The Feed-in-Tariff for solar panels can provide a 12-15% return in 2012. This means you can earn 1,200 pounds each year on a system that costs about 8,000 pounds. The return depends on location and solar potential of your roof, the price, and the time of installation. This post gives an example.
Example of Financial Return
Suppose you have a South Facing roof with no shading so it has a 100% solar potential (read more about solar potential) and you are based in a good location like Exeter (read more about location). When you install a 4kWp system (20 solar panels) it is expected to generate 4,000 kWh in the first year. Your financial return has 3 components:
- Feed-in-tariff: 21 pence per kWh
- Electricity savings (part you use in your house): 15 pence per kWh
- Export tariff (part you export back to the grid): 3 pence per kWh
Suppose you use half the electricity in your house and export the other half. Then your year one return is: 4,000 x 0.21 = 840 pounds for the FiT, 2,000 x 0.15 = 300 pounds for the Electricity savings and 2,000 x 0.03 = 60 pounds for the Export tariff.
This totals a return of 1,200 pounds in year one, which roughly results in a 15% return on investment (based on a 4kWp system cost of 8,000 pounds). This return will be only slightly lower when you install after July or October – we expect it to be in the area of 12%. Total system payback time will be around 7-8 years which means you can enjoy more than 17 years of Feed-in-tariff income that is tax-free and inflation adjusted, and get free electricity at the same time! Get started now and enter your postcode to calculate the return for your own house!