Taken from Financial Mail dated 11 September 2011

 

Financial Mail has warned against ‘free’ solar panels, where you rent space on your roof to a firm that owns the panels.   But if you own the panels, the returns can be compelling, thanks to Government subsidies known as feed-in tariffs (FITSs).

Business consultant Nick Done, 43 from Southport, Lancashire because aware of solar panel schemes through flyers and adverts and thought the promise of ten per cent returns was worth investigating further.

Nick paid £12,500 to install panels over a 32 square metre section of south-east facing roof at his Victorian detached home that he shares with wife Dawn, 43 and their daughters, Charlotte 9, and Josephine, 6.

“We were led to believe by the installers that the FIT income would be £1,200, but in fact it was £1,400 in the first year.” He says.  The FITs funded by Government are paid via your electricity supplier.

The FIT rate is guaranteed to rise in line with inflation and FITS are paid per KWh generated, regardless of whether your household consumes the energy or distributes it back into the grid.  And remember, FITs are tax-free.

Nick believes that the family save between 50 and 60 per cent on their electricity bill, about £300 per year.  In total, this is a yield on his original £12,500 of 14 per cent.  The average installations cost about £12,000 and function best on southerly roofs with a slope of between 20 and 40 degrees.

Nick mentions that as FITs are inflation-linked, returns will not suffer if the cost of living rises.  ‘And if energy prices continue to rise, the savings are greater there, too,’ he says.

ANNUAL RETURNS;  More than ten per cent, possibly far more.

RISK:  Low, but you need to invest about £12,00 and cannot get the money back.