For a lot of people, the idea of eradicating their electricity bill might seem like a dream. If you’ve ever thought about it, you might have looked into solar panels. These are a great way of converting the sun’s rays into electricity for you home.
Even better, under the government’s renewable energy scheme, you can sell this power back to the grid and make a little money. However, there are some hidden costs and surprises people don’t always realise, so before ploughing ahead and having your solar panels installed, it’s best to do your homework.
Solar Power Funding
To promote the installation and use of small-scale renewable energy, government grants for solar panels are provided via the Feed-In tariff (FiT). Instead of being a cash grant, the government pays you for the energy your solar panels produce. It means that not only can you significantly reduce your electricity bill, but you can make some money too.
Unfortunately, this money isn’t as much as it used to be, and as of 2016, the government slashed the FiT by 64per cent. However, over a 20 year period you can still expect to make £2,080 profit which is a return on investment of about 4.8 percent.
It should be noted, however, that as solar panels become increasingly affordable to install, the FiT will be reduced and eventually phased out entirely. For example, the tariff for generating electricity at the beginning of 2016 was 4.39pKwh. This is expected to drop to 4.18pKwh by the end of 2016, and down to 3.55pKwh by the beginning of 2019. It is extremely important, therefore, to take advantage of the scheme sooner rather than later if you want to benefit from some additional income on top of energy savings.
The End of Free Solar Panels
Due to the falling energy payments, free solar panels are, alas, a thing of the past. When the initiative first began, a lot of companies were able to benefit from the scheme by fitting panels to the roofs of people who couldn’t afford to buy them outright.
By renting this space, firms would then split the FiT payment between themselves and the homeowner. In later years, this income split was removed altogether, with firms giving you free solar panels but keeping all the government revenue.
Now, with FiT payments so low and expected to plummet even further, freebie solar panels are no longer available. Instead, many companies offer a finance scheme. This means you could still benefit from lower energy bills, but you’ll have a small monthly loan repayment – the cost of which could actually remove any benefit you’re gaining from lower electricity bills.
Hidden Expenses and Nasty Surprises
If you do decide to go ahead with a finance deal and want to rent out your roof to a solar panel company, there are some important things to be aware of before you sign a contract.
- Free Electricity in the Day Only
At first glance, you might think you’ll be getting all your electricity for free. However, this isn’t true. You’ll only be getting free power during the day. If you’re home during the day, then this could work in your favour. However, if the entire household is out until dark and it’s only then that all the lights go on, you’re unlikely to cut your electricity bill by much.You can install timer switches on electrical appliances (dishwashers, for example) to ensure they run in the daytime instead of at night.
- Consent for Home Alterations or Sales
Some contracts require you to get consent from the solar panel owner before you make alterations to your home, including adding a loft extension, for example. In addition, because you’re renting out your roof space for a set 20-25 years, you might require consent to sell your home.
- Pay Missed FiT Payments from Personal Expense
There may also be a clause which requires you to pay out for any missed FiT payments. For example, if you’re having your roof fixed and the panels have to be removed for a while, you could be responsible for paying compensation.
- Renting Roof vs. Renting Panels
Some companies, instead of renting your roof space, will actually sell you the panels themselves. In the former situation, when it comes to selling your home, you’d have to find a buyer happy to take on the remainder of the roof renting contract. But if you are buying the panels via finance, you can take them with you. However, you’ll have to ensure you have somewhere to place the new panels, not to mention paying the missed FiT payments whilst they’re being moved.
Overall, solar power grants are still a great option if you can buy the panels outright. Doing so allows you to enter into the FiT scheme under your own contract, and because you own the panels, you’ll benefit from both reduced energy costs and a new income stream. In some cases it can be cheaper to take out a loan to cover the cost of the panels than to try and finance them through a solar panel firm.
You can then use contractors from Quotatis to help fix the solar units in place and reap the benefits from this renewable energy source instead of worrying about a third party. Being aware of the pitfalls is essential, however, as it ensures you’re able to actually save money instead of getting a nasty financial surprise.