What Are The Returns On Solar Panels UK?

Returns on solar panels UK

costs solidworks 2012 premium Solar panels are becoming cheaper. The average cost of solar panels (Solar PV Cell Price) has gone from $76.67/watt in 1977 to a minute $0.29/watt in early 2015. With this falling cost, the returns on solar panels in the UK are becoming increasingly attractive, topping over 10% per year depending on your installation and usage.

In the past, we’ve looked at the long-term returns from cash, shares and property. But, now, solar panels are a whole new investment that is readily available to homeowners, and the returns on solar panels could now be more than investing in the stock markets. What’s more: these returns are less variable than the market returns, you could be helping the future fate of the planet and, best of all, you can stick the proverbial two fingers up at the energy companies!

Today, we’ll look at the investment case and the potential returns on solar panels in the UK.

We even have a very special exclusive offer where you can get a 5% discount on your quote with one of the leading UK installers of solar panels.

 

What are “solar panels”?

Let’s have a quick reminder of the basics. Solar PV panels can be installed on the roof of your home or business and they effectively turn your property into a mini power station! They can supply the electricity to your home or office, and the supply will usually exceed what you will use, and so the excess is sold back to the energy companies.

When the solar panels are installed, you are registered into a government scheme entitled “Feed-in-Tariff”, which means you will receive tax free guaranteed payments (which increase in line with inflation) over the next 20 years!

Did you know: every single hour, the sun delivers more energy to the earth than the entire plant uses in one year!

 

What is the Feed-in-Tariff scheme?

One factor that makes the returns on solar panels in the UK so appealing is the government’s Feed-in-Tariff scheme. Introduced in April 2010, it effectively guarantees a fixed income for each kilowatt hour (kWh) of energy generated. This income is guaranteed for twenty years, is tax free and will increase in line with inflation.

 

What Makes Up My Returns On Solar Panels?

After your solar panels are installed and registered to the Feed-in-Tariff scheme, you’ll earn money every day from the following three sources:

  1. Feed-in-Tariff: you are paid a fixed income for every kWh of electricity that you produce.
  2. acrobat xi pro buying Used: for any electricity you use, you no longer have to purchase this from your energy company
  3. Exported: all excess electricity produced is then exported back to the grid

 

Returns On Solar Panels UK – An Example

To demonstrate the great returns on offer, let’s run through an illustrative example over 20 years (the period that the government guarantees the Feed-In-Tariff). I’ll be using the online quote tool from UK Solar Generation, which allows me to find my property, mark out the roof and my energy usage and get quotes.

I’ve therefore entered a property in Essex, marked the roof and entered the required information. We will assume that my annual electricity usage is 5000kWh per year.

My primary example will then be based on the 7.0kWp PhonoSonar system, with an initial price estimate of £9,190 for installation of 46m2 of panels, providing 6,490 kWh of energy annually. However, if enter your name followed by “Moneystepper” when you submit your quote, you’ll receive a 5% discount on this price (a whopping £459.50 discount in this example).

Therefore, my upfront cost is £8,730.50.

In the spreadsheet below, you’ll also find examples for a 4.0kWp system and a 10.0kWp system, and each can be amended to represent your exact details.

My returns are broken down as follows:

  1. Feed-in-Tariff: 6,490kWh produced, starting at the current tariff of 12.13p and increasing in line with government predicted inflation of 2% per year.
  2. Used: 5,000kWh used, starting at current price from major UK electricity suppliers of 14.00p, and increasing at the government predicted annual electricity target of 2.6% per year.
  3. Exported: 1,490kWh remainder sold back to the grid, starting at 4.85p and increasing in line with inflation at 2% per year.

 

Also, to make a fair comparison, interest is then earned on all money received at the same rate in which it would be saved/invested in the comparison.

For now, we’ll look at two examples:

  1. Interest on all money received and in the comparison is at 2% representing fixed income from a cash ISA account
  2. Interest on all money received and in the comparison is at 8% representing the long term returns from the FTSE 100.

 

All the workings are included in the attached spreadsheet and you can amend your own system, usage, inflation rates, savings rates, etc etc, in order to make a calculation of your own returns:

 

The summary for the three examples we have run are as follows:

7.0kWp system

20 year profit @ 2% returns 20 year profit @ 8% returns
20 year solar panel return £37,034 (7.5% ROI) £57,489 (9.9% ROI)
20 year invested in alternative (savings account / FTSE 100) £12,973 (2.0% ROI) £40,692 (8.0% ROI)

 

4.0kWp system

20 year profit @ 2% returns 20 year profit @ 8% returns
20 year solar panel return £21,587 (7.6% ROI) £33,448 (10.0% ROI)
20 year invested in alternative (savings account / FTSE 100) £7,411 (2.0% ROI) £23,247 (8.0% ROI)

 

10.0kWp system

20 year profit @ 2% returns 20 year profit @ 8% returns
20 year solar panel return £46,789 (6.8% ROI) £73,330 (9.3% ROI)
20 year invested in alternative (savings account / FTSE 100) £18,535 (2.0% ROI) £58,138 (8.0% ROI)

 

Therefore, you can see in these examples that the returns on solar panels (whichever system output you opt for) exceed those that can be earned elsewhere.

In fact, in order to make the solar panels investment equal to the alternative for the first 7.0kWp system example, you would need to earn 10.7% elsewhere. This is pretty tough to do without taking significant risk which you don’t have with the income earned from solar panels as it is protected by the government scheme.

 

Factors that make the returns on solar panels even better…

I would encourage you to visit the quote page from UK solar generation (not forgetting to add “Moneystepper” ater your name in the quote to get an exclusive 5% discount) and enter your own figures in the attached spreadsheet to get an idea of what returns may be available to you.

Beyond that, it’s important to keep the following things in mind when considering the returns on solar panels in the UK against the alternatives:

  • The solar panels should last beyond this 20 year time frame. In fact, all solar panels installed by UK Solar Generation come with a 25-year warranty and are guaranteed to function with over 80% efficiency ever after the 25 years.
  • Equally, all installation and workmanship comes with a 10 year guarantee.
  • The above analysis (and spreadsheet) assumes no resale value on the solar panels. However, if they are already installed and operating effectively after the 20 years, they will still have some residual value. If we build this into our results, the returns on solar panels become even more appealing.
  • For many people, helping the future of the planet (replacing burning fossil fuels with renewable energy) is a non-quantitative factor which goes alongside the monetary returns on solar panels.
  • After installation, you get a funky little system whereby you can monitor your production, usage and export amounts every day. Here is one example from a house who have recently had solar panels installed:

Returns on Solar Panels UK - Home Dashboard

 

Why UK Solar Generation?

No end of reasons:

  • Their prices are amongst the best, if not the best in the UK.
  • All electricians are fully qualified, experienced Photovolatic electricians and all members of their roofing team have over 6 years’ experience.
  • All work is fully warranted.
  • You can obtain a no obligation quote via their online tool.
  • The majority of installations will be completed within 2 days (anywhere in the UK).
  • They have a history of positive references, a few of which can be found here.
  • And, most of all, readers of Moneystepper can get a 5% discount adding “Moneystepper” after your name when you get your online quote (e.g. Graham Clark – Moneystepper). This is an exclusive discount and is not available anywhere else!

 

Any Questions?

The returns on solar panels in the UK look great. But, do you have any further questions? If you do, feel free to leave them in the comments below and I’ll get straight back to you. Here are some frequently asked questions, so hopefully we will cover your query here:

 

  • How do I qualify for the Feed-in-Tariff?
    • UK Solar Generation are an accredited PV installer and hence upon installation they complete all the required paperwork to get you set up on the Feed-in-Tariff.

 

  • Why is the Feed-in-Tariff paid?
    • All energy suppliers are tied to the government carbon reduction commitment and your solar panels help towards this. As such, the income is paid by both the government and the Big 6 energy providers in the UK – another win over the big energy companies!

 

  • Does it depend on where I live?
    • Yes. Some places are sunnier than others. For instance, output for Newcastle is approximately 907kWh per year, London is 985kWh and Cornwall is 1093kWh per kWp installed. However, if you enter your address into the online quote tool from UK Solar Generation, this will be taken into account, and you can build this into your investment appraisal accordingly.

 

  • Do I need planning permission?
    • No. Unless you live in a listed building or in a designated are of outstanding natural beauty, then you will not need to obtain planning permission.

 

  • Will my roof be impacted by the installation?
    • No. Due to the design of the mounting brackets, there will be no impact on the integrity of your roof. In fact, it should have a beneficial impact as the solar panels protect your roof from the elements.

 

  • Will my solar panels need maintenance/cleaning?
    • Impressively, no! If they are installed on a roof at an angle over 20 degrees, the solar panels are self-cleaning.

 

 

Conclusion

Due to the fall in the cost of solar panels, the investment returns on solar panels in the UK are now very healthy indeed. In the long-term, they exceed the fixed rates available from cash ISAs and savings accounts, and could even exceed the returns from variable investments like the FTSE 100.

To find out what your returns on solar panels would be for your home or office, simply:

  1. Enter your information and “Moneystepper” after your name at the following page in order to get a specific quote for your property, with an exclusive 5% discount:

Get an online quote today (with 5% discount)

 

  1. Complete the attached spreadsheet using your own figures and assumptions on inflation to work out your return on solar panels for your home or business:

Free Spreadsheet: Returns on Solar Panels UK (Download) 

 

  1. UK Solar Generation will then be in touch to discuss the next steps.

 

Once again, let me know if you have any questions regarding the returns on solar panels in the UK – I’d be more than happy to discuss.

4 thoughts on “What Are The Returns On Solar Panels UK?

  1. Solar Panels in the UK can be a great way to save money but it is not worth doing a goverment scheme as they suck all the money out of them. The best value is having a south facing garden but there are also costs associated with it due to the electrical inspections

  2. Personally I would prefer if we could use solar panels to power all the lighting in my home. If I can power LED bulbs in my garden with tiny solar panels, I dont know why I cant use larger panels to power the rest of the lights in my house at night…

  3. On this point in time solar panel been a big help for people. They conserve energy and lessen our electricity bills. The more solar panel you have the more you’ll save a lot.

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