PV SYSTEMS ARE STILL A GREAT INVESTMENT, EARNING UP TO 14.8% IRR
A PV system earning Feed in Tariff (FIT) is currently a great investment with an estimated 14.8% rate of return for a 4kW system, compared to around 3% with a building society* at FIT rates applicable until end of June 2013.
HOW MUCH DOES FIT PAY?
Feed in Tariff is the financial incentive paid for the total generation from a PV system, regardless of whether you use all of the electricity in your own home. Up to 4kW, FIT pays 15.44 pence per kilowatt hour (p/kWh) of electricity generated, plus an extra 4.5p/kWh for electricity exported to the grid, with all payments being for 20 years, tax free and index linked.
IS IT STILL A GOOD INVESTMENT?
Yes definitiely! Whilst the there have been some recent much publicised reductions in the FIT, these have been more than matched by less well known, but massive, reductions in equipment costs, such that a PV system a better investment now than it was when FIT was first introduced in April 2010.
A typical 4kW system costing £6,450 (Including Free EPC Energy Rating++) will generate a combined FIT income and electricity saving of around £853 per year such that payback is 7.6 years and the internal rate of return on investment is 14.8% (*based on SAP 2009 for a south facing un-shaded roof at 30 degree pitch, with 3% RPI, 5% fuel inflation and panel output reduction to 80% over 25 years - please
for full details of this calculation).
Its an even better invesments for farmers and commercial property owners who can fit larger 10-50kW systems, earning up to a 20% return on investment.
DO I NEED AN EPC?
Since April 1st 2012 it has been a requirement to have an energy performance certificate (EPC) rating of 'D' or above before FIT can be claimed. We will arrange for this completely free of charge for homeowners (++assuming you eventually go ahead with a PV system from us) via our recommended EPC provider SHINE Energy Services so this is not usually an issue if you are in a house with a cavity wall, loft insulation and a modern boiler.
If you have bought your house in the last few years you probably already have one. CLICK HERE TO CHECK YOUR EPC.
However from December 2012 there is an exemption from meeting the energy efficiency requirements of EPC Level D or above for community, school and further education colleges and projects by community organisations on non-domestic buildings. A ‘community energy’ project is one in which the generation or export is carried out by: 1) community interest company; 2) a co-operative society; or 3) a community benefit society.
WHAT RATING IS MY HOME?
If in an older house then please use this Home Energy Check tool from EST to estimate whether you are likely to achieve a D rating and send us the PDF results file. If you are estimated to be a D rating or above then we can proceed with a survey, quote and order and then issue you with your free EPC certificate, just before the installation. However if you are an estimated E or lower then you will need to have EPC survey and assessment to confirm exactly what rating you currently are so that SHINE and ourselves will advise on the best way to achieve a D rating, which may include low energy lights, loft insulation or a new boiler and/or central heating controls installed by us, prior to the PV installation.
Please click here for answers to Frequently Asked Questions about FIT.
A good web site for further details on FIT is fitariffs.co.uk.
If you want an independent calculation of the savings then please try the Energy Saving Trusts Cashback Calculator
You can get up to 37% of the cost of your PV system paid for under the Green Deal, which could include the cost of renewables, bundled in with other measures such as loft insulation or cavity wall fill. For further details of the scheme and how to get a Green Deal Assessment please click here.