £6,200
22 or more 16 4 £5,800 to £8,300

How much will I save on my electricity bill?

The Energy Saving Trust estimates an annual saving of between £85 and £210 a year on your electricity bills. How much you actually save will depend on the size of your home and the amount of electricity you use. This is unaffected by the government’s accouncement.

What is the Feed in Tariff?

The Feed In Tariff is paid to you for twenty years after the installation of your solar panels (if you get your application in on time, that is). You’re paid per unit of electricity and any money you make from it is tax-free.

There are two feed-in tariffs – the generation tariff and the export tariff. You receive payment from your nominated supplier every three months (your nominated supplier does not have to be your electricity company).

The generation tariff

The generation tariff is remuneration back to you and your household for every kilowatt hour of electricity you produce. It’s currently paid out at the rate of 3.93p per kilowatt hour

The export tariff

The export tariff, currently set at 5.24p per kilowatt hour, is payment for electricity that you don’t use which is fed back into the National Grid. You can sell a maximum of up to 50% of your surplus electricity.

What difference does the Feed in Tariff make?

A big difference – it’s one of the main drivers behind nearly 100,000 installations a year in the last 10 years. Let’s look at how quick a solar panel system will take to pay you back with and without the Feed In Tariff.

How fast do I make my money back if I get my solar panels installed on time?

The CompareCompanies team have done a study using the Energy Saving Tariff website’s calculations on the mid-range saving on electricity bills (halfway between someone who’s home all day and someone else who’s out all day until 6pm), the expected generation tariff rebate, and the expected export tariff rebate. In this example, we have assumed that the solar panel insulation would cost £6,500.

In England, Wales, and Scotland, the average homeowner could expect payback in under 20 years. It’s longer in Northern Ireland where the generation tariff is unavailable.

  Mid-range saving Generation Tariff Export Tariff Annual saving Time to pay off
London £155 £165 £110 £430 15.1 years
Aberystwyth £150 £145 £100 £395 16.5 years
Manchester £148 £140 £95 £383 17.0 years
Stirling £145 £130 £90 £365 17.8 years
Belfast £148 £0 £85 £233 28.0 years

How long does it take to make my money back if I miss the deadline for the feed in tariff?

If we remove the generation and export tariffs from the calculations, it can take anywhere between 60% longer for Northern Irish homeowners and 177% longer for London homeowners. The difference is marked.

  Mid-range saving Generation Tariff Export Tariff Annual saving Time to pay off
London £155 £0 £0 £155 41.9 years
Aberystwyth £150 £0 £0 £150 43.3 years
Manchester £148 £0 £0 £148 44.1 years
Stirling £145 £0 £0 £145 44.8 years
Belfast £148 £0 £0 £148 44.1 years

Will there be a replacement for the Feed In Tariff?

In their Control for Low Carbon Levies document published on 22nd November 2017, the government assumes that “there will be no new low-carbon electricity levies until 2025”. So, probably not.

How long do I realistically have left to get solar panels and still qualify for the Feed in Tariff?

From the time of enquiry up until the date of installation make take up to 3 months although some installers can do it in a much shorter time. It’s always better to be conservative on these types of things though so the sooner you get in touch with an installer, the better.

Your installation will need to be completed and certified under the MCS scheme by 31st March next year. You then have up until 31st January 2020 to apply to a supplier to pay you the feed-in tariff.

How to find a solar panel installer before the Feed In Tariff is abolished

The clock is ticking. Although the government have indicated that the scheme won’t be replaced before 2025, it might well be however we wouldn’t bet the mortgage payment on it. The government has been short of money for years and the feed in tariff is the latest sacrifice. It is by far from the only environmental incentive to be removed in recent years.

We’ll write a new article in the weeks following the abolition of the Feed in Tariff to new installations to see where the land lies at the time.

However, if you want solar panels, it’s almost certainly and definitely better (in the absence of a crystal ball or the power of hindsight) to have the feed in tariff than not to have it. Time really is of the essence.

Meet qualified installers – free quotes, no obligation

Compare Companies works with solar panel installers across the UK who are registered with the MCS and who have at least one year’s strong trading history which means they can apply for a Category One or Category Two account.

Get in touch with us via the form on this page letting us know that you want to find out more about solar panels and that you’d like to have them while the Feed in Tariff still exists. We’ll send 3-4 trusted tradespeople your details – get a quote from each of them to get the very best price and after sales service on your installation. Ask them any questions you need to so that you get the installation you want.

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