Solar PV - Return on Investment

Introducing the Clean Energy Cashback Scheme - FITs

The Clean Energy Cash Back Scheme-introduced by the UK government on the 1st of April 2010 (commonly known as Feed-in-Tariffs  or FITs)-  has transformed the way we perceive solar photovoltaics.

In the past, solar PV systems had the reputation of being prohibitively expensive with long pay back periods.  All this has now changed. Investing in Solar PV is now regarded as one of the best investment s currently available conferring many environmental and financial benefits and annual returns of nearly 10%...tax free! (NB: FITs income is Tax Free for domestic installations)

The Clean Energy Cash Back Scheme was introduced to reward householders, businesses and communities for investing in micro-generating technologies such as solar pv, turbines and anaerobic digestion. The scheme is designed to pay an income based on the amount of electricity produced. This income is tax free for domestic installations and is guaranteed for 25 years for solar PV systems and 20 years for turbines or anaerobic digestion.

Income from the Scheme

Income received from the scheme is based on the amount of electricity produced by the system (kWh) and is paid irrespective of if the electricity is used or sold to the National Grid. The total number of units generated by the system is determined by a separate meter installed at the time of the installation (usually by the company you purchased the system from). The tariffs for the income for each technology are depicted in table 1.

Tariff levels for electricity financial incentives

Technology

Scale

Tariff level for new installations in period (p/kWh) [NB tariffs will be inflated annually]

Tariff lifetime (years)

PV

 ≤4 kW (new build)

 36.1

 36.1

 33.0

 25

PV

 ≤4 kW (retrofit)

 41.3

 41.3

37.8

 25

PV

 >4-10kW

 36.1

 36.1

 33.0

 25

PV

 >10 - 100kW

31.4

 31.4

 28.7

 25

PV

 >100kW - 5MW

 29.3

 29.3

 26.8

 25

PV

Standalone system

29.3

 29.3

 26.8

 25

Wind

 ≤1.5kW

 34.5

 34.5

 32.6

 20

Wind

 >1.5 - 15kW

 26.7

 26.7

 25.5

 20

Wind

 >15 - 100kW

 24.1

 24.1

 23.0

 20

Wind

 >100 - 500kW

 18.8

 18.8

 18.8

 20

Wind

 >500kW - 1.5MW

 9.4

 9.4

 9.4

 20

Wind

 >1.5MW - 5MW

 4.5

 4.5

 4.5

 20

Table 1. Tariff levels for Clean Energy Cash Back Scheme 

Determining Solar Yields and Income

Typical solar yields, FiT income, savings and export incomes for different sized solar pv systems are presented in table 2.

Please note that solar yield calculations can be performed (free of charge) based your specific location. Contact us if you would like to find out what solar yield (and FITs income) you can expect for your property.

 

Feed-in tariff Scenario

Installed system size

1 kWp

2 kWp

3 kWp

4 kWp
       

 

Electricity Generated(kWh/annum)

892

1,734

2,601

3,366

1-     FIT income1 (estimate)

£368

£716

£1074

£1390

2-     Import Savings2 (estimate reduction in electricity bill)

£57

£112

£168

£218

3-     Export income3 (estimate income from selling surplus to grid)

£13

£26

£39

£50

TOTAL 1+ 2 + 3 =

£439

£854

£1282

£1659

Typical return on investment

9%

9%

10%

12%

 

Table 2. Typical return on investment for different solar pv system sizes

  1. 1. The FiTs income was determined by multiplying the annual electricity generated by the tariff rate of 41.3p/ kWh (see table 1). In doing so we can see that generous incomes are available for each system.

  2. 2. Import savings is the savings acvhieved by using your own electricity rather than purchasing (importing) from your regular supplier. Saving calculations assumed that 50% of the electricity generated is used. A rate of 13p/ kWh was used as the purchase price from the supplier.

  3. 3. The export income is based on selling 50% of the solar electricity generated  (not consumed by the property)  at an export price of 3p/kWh.

 

A typical annual FiT income for a 4kWp solar system can be as high as ~ £1,400. More income can be received for larger systems. Additionally, you can save hundreds from your annual electricity bill simply by using some of the electricity you generate. Additional income can be achieved by selling surplus electricity to the National Grid.

What does it all mean?

Investing in Solar PV makes good environmental and financial sense. It offers a long term relatively risk free investment with a high return (tax free for domestic installations) for up to 25 years.

Amgen Renewables can design and install a Solar PV system specific to your needs. All of our systems have been meticuously designed to ensure optimal performance for every site. We use only the finest equipment (SHARP) with performance guarentees up to 25 years.

Contact us for more information Tel 0845 5194252