The sun hasn't yet set on domestic solar energy
The decision to cut tariffs for installations does not mean the end for home renewables. Chiara Cavaglieri reports
Sunday 18 December 2011
With just six weeks' notice, the Government announced that it would be slashing the Feed-in Tariff (FIT) payments for solar panels by more than half.
The cuts, which came into force last Monday, could threaten 25,000 jobs in the renewables industry but, as a homeowner, if you were thinking about improving your home's energy credentials, is it still worthwhile fitting solar panels?
"We knew and accepted that the current subsidy level of 43.3p for smaller domestic and commercial solar PV installations was coming to an end. What shocked us and the industry as a whole was the extent of the cut and the speed with which it is being implemented," says David Hunt, a director with energy company Eco Environments.
The FIT scheme has been understandably popular; you get cash payments as an incentive for having solar panels on your roof to generate your own energy. However, the Government has reduced these payments from 43.3p a kilowatt-hour to 21p (from next April) for any new installations registered after 12 December.
Those who already have solar panels in place get to keep the top rate for 25 years but, in the scramble to beat the deadline, many customers have been left unhappy after failing to get their installations completed in time. They will now earn less than half of what they had hoped from their investment.
Solar panels used to be a fairly easy sell with the more generous feed-in payments but the cuts are likely to put many people off.
"It used to take nine or 10 years for the systems to pay for themselves, and now that is increasing to around 17 or 18 years. On the old rate, you could make £1,200 a year. But with the new rate, that drops to £650 and the payments are only guaranteed for 25 years so you haven't got many more years to make a profit on it," says Sylvia Baron, a Which? energy expert.
There is no doubt there is now a big gulf between those with existing solar PV systems and anyone getting one installed today, but it is important to remember that these feed-in payments are still tax-free and inflation linked (to the retail prices index). Also, because the electricity companies pay for all the energy generated, whether you use it or not, any excess electricity is exported back to the national grid for extra cash.
Rising fuel prices and lower installation costs going forward could mean that solar panels still offer a decent combined return and saving. The cost of having solar panels fitted has already fallen some way in the past 12 months, while electricity bills have continued on an upward spiral and in an industry that has had the rug pulled out from under its feet, there are bargains to be had.
"Considering the economic climate the prospect of a Government-backed, income-tax-free and index-linked investment return at above 5 per cent means that it is still very worthwhile to invest in solar energy," says Toby Ferenczi, a co-founder of energy company Engensa. "Prices have fallen so much that the returns are almost as good as they were when the scheme was first introduced last year."
One company, EvoEnergy, has now cut the price of its cheapest system by over £3,000 so a 3.92kw system with 16 solar panels could be fitted for £9,777. EvoEnergy say that a typical south-facing home could earn £759 a year from the FIT and save £219 on their annual electricity bill, equating to a 10 per cent return.
However, the sticking point could be that from next April, full payments will only be available to those with an energy performance certificate graded C or above. This essentially means you'll need loft and cavity-wall insulation, although the Energy Saving Trust says this makes sense as there is little point generating energy only to lose it through the roof and walls.
Even so, it may be that only very new homes qualify and everyone else could receive less than half of the reduced standard payments. The message, therefore, is to do your research, make the calculations, and if you're looking at this purely from an investment point of view, consider other options.
There are so-called "free solar" or "rent-a-roof" deals where you can get the panels fitted for nothing (and still benefit from energy bill savings) on the proviso that the supplier gets to keep the feed-in payments. Several companies, including British Gas and Eon, have already stopped taking on new applicants in light of the cuts but you can still get free financing with the likes of HomeSun, Isis Solar and Engensa. These deals are potentially more attractive now that you have less to lose in terms of feed-in payments and more to gain from rising energy prices.
"These might become slightly more competitive. Before we said don't go for a rent-a-roof scheme because you would lose out on a lot of money but that is not the case anymore. However, be careful about the contract; in the past we have seen a few problems in the terms and conditions to watch out for," says Ms Baron.
It is important to remember that you have to lease your roof for 25 years and any financial contract of this length is a serious undertaking so legal advice is a must.
Watch out for contracts that are heavily in the favour of the solar panel company, for example, it may stipulate that you need consent to sell up, or make any home alterations near the system during the contract. It may even state that you must compensate the company for missed feed-in payments if you need to repair your roof at any point. Even if you are allowed to sell your home within the 25 years, bear in mind that finding a buyer happy to take on a house with a roof that is rented out may be tricky.
If you do decide to go ahead and get solar panels fitted, whether financed from your own savings or through a rent-a-roof scheme, there are some basic rules. First of all, check if you need planning permission although you generally won't unless you have a flat roof or live in a listed property, or conservation area. You also need to inform your mortgage provider and insurer that you are getting solar panels installed. Then once you've chosen your solar PV company, ensure that they are MCS (Microgeneration Certification Scheme) certified and a member of the REAL (Renewable Energy Assurance Limited) Consumer Code.
Jo Kelly, 64, Basingstoke
Despite the cut to the feed-in tariff, Jo Kelly, went ahead with a solar panel installation on her three-bed Victorian home last Thursday.
"I had been thinking about it for some time and then the Government changed the goalposts. It didn't put me off though. I think it's the way that everybody has got to go. My money was sitting in the bank doing nothing," she says. "It might as well stay on my roof instead".
Jo used EvoEnergy to install six panels, which cost just shy of £7,000. The company has estimated that she will make £273 a year from the new feed-in tariffs but that doesn't factor in the money she save on her own electricity bill and for Jo, any extra payments are a bonus.
"People shouldn't get so hooked up on what kind of return they can get. If they want to leave something behind for grandchildren, this is a great way of doing it".
Donald MacInnes: 'I have to have £500 a month spare from now until at least 2035'
HSBC becomes first bank to offer five-year fixed rate mortgage with interest rate under 2%
Are finance apps stealing your personal data?
Crippling PFI deals leave Britain £222bn in debt
Pension freedoms: How to deal with cold calls from scammers
- 1 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 3 Giorgio Armani criticises the way some gay men dress saying 'a man has to be a man'
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...
Day In a Page
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000