The beginning of 2016 has been bad for renewables, particularly solar which has seen subsidies through the Feed in Tariff cut by 65%. This has led to many in the industry to complain that there will be major job losses when fewer customers decide to have panels installed.
But are solar panels still a good investment for the ordinary man or woman in the street?
The simple answer is that solar panels don’t give as big a return as they did before the Feed in Tariff came down in January. This fell from a healthy 12.92 pence to 4.39 pence which means essentially that it will take much longer to pay off any loan or savings investment and the likelihood of making a clear profit out of the Feed in Tariff is pretty small. This was, no doubt, a huge driving force in people deciding to have solar PV installed in homes and small offices across the UK.
There are, however, a number of other matters to take into consideration when installing solar panels.
First of all, you are going to benefit from cheaper electricity bills and you will be protected from the increasing rise in prices that utilities may charge in the future (which unfortunately for us all, is a certainty).
Your investment will be amplified the more the price of electricity rises and this is expected to be around 2.6% each year for the next fifteen years.
The cost of installing solar panels has also come down dramatically, especially with the Feed in Tariff that was in operation. While this fall might not continue so dramatically in the future, the price of solar PV is still good value.
According to the Solar Trade Association, installing panels provide a good rate of return despite the recent cuts:
“The calculations suggest solar panels offer a higher return rate than most savings accounts. It added that a competitively priced system, costing around £6,400 could see the initial investment paid back in around 13 years.”
The Government has come under criticism for its axing of the subsidies and the impact that it may well have on the industry as a whole. Even before the cut went into effect on the 1st of January this year, a number of solar PV companies had gone to the wall.
Solar PV is not the only technology that is about to experience less than sunny times. Solar thermal, which has been helped by the Renewable Heat Incentive, is set to be taken off the list sometime next year, causing more consternation in the industry. This is another area where the Government believes that the technology can survive on its own and that people will continue to buy solar thermal even with no incentives in place. Many in the industry disagree and complain that they are being unfairly singled out.
According to the Guardian who broke the story recently:
“Discriminating against this globally important technology in the UK would send a terrible message to householders, and it would have very serious ramifications for the British solar thermal sector.”
While subsidies continue to be withdrawn, the installation of solar PV and solar thermal is still taking place but at a slower pace. 340 MW have been installed since the start of 2016 and in the UK we just passed the 10 GW capacity mark. There are some who believe that innovations such as storage batteries which could make the prospect of home energy production more viable will give the industry a further boost in the years to come. But the technology is still in the early stages and may come too late to save many companies.
The truth is that solar PV and solar thermal in the UK are both facing difficult times as they adjust to the new subsidy landscape. That doesn’t mean they are unattractive investments, though returns may be slower in coming.
Find out more about installing solar technologies here.