Thinking of installing solar panels? Does it make sense as a financial investment post FEED-IN-TARIFF?
The Feed-In Tariff has ended
As of the 1st of April 2019 the feed-in-tariff (FIT) is closed to new applicants. Under this government scheme people were payed a fixed amount for the renewable wind and solar electricity they generate. In-spite of the flaws in it's management, this initiative can be credited with the rapid and wide scale adoption of solar panels across the country. Some have seen remarkable returns for their investment.
If you were to install a new solar photovoltaic system today, sadly you will not be eligible to claim the feed-in-tariff. Payback figures and timescales for solar PV are subsequently very modest, relying entirely on the energy savings made when green electricity offsets use from the grid. Where there is a continuous demand for electricity during daylight hours, and especially if that load is higher in the summer (such as with refrigeration or air conditioning), it is still possible to see a payback in the lifetime of a PV system without the FIT. The energy saving trust cites that the time it will take for the savings to pay for the installation is 24 years. This is a very long time to wait.
What's on the horizon for Solar PV in the UK?
Enter the new Smart Export Guarantee (SEG)
The SEG is a new government initiative and very different from the FIT. Under the SEG, energy suppliers from Npower to British Gas, will be made to offer tariffs with a guaranteed price for the electricity that you export to the grid. Unlike the FIT, you will not get paid for all the electricity you generate. However, the surplus solar you can't make use of can be sold back to the grid. How much exactly will be determined by the market and will depend on how much energy providers want to pay. Octopus energy is one supplier that's ahead of the pack in offering innovative energy packages, perhaps most notably perhaps for cheap rates for charging electric vehicles. For those with a suitable smart meter, this is needed to reliably measure export, Octopus are offering deal with a guaranteed export rate of 5.5p per KW/h. Figures from the Energy saving trust suggest a minimum payback term of 17 years at this rate assuming you're at home all day. If you're not home much then the payback time could be considerably longer. This is a big improvement on the 24 year payback on electricity savings alone, but it's difficult to imagine that it will have much impact on the rates of new installations.
For now and the foreseeable future, the principal reason for installing solar panels on your home is environmental and not financial. In the meantime, I'll be keeping everything crossed that this upcoming election will bring more substantive and inclusive renewable energy initiatives to fill the hole left by the feed-in-tariff.
Here's a link to the Energy Saving Trust for more detailed information on the subject.