Anyone installing a Solar PV system in England can still make good money, reducing their impact on the environment and their energy bills. Through the government’s Feed-In Tariff scheme, payments are made for every unit of electricity generated by the solar panels fitted to your roof and for any excess electricity that can be exported to the grid. The scheme typically pays for itself in less than 15 years, and after this you can still enjoy FIT income and lower energy bills for the following 5 years at least.
Your FIT rate, or how much you will be paid per unit generated or exported, is set when you install your system. The government reduces the rates available to new customers over time, in a process known as degression. This occurs because as demand increases, the cost of solar PV systems goes down. This means that the earlier you install your Solar PV panel the more that you stand to earn.
From 2008-2012 the global wholesale price of solar modules fell by 75%. An average 3kW domestic system now costs £4,000-£5,000, with 4kW systems costing around £5,000-£6,000. The tariffs, meanwhile, have dropped from 43p/kWh last year to 15.44p/kWh as of November 1st over a number of months. There are varying opinions in the industry as to whether the tariff reduction is in line with reducing system costs, but one thing is for certain; consumer demand has reduced.
So is solar PV still worth it despite the cuts?
It’s quite possible that consumers choosing not to go ahead have responded to the FIT cuts rather than considering the reductions in installation cost as well, as you can still get a good return from installing a solar PV system. The drop in demand has also meant a further reduction in system prices that smart consumers can take advantage of.
Let’s do the calculations:
If the average household shops around for a 3kW system (using our service, let’s say) they will pay less than £5,000, with the really savvy being able to get a 4kW system for this price. Installing a system at this price would deliver around a 38% return under the current tariff rates, with an average home making £2,500 over the lifetime of the technology. You could also gain more in time, as if fuel inflation rises faster than RPI, which it is currently doing, your energy bill savings will increase year on year.
As you can see, despite rapid change in the industry there is still an excellent case for investing in solar PV, and with further system price reductions predicted this is set to continue. The key to maximising your gains from solar PV really does lie in shopping around for a well-priced system, so make sure you get several quotes from suppliers. To see if your home is suitable for solar PV and get competitive quotes from qualified installers head over to our assessment tool now.