Why you’re better off without a Grant for Solar!

Tuesday 15 October 2010

There is an ever growing interest from the general public in Renewable Energy. Increasingly, as the fear of large rises in fuel bills grows, and concerns about global warming become greater, people are looking to Renewable Energy technologies such as Solar PV as a way of reducing fuel bills and their Carbon Footprint.

However, until last year, it made little economic sense to install a Solar PV system because the cost was so prohibitive. It may have reduced your carbon footprint, but the costs far outweighed the benefits.

As a result, Solar PV installations in domestic properties were only likely to go ahead if you could receive a grant for Solar PV. Even then, the grant contribution towards a Solar PV system in England and Wales was hardly generous at just £2500. In Scotland a grant for Solar PV was more generous at 30% of the cost (up to a maximum of £4000).

So you might think that the decision to do away with household entitlement to a grant for solar would have been the cause for some concern within the Solar PV industry and that it may have a dramatic and negative effect on the number of Solar PV installations.

But you would be wrong because the new system of support for Solar PV that has replaced the grant for solar is far more attractive:

  • It provides a generous income from the electricity produced.
  • It has helped reduce the installation cost by around 15%.

Introduced in April 2010, the UK Clean Energy Cashback Scheme (also known as Feed in Tariffs) offers domestic households up to 41.3p per kilowatt hour. That means for every kWh of electricity produced by a Solar PV system, a utility company will pay you 41.3p

Typically this could generate an income of around £800 per household from the UK Feed in Tariff scheme.

The household also benefits from not having to buy as much electricity from the Grid - which assuming you pay 13p per kilowatt hour will save around £100 per year; and a further 3p per kilowatt hour is paid for exporting 50% of the electricity they produce (typically around £30 per year).

Adding all this up, a Solar PV system will save you over £900 per year and as Feed in Tariff payments last for 25 years, you could receive around £22,500 in total. Compared to a grant for solar of £2500 that you would have received last year in England and Wales, it will not be long before the savings and income earned from a Solar PV system outweigh the grant for solar.

But the biggest saving you will make from the new system of support is in the original cost you will pay for the Solar PV system.

Prior to this year you would have expected to pay between £12,000 and £16,000 for a typical domestic installation. Because the Feed in Tariff is so generous, it has seen a rise of 1500% in the number of Solar PV systems installed. This in turn has seen a dramatic reduction in the cost of materials and labour. Today, the typical cost of installing a Solar PV system into a domestic property is between £10,000 and £14,000.

So, with the guaranteed income from the electricity produced, together with the reduced electricity bills and lower installation costs, you can stop looking for a grant for solar, because the Clean Energy Cashback scheme provides a much better deal.

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