Free v Paid solar panels
The pros and cons.
You can take advantage of either free panels under the so-called 'rent a roof' scheme, or self fund your panels. Either method has its own benefits.
Free panels.
Investment money amounting to several 10s of millions of pounds are available, provided by entrepreneurs willing to pay to install panels on your property, be that a house, clubhouse, office block, school, swimming pool, farm building, warehouse - in fact just about any domestic or commercial property.
You benefit from the free electricity generated, lowering your energy bills, increasing the value of your property and/or its viability as a rental proposition and gain a certain amount of energy security.
You may be required to pay an administration fee of around £500 to take on free panels.
Why the generosity?
The investors take all the Tariff payments, currently over 43.3p for each kWh of energy generated. They also earn an extra 3.1p per kWh for any energy fed back into the grid. It doesn't matter if the energy produced is used by the property it feeds or not, it's a reward for generating that energy. This makes it a very attractive investment possibility, the returns are as much as 8-10% per annum, possibly more as the investors will be able to demand lower supply and installation costs than end users are likely to get.
As the investor relies heavily on the performance of the panels, they are likely to pay for all maintenance (which in the case of solar PV panels is minimal), insurance etc.
You'll benefit from the added energy security as well of course.
If you can arrange for your energy usage to be highest during daylight hours when the panels are operating at their highest efficiency, i.e. timing laundry, water heating etc, you'll see the best benefit.
Self funded panels.
In this case, you purchase the panels and own them outright. You then take the payments generated by the Tariff schemes. The overall return on your investment is estimated to be around 8-10%, which far out-performs most savings accounts and other investments. This will be a combination of lower energy bills and the Tariff payments. You can therefore purchase from savings, or take out a loan, extend your mortgage etc., and for the first few years, more or less break even - or as energy prices rise, as they have done in October 2011, by 15% or thereabouts - make a small profit.
However, once the panels are paid for, you can enjoy the benefit of the free electricity AND the tariff payments, with minimal further outlay. The returns over the 25 year Tariff period are pretty impressive, as can be seen from the table below.
Whichever you choose, it is far better than doing nothing. As the utility companies have to pay for the Tariff payments, you can be sure they will be taking this into account in pricing their energy. Those that do nothing will be paying for the energy efficiency of those that take the leap and opt for installing renewable energy systems, such as solar PV, wind turbines and small scale hydro-electricity.
Remember too, that the Tariff payments are guaranteed for 25 years, are Index linked and tax free.
One note to make about the Tariffs is that they are not going to be around forever. Once the percentage of renewable energy produced by the country reaches 15%, then they are likely to disappear (except where guaranteed). They also lower each year, so those taking up the offer this year will be better off than those doing so after March 2012 and in subsequent years. This takes into account the expected lowering in pricing for solar PV panels and other renewables as technology improves and volumes increase.
