Are Solar Panels a Good Investment?

With increasing media coverage about solar panels, it is hard to know whether they can provide a good return on investment and if they are a worthy purchase for your home.

Solar photovoltaic panels were recently featured in an expert UK guide, which detailed the different ways to get solar panels for your home. Buying a solar panel system can be expensive, with an average array costing in the region of £ 11,000. It is therefore important to understand that they can provide a substantial return and for this reason should be seen as an investment.

Solar panels, once installed, will provide you with free electricity which you can use in your home to power your appliances. By using this electricity you will lower your energy bills by buying less from your supplier. You will also protect yourself against future energy price increases. As the price of electricity continues to rise, your savings will be greater.

By using the renewable electricity produced by your photovoltaic panels, you are also making an investment in the future as you are reducing your carbon emissions. By not buying electricity from your energy provider that comes from burnt fossil fuels, you can reduce your carbon footprint and help the environment.

The Feed-in Tariff

The Feed-in Tariff makes solar panels a brilliant investment. Introduced in April 2010, the government-backed tariff was designed to incentivize the uptake of solar photovoltaic (PV) technology to reduce the country's carbon emissions. Having proven successful in countries such as Germany, Spain and the Czech Republic for incentivizing solar PV, the Feed-in Tariff (FiT) ensures that your energy provider pays you for each unit of electricity that your system generates, even if you use it all in your home.

However, the solar array will usually generate more electricity than you can use and will there before export the surplus into the National Grid for others to benefit from. You will be paid extra for the electricity that you export.

The FiT makes investing in a solar panel array worthwhile, as the payments are guaranteed for 25 years, tax-free and index-linked. They provide a great return on investment. Although the average domestic system will cost eleven thousand pounds, the Feed-in Tariff means that it will pay for itself in ten years. The payments are guaranteed for 25 years and once the system has paid for itself, the continued payments are pure profit.

On average, a domestic solar PV system will provide an 11% rate of return on investment, which is nearly four times what the same money could earn in a savings account or an ISA.

Source by Aaron A Dicks

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