Solar panels: a tax-free return of 10pc pa

Solar panels: a tax-free return of 10pc paA tax-free, index-linked return of 10 per cent a year, guaranteed for 25 years may sound too good to be true
But this is the level of return the Government claims you could receive by investing in a solar panel system for your home.Simon Lovering, Chairman of Worthing Business Circle and Director of Eco Innovations and Eagle Roofing, says ‘this is not as far fetched as it sounds. The Government are keen to see the Green Energy generation expand in the coming years, and this incentive will make many people think about it a little bit harder’

If you think installing solar panels is only for those committed to ecological issues, a new government scheme designed to increase uptake of renewable energy may make you think again.

The Department for Energy and Climate Change’s (DECC) Clean Energy Cashback Scheme is offering big financial incentives to anyone installing solar panels in a bid to make doing so stack up as an investment to even committed climate-sceptics.

The cashback scheme, also known as the Feed-in tariff, has been going since April. Grants for solar panels have been abolished and replaced with a system where people who install them are rewarded for every unit of energy generated by their system. Energy companies are also required by law to buy back any excess they generate.

To qualify for the scheme you have to install solar photovoltaic panels, known as solar PV.

This type of panel generates electricity from sunlight. The scheme currently does not cover the other main type of solar panel, solar thermal, which warms the water in your boiler system, although the DECC aims to bring thermal systems on board from April 2011, albeit with lower cash rebates.

Wind-generated electricity is now covered under the scheme, however.

The scheme promises to reward investors in three ways. Firstly, you are paid the “generation tariff”, which is a direct payment from your energy supplier for each unit of electricity you generate.

This starts at 41.3p per kilowatt/hour (kWh), and is fixed by statute to increase in line with the retail price index for the next 25 years. The second saving is under the “export tariff”, which is a payment made for energy you export back into the electricity grid rather than use on site.

This pays an extra 3p per kWh. Finally, you also make savings on your electricity bills, now saving you about 13p per kWh.

“The biggest financial savings through solar go to those who use all or most of the electricity they generate. This means the retired or those who work from home get the best return on investment because they get the saving on their electricity bill as well as the feed-in payment,”

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Call Eco Innovations on 0845 362 8503 to find out more.