Are Solar Panels Still A Good Investment?

Over the past 3 years, installing solar panels on your roof has been a popular way to save on your energy bills while contributing to conservation efforts. Homeowners have been able to earn money by generating their own electricity while earning money under the government's Feed-In Tariff scheme while earning additional money by selling excess power to the National Grid.

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However in June 2015, the Government announced they would be reducing the Feed-In Tariff by 64% from February 2016. This reduction is now in force and the Solar Panel industry has responded by reducing the cost of buying and installing solar panels by 50%. So in 2017, does it still make sense for homeowners to invest in home solar panels?


Changing Payments

Probably the best way to explain these changes is to list the 3 key financial benefits from home solar panels (based on figures from the Energy Savings Trust). The 2nd point below is the one being impacted by the Feb 2016 changes.

1. Lower Home Energy Bills

Solar panels generate electricity that can be used by the household instead of using electricity from their regular supplier. Assuming your solar panels are generating power (i.e. you occasionally see the sun where you live!) you can enjoy savings of up to £70 a year on your electricity bill.

2. The Feed-In Tariff'  

This is a payment you receive from the government for all electricity generated by your panels - even if you consume it yourself. It was one of the most persuasive parts of the business case for installing solar panels when it was introduced on the 1st April 2010.  The rate plummeted on the 8th February from 12.47p/kWh to just 4.39p/kWh. So what previously generating an income of £435/year will now only generate £150/year and that make s a big difference to the business case.

3. The Export Tariff'

This is the tariff paid to you for all the electricity you don't use and export back to the National Grid. This is currently paid at 4.85p/kWh and isn't likely to change in the near future. Assuming you export 50% of what you generate (national average) you should generate roughly £85 per year.



Are Solar Panels Still A Good Investment?


Taking into account the new lower Feed In Tariff, the business case for Solar Panels is not as clear as it once was. A homeowner can now expect to earn and save around £300 a year and have their payments guaranteed for 20 years. The good news is that the solar panel industry has reacted fast and the cost of installing Solar Panels has now fallen to as low as £3,000. If you are earning £300 a year then it will take only 10 years to recoup your investment.

So our advice would be this. Solar Panels are still a good investment, especially if you are passionate about green issues and renewable energy, as well as having access to your own energy supply, At best, your investment will pay itself back over 10 years (assuming payments keep pace with inflation) so if generous investment returns are an important consideration then solar panels might not be for you.

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