Free solar panels – surely they’re all free anyway because the money you make from them over 25 years is more than the money you’ll outlay?
Yes that’s true. However, many people really do want to have a solar panel system installed on their properties but it’s the upfront cost that puts them off. You eventually make your money back and a little on top.
If that’s your situation, is there any solar panel funding available? What about for your business?
What can you do to get the solar panel system you want for your property? Is there a local solar scheme in your area?
Government-funded solar panels
There are no grants for solar panels in the traditional sense of the word from the Government that will pay in full or in part for your solar panel installation.
What they offer instead is a scheme called the Feed-In Tariff which pays you money for 20 years after your solar panels have been installed. The Feed-In Tariff is, in effect, the government solar panel scheme.
How do they calculate how much money you get? It’s by the amount of energy your solar panels produce measured in something called kilowatts per hour (often abbreviated to kWh).
The Feed-In Tariff changes every year – normally in a downward direction. However, when you get your solar panel system installed, the Feed-In Tariff that was in operation at the time you registered your system with the Government is fixed for 20 years. The tariff will go down but you won’t be affected by that.
You won’t be taxed on the money you make from the Feed-In Tariff. Better still, any money you receive from Feed-In Tariffs does not count towards your tax free personal allowance every year (due to be £11,850 per annum from April 6th 2018).
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Now might be the best time to get solar panels
Why? Because the government is short of money and they desperately want to reduce the amount they pay to homeowners who are installing new solar panels.
Back in the 2015 Budget, the Chancellor George Osborne announced his intention to dramatically reduce the Feed-In Tariff by 87%. Following a backlash from the green lobby and from the solar panel industry, he backed down.
That was good news but, unfortunately, he still cut the rate by 64%. To give you an indication of the size of the drop in the tariff, it was at 12.03p per kWh prior to February 2016 after which it fell to 4.07p per kWh.
The 4.07p figure is important because it still allowed homeowners signing up to install a new solar panel system to be able to make their money back and a little bit more over time in the vast majority of cases.
Why is the Feed-In Tariff getting reduced all the time?
Because the price of solar panel systems is coming down.
The Feed-In Tariff was originally like a subsidy from the Government. They wanted people to be greener but, a few years ago, solar panel systems were very expensive. The Government wanted to help people cover their costs.
As the price of the systems has come down, people don’t need to be subsidised as much. It’s almost certain that, as prices continue to fall over the next 10 years, the Feed-In Tariff will be abolished.
It’s already starting to happen. Recently, a cap on the number of people who could register for the Feed-In Tariff was introduced to try to cut the amount of money the government is spending on the scheme. Before that, it was a free-for-all – and the Government were happy with that because, to them, the more people applied for the tariff, the more successful their campaign to make Britain greener was going.
So the Feed-In Tariff is going down. What does that mean to me?
It means that it’ll take a lot longer to pay off your investment in your solar panel system and your overall return over 25 years will be less. But it is still worth it for lots of different reasons.
Most UK solar panel system installs comprise of around 12 panels. That’s around 3kW. The price for this type of system, including installation, will be around £5,000.
Your solar panel system will pay you back like this –
- 2.1% of the £5,000 every year from the generation Feed-In Tariff – £105
- 1.4% of the £5,000 every year from the export Feed-In Tariff – £70
- 1.5% of the £5,000 every year from savings on your energy bill – £75
- Total savings = £250 per year (or about 5% of the cost of your system)
You will break even after 20 years. At this point, the Feed-In Tariffs are removed but you will still continue to make savings on your energy bill of £75 a year (probably a lot more given the seeming never-ending increase in electricity prices recently). Over the 25 years, you’ve covered the entire cost of your system and made at £375 in profit.
Can I get my solar panel system for free?
It’s going to be difficult.
When the Feed-In Tariff was around 15p per kWh, it made a lot of sense for companies to install and maintain solar panel systems for free. Over the course of 25 years, the solar panel installer would make around £12,000 on the Feed-In Tariff leaving the homeowner to benefit from lower energy bills.
With the tariff at 3.93p today, the £12,000 that the installer would have earned six years ago would just yield him or her £3,144 now. That’s barely enough to pay for the solar panels let alone the installers.
Even when the tariff was a lot higher, it was never straightforward and certain that one of these companies would have installed a system on your home anyway. Why is that?
- You need a south-facing roof with the right orientation (10 to 60 degrees) to catch enough sun and daylight
- Your home needed a Grade D or better energy performance certificate
- The further north you are, the less electricity you’re going to generate
The right set of circumstances had to exist for a company to make money from providing your home with a free solar panel system.
The last major player in the free installation sector, A Shade Greener, has stopped offering the service. Its website says that the scheme is returning in 2017. At time of writing, it’s 2018 and no-one at the company has got around to changing the date on the homepage – not a promising sign at all that it’s coming back.
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How did the free solar panel scheme work?
You rented your roof to the company. At no time did you own the solar panel system bolted onto your premises.
Your supplier was responsible for maintenance. However, if you did anything, even by accident, to damage the system, you might be liable to pay the supplier the money it has lost because it has not been received the Feed-In Tariff when the panel system was broken.
You would have to check with your mortgage provider to make sure that they were happy with renting your roof out to install solar equipment on it. There was legal ambiguity about how enforceable the contract with the solar panel company would be if you tried to move home. Would you be responsible for it or would the person who bought your home?
Was there a free solar panel for pensioners service?
Yes – it was called the Green Deal, abolished back in 2015.
The idea behind the scheme was that, because pensions stayed at home more during the day, they would benefit the most from solar energy as they were using electrical equipment at a time when the sun was out.
Can my business qualify for free solar panels?
The ECO solar fund, part of the Green Business Fund offered by the Carbon Trust, gives business grants of up to £10,000 to fit solar panels.
Companies with 250 staff or less can apply and, according to the Trust, the timing is right for the scheme. In a survey of business owners, just under 50% were concerned about their energy expenditure. These directors wanted to make an environmentally positive change but lack of money and lack of affordable options were preventing them from doing so.
The grant can be used on lighting, heating, HVAC, and energy-efficiency controls, including business-premises-mounted solar panel systems.
What is the PSP scheme?
The PSP scheme is a very successful internet and real-world sales campaign run by Paresh Khimji, a particularly talented marketing professional based in Manchester.
The service offers homeowners the opportunity to earn up to £600 a year by paying the company to install a solar panel system on their properties. The company says it provides financial help for those who can’t afford a system and it promises to work with successful applicants who own their own home and work for more than 16 hours a week.
On the company’s main website, it mentions a payout of 15.57p per kWh suggesting that it has not been updated for a while.
Could I fund my solar panel system with a loan?
Yes – that is absolutely fine although, as mentioned earlier, if you are a homeowner, please check with your mortgage provider if the ownership of the solar panels is not transferred to you personally when the job is completed.
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