Over the last couple of years, there has been a lot of talk about the benefits of eco home upgrades. However, while it’s easy to understand the impact that better insulating your home and replacing old windows with double glazing, solar panels are a different matter. Many people are unsure of the initial costs, the amount of energy they produce and how much they can reduce household bills.
This article will aim demystify and explain the benefits of solar panels, helping you to make an informed decision about this renewable energy source.
On average, installing solar panels costs around £7000. Clearly, this is a large amount of money to find, especially considering the current economic climate. However, the government launched ‘the Green Deal Scheme’ in 2013, offering loans and grants to enable homeowners to utilise energy efficient methods. The cash back offer allows a homeowner to claim a maximum of £4,250 for installing eco upgrades, meaning solar panels could cost less than expected.
Earnings and Savings
So now that you know the initial cost, what about the long term financial rewards? This can be broken down into three stages: generation, export and savings.
Known as a feed-in tariff, you may be surprised to learn that the government will pay you for the energy generated by solar panels. This figure currently stands at a tax free 13.8p per kWh. When you buy solar panels, the amount you earn is fixed for a 20 year period. However, this figure is renewed quarterly, so it’s best to install sooner rather than later to secure a better rate.
Solar panels also offer further financial gain, as you can export and sell unused energy to the power grid. In addition, generating your own energy will reduce your yearly bills. Add it all together and the average household could save £750 annually, which adds up to an incredible £15,000 over twenty years.
Solar Panels Versus Pensions
Last year, the Telegraph reported that former energy minister MP Greg Baker, claimed that solar panels can provide a better financial return than a pension. But is this true?
If we examine, for example, a male retiring at 60 with a pension of £7500 and living until age 86 (the average life expectancy), his would receive a total of £16,070. For a woman aged 89 the sum would be £17,280 and would henceforth increase with age.
Solar panels, on the other hand, offer a total of £15,000 from a £7500 investment. It’s also worth noting that the average lifespan of a panel is 25 years, but government payouts cease at 20. This means that pensions offer a better financial return, but only marginally so.
Clearly, solar panels offer huge economic benefits. However, unite with your pension and you have a winning financial combination that could boost your retirement years.