It was recently announced that the UK has almost reached a solar milestone with almost half a million panels sold to date. Could solar panels be a good investment for your household?
Could you generate your own electricity and get paid for it?
Feed-in-Tariff schemes (FiTs), also sometimes known as Clean Energy Cashback, can give people the opportunity to generate their own renewable or green electricity. You can usually then use the electricity you make for free in your home. If you need any extra energy you can buy it from your supplier, and if you make more than you use then you can sell it back to the National Grid. Many people are reluctant to invest in solar panels on their own home because there can be a high initial investment, and it can take several years for you to make a tangible return- which, like with other investments is not guaranteed.
You are usually paid a set amount for each unit (kWh) of electricity the panels produce. The rate you will receive, and the number of units you could produce will usually depend on various factors including the size of your system, the kind of technology, the direction your roof faces, where your home is located and the date the system was installed. The person that installed the system must have been certified to do so.
How much will it cost?
The average cost of a 3kW solar panel installation is normally upwards of £6,500. This is much less than solar panels have cost in the past. There are also some schemes that offer eligible homeowners free panels, with the installer often keeping the FiT payments, but allowing you to use the generated electricity free of charge.The eligibility criteria for this is usually restrictive, and with energy prices predicted to rise, this might not be a feasible option in future. There are also loans available for solar panels if you think that they are well suited to you, but don’t think that the free panels part would suit you. Energy prices are predicted to increase over time, meaning that these can be a good way to keep your energy bills down in future too.
How can you get involved?
If you’re interested in being part of the Feed-in-Tariff Scheme then you should get in touch with one of the registered suppliers listed on the government website. Suppliers include household names such as British Gas and E.ON. You can read more about Feed in Tariffs on the government website here: www.gov.uk/feed-in-tariffs/overview.
The downsides of solar
Although solar panels might not be considered a traditional investment, they are relatively simple to understand, and can feasibly all be sorted out without consulting a financial adviser. For some, they will also provide a stable return over time. If you are considering investing in solar panels as an investment rather than just a home improvement, then you should take into account the potential risks, for example:
- Solar panels won’t work for everyone, and your roof needs to have clear access to sunlight.
- Although photovoltaics can still produce electricity on cloudy day, they’re no where near as effective in overcast weather.
- Potential breakages and associated cost.
- As with all types of investment, there’s no guarantee that you’ll get a return.
If your electricity prices are particularly high, and you’ve done research and think that solar panels are a good match for your property, then this could be a good match for you. Solar panels usually face South, although some research has suggested that West-facing panels might be just as effective.
Is it worth investing in solar panels?
Although the FiT rate has been slashed in the past, and the average earnings per year are much lower than they were previously, for some houses, FiT can still save people money on their energy prices, as well as generating a modest but stable additional income- depending of course on your circumstances.
Will they affect the value of your home?
Solar panels are not always considered the most aesthetically pleasing of roof additions, and some people are worried that they will decrease the value of their house. Equally, it’s thought by some that the decreased energy costs can increase the value of a home. The initial outlay can also be large, and it can take several years for the returns to cover the initial investment.
Are there alternative ways to invest in green energy?
There’s plenty of other ways you can invest in solar panels, if you don’t want them on your own roof. If you’re interested in investing in renewable energy sources then investing in a green energy related company could be another way to put your money into renewable energy. Although green energy is not a traditional line of safe investment, it is a growing area, and it’s possible that your investment could pay off in future.
Consider your options
If you’re thinking of investing in green energy, it’s important first to consider the type of investment that would be best for your circumstances along with your investment goals and attitude to risk. You can read more about this and more by visiting our investing for beginners guide. If you’re interested in ethical investment in particular and already know the investment style that would suit you you can read more by visiting our guide to ethical investments. Investing in solar panels can be the right choice for some, but overall, it’s a long term commitment and whether it’s right for you will depend on your circumstances.