2nd November 2011

Eco2Solar Know that Solar Panels are Still a Good Investment!

Eco2Solar would like to speak out against negative industry reactions to the recently announced drop in Feed In Tariff (FIT), payable to homeowners who install photovoltaic (PV) solar panels on their roof.

The Government announced on Monday (31st October) that the FIT was to drop from its current level of 43.3 per kWh to 21p after next April, for installations registered from 12 December 2011 onwards.

Whilst acknowledging that the unexpected timing of the change will cause problems for the industry, our managing director Paul Hutchens (pictured) believes that solar panels still represent a good medium-term investment for homeowners, and that many of the cost and payback figures being quoted in the media are based on incorrect assumptions.

Various reports have indicated that the drop in FIT will more than double the payback period for the average system from around eight to 18 years, making it an unattractive investment for most domestic purchasers.

“Most reports are quoting an average £11,000 investment for a 3kW system, whereas the real cost is more like £8, 000,” said Mr Hutchens. “It’s true that annual returns of between 12% and 15% available with the current rate of FIT will no longer be possible, but homeowners should still be able make a return of around 10% per annum with a payback period of around 10 years*”.

“This compares very favourably with the return you could expect from leaving the money in a bank or building society, where after the effects of inflation you would be lucky to see any profit at all on your money.”

However we would also like to admit, many of our competitors operating on the ‘free solar’ business model – where the panels are offered to the homeowner free of charge, with the homeowner benefiting from free electricity generated but the company receiving the Feed In Tariff payments – are in a very difficult position following the government announcement.

“The ‘free solar’ model is dead in the water,” continues Paul, “and certainly companies like ours, which operate differently and charge for the panels and installation, will certainly need to look closely at costs and structure and work hard to become even more competitive. But we all knew a reduction in the tariff was coming, albeit not this sudden and severe.

“At the moment, Eco2Solar does not expect to have to make redundancies. We are committed to helping customers make a solid financial investment, achieve substantial savings on their energy costs and contribute towards a greener, more sustainable lifestyle.

“Solar energy is still, we believe, an industry with a bright future.”