Solar Panels – “One of the best investments”
Feed-in tariffs came into being in April, and were introduced by Labour to encourage householders to install solar panels or wind turbines, paying them a tax-free, index-linked income for the energy they produce.
The coalition agreement drawn up by the Conservatives and Liberal Democrats promised to honour “the full establishment of feed-in tariff systems in electricity”.
The tariffs pay up to 41.3p for every kWh of electricity produced using solar panels and an extra 3p per unit on top for any surplus electricity sold back to the grid. When you cannot generate enough energy for your needs, you buy electricity from your utility company at normal rates, but you will buy less, making significant savings on utility bills.
Viridis Energie Consultants, a company that advises consumers on renewable energy, suggests you can expect a return of about £950 a year for the average three- or four-bedroom house with solar panels, which typically cost £12,000 to install.
Given that the income is tax-free, the return on a £12,000 investment is equivalent to around 14% for a 50% taxpayer and 11.5% for a 40% taxpayer, with the investment recouped in as little as seven years. As the payments are linked to RPI, this equates to a real return of around 19.5% and 16.5% respectively at today’s RPI rate of 5.3%.
The Sunday Times ranked this as the 5th best investment opportunity!