Solar Panels – a great investment?

Solar electricity is big news in the UK at the moment.  You can’t miss all the adverts for free solar panels, to be maintained for free for 25 years, providing you with electricity for free.  It sounds like a dodgy deal, but they claim there is no catch.

Feed In Tariffs (FIT’s):

So what is all the fuss about?  In 2010 FIT’s came into existence.  FIT’s mean that electricity companies now have to make regular payments to homeowners and communities generating electricity via solar electricity panels or via wind turbines.  Investors in these technologies will receive a generation tariff (i.e. payments for any electricity generated), an export tariff (these are payments for any electricity pumped back into the grid) and energy bill savings (especially if appliances are used more during daylight hours).  These FIT’s have been guaranteed by the government to apply for 25 years for each investor and to be linked to inflation.  For more information on FIT’s see: http://www.energysavingtrust.org.uk/Generate-your-own-energy/Sell-your-own-energy/Feed-in-Tariff-scheme). 

Make a profit on solar electricity panels:

Solar Panel packages cost approximately between £10,000 to £15,000 for a 4kw system and it is roughly estimated that investors with the right roofs in the right locations, making full use of the FIT’s scheme can make/ save over £1000 a year. The idea is that by the end of the 25 year period they will have seen a significant return on their investment.  This however is largely due to the fact that currently the rates for the generation tariff are very generous.  These rates are due to decrease by 8.5% on a yearly basis (see: http://www.tescohomeefficiency.com/solar-electricity/) from April 2012 and anyone considering investing or applying for free solar panels will benefit most from the scheme under the current rates.

Free solar panels on offer in the UK – only homeowners with the best roofs are eligible:
We live on the South Coast and have two south facing roofs.  We heard and saw all the adverts and decided to invite a company round to see if they would be interested in providing us with free solar panels.  They spent some time outside taking various roof measurements, had a look at our fuse box and went up into our loft.  After a couple of weeks, we were informed that our roof was too small and that they wouldn’t be progressing any further with us. 
In a way it was a bit of a relief.  We weren’t sure if it was the right decision for us and were aware that there were some pitfalls to the scheme.  We were wary of what exactly we would have been agreeing to with the company and whether it would have affected our house price should we want to sell in the future.

See this article in the Daily Mail about some of the downsides to  free solar panels:
http://www.dailymail.co.uk/property/article-1309252/MARKET-WATCH-Solar-panels-fit-prince-beware-free-offers.html

Investing in solar electricity panels – things to consider regarding installation:

My husband suggested that if we couldn’t get free solar panels we should think about investing in them ourselves and he shopped around for quotes. 
One of the places we asked to quote was a local company, which has been in business for 9 years.  The company was around long before the FIT’s and specialises in the purchasing and installation of solar panels.  The manager came round to gather information in order to quote and stayed to answer a number of questions we had about solar panels and their installation.  He pointed out the following pitfalls of having solar panels installed by a company which has just recently started installing solar electricity panel systems in the light of FIT’s.
  • They do not have years of experience in the industry and may be more prone to making mistakes on installation, including the potential for damage to your roof.
  • They are likely to be looking to get as many jobs done as quickly and cheaply as possibly to take the greatest advantage of the current tariffs.  This could potentially involve them cutting corners, with use of cheap installation techniques and cheap parts, which could affect the reliability and effectiveness of the system in the long run.
  • If they are an already established business, they may be relying on their brand name and the brand name of others to win customers, regardless of whether they are the best people for the job or not.  For example we also got a quote from Tesco’s, who quoted us for Sharp solar panels.  Our guy around the corner told us that other panels have better efficiency ratings, but people choose to go with Sharp as the name appeals to people who feel they know and trust the brand.  When combined with Tesco’s name, it gives people an added feeling of security.
We also learnt that whichever company you decide to go with, the installers and solar panels must be MCS approved to enable you to benefit from the FIT’s.

What can go wrong with your investment in solar panels?

Buying solar panels does seem like a fairly safe bet at the moment, but it is a large amount of money to invest and if you are considering it, as we are you may want to take into account the followings risks and how to address them. 

Risk Controls / Questions to ask prior to purchase
Installation and/or parts are of a poor quality. Damage to your roof occurs on installation. Check the installers insurance policies to ensure that they can pay you in case of any damage/ problems.  You may want to take photocopies of any relevant documentation.
Make sure that you have full contact details for your installers, including landline number and postal address and are able to get hold of them in the event of problems arising from installation.
Ensure installers have appropriate qualifications and experience, ask to see any relevant certificates. 
Seek references/ reviews on the company prior to employment
Ask the installers exactly how they plan to install your system, what the key risks are and what parts they plan to use and why. Do a little research on solar panel systems, their parts and their installation and test them against it.
Notify home insurance providers of installation of solar panels and check what you are covered for. 
Fault occurs in solar panel system in the next 25 year period. Is yearly maintenance of your solar panel system needed/ provided/ offered by your installers?  How much would that cost if extra?
Panels get damaged at some point during the 25 year period Do your panels come with a guarantee/ how long does it last and does it cover wear and tear over a 25 year period?
Does your home insurance cover accidental and/or weather damage? Would the addition of solar panels to your home have any effect on premiums?
Panels stop working effectively  Are you being offered a 25 year efficiency guarantee? 
Can you/ do you want to take out insurance/ put savings aside to cover this?
Can you rely on a 25 year guarantee? Some people may prefer to go with a well known established company as they feel they may be more likely to be around in 25 years time. However many well known and established companies such as MFI for example have closed recently and there are no guarantees. 
Some of the cheaper panels, may start to lose their efficiency quicker than some of the more expensive panels. It may be worth investing in a more expensive panel to help you get your money back in the quickest amount of time possible. This also helps if the government change their minds down the line about FIT’s, or may be a problem if they change their minds really quickly.
Is my roof appropriate for solar panels? Will I really benefit fully from the FIT’s? It might be worth inviting someone round to see if they would give you free solar panels, prior to investing yourself. If they would, then you know you are in a good location for it, as they aren’t giving them away to just anyone.
Ask your installer what checks they have made to ensure your roof is appropriate for this scheme and whether you will benefit sufficiently from the FIT’s. Double check this yourself as well, by doing some research online.
Inverter goes wrong (apparently they only last 10-15 years) Could potentially take out an insurance policy or put some money aside to pay for this eventuality. Or you could potentially look for a second hand one later down the line.
Government changes their minds about FIT’s for existing customers Hopefully this is unlikely.  This might be one where you have to take the risk if you choose to invest in solar panels.  
We may want to sell our house before we have made our money back on our investment This is a long term investment and is not really worth making if you don’t plan to be in your house for the long term. However if you do have to sell, you may be able to take account of it in the asking price.
Solar panels may put buyers off our house. There are different coloured and sized panels available. Some may be viewed as more attractive than others.
Given the generous FIT’s anyone purchasing the house would receive a source of income along with it, which is likely to be attractive.

DIY Solar panel systems?

If you can’t afford to invest and you aren’t able to get free solar panels, you could look into making them yourself.  You won’t however be able to qualify for FIT’s, as you have to use MCS registered installers and the panels have to be MCS approved.

There are various solar panel diy instruction packages being sold on-line, with the claim that anyone can make cheap solar panels themselves for a cost of around £100 – £200. See this blog for more details:
http://howtobuildownsolarpanels.blogspot.com/  Some of the sites that come up do look a little dodgy though, so be careful!

Further information about free solar panels/ investing in solar panels can be found on this website:

http://www.moneysavingexpert.com/utilities/free-solar-panels This gives an overview of free and bought solar panels with lots of good links.

What do you think about solar panels?  Would you consider getting them for free, investing in them yourself or even having a go at making them?  If anyone has any comments/ advice /contributions on this subject areas they would all be greatly appreciated.

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