Six things to consider before buying solar panels

31 October 2011

Worried homeowners looking for a way to combat their rising electricity bills could be tempted by solar panels - and the promise of free installation by some companies in recent advertisements is certainly an added incentive. But is this simply a case of ‘too good to be true’?

How much can I save?

Photovoltaic or PV panels convert light energy into electricity (unlike the less effective old-school panels that needed direct sunlight and heat energy to work); the more light converted into electricity, the less electricity you’ll need from your energy provider and therefore the lower your bill.

The Energy Saving Trust estimates a typical home is likely to reduce its annual electricity bill by £90. On top of this, British Gas estimates an average household can earn £877 per year from the government feed-in tariff scheme.

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What is the feed-in tariff (FIT) scheme?

Customers are paid by their energy company for any electricity produced - even electricity they use. The National Grid also makes a smaller bonus payment for electricity that feeds back into the grid. Your FIT payments are guaranteed for a 25-year period and are tax-free.

British Gas estimates an average household could claw back £24,900 by the end of this period.

Why do companies offer free solar panels?

Installation costs (including the cost of the panels themselves) range from £6,000 to over £10,000. If a company offers to install these pricey panels for free, you’d be forgiven for thinking ‘yes please’.

But these companies aren’t doing this out of the kindness of their hearts: although you’ll save some money with the electricity you use, it is the company that actually owns the panels, so it gets to keep all the income created by the FIT scheme, not you.

So will I be better off paying for the installation costs myself?

If you can, yes - although bear in mind that the feed-in tariff stays with the property, so you should only consider this if you’re planning on living somewhere for a long stretch. Even if the panels only cost £4,000 and you make nearly £1,000 a year, it will take you at least four years living in that property just to break even.

Are there any catches to look out for?

The position of your house - south-facing homes stand to benefit the most, but companies will consider west and east facing roofs too.

The gradient of the roof and surrounding trees will also affect the productivity of panels, so if a company gives you a hard sell to take the panels and pay the installation costs yourself, be wary.

Also bear in mind the rate paid for electricity could change in the future, according to government policy.

What else should I consider?

Money-making and money-saving claims will always be based on the optimum levels and may not include extra costs. Take solar panel company Everest. It recently had its knuckles rapped by the Advertising Standards Authority (ASA) for claiming customers could “generate up to £1,614 per year for 25 years taxfree”.

The ASA ruled this was misleading, because it didn’t take into account the costs of installation and the upkeep of the solar panels. You should also only use companies approved by the Microgeneration Certification Scheme.

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