Solar energy offers huge benefits to both individuals and the world as a whole; it reduces bills, has no impact on global
climate, and its resources are limitless.
How is Solar Energy Generated?
Solar Photovoltaic, or solar PV for short, is the method of converting sunlight into direct current electricity using semi-conducting materials. The most common of these materials is silicon and this is what is used to make the PV panels that you see on many rooftops. The panels are made up of thinly sliced square silicon wafers called cells, with about 60 cells per panel layered together in rows behind a glass case and aluminium frame with two cables (positive and negative) attached at the back to conduct and transport the generated electricity.
When the silicon cells are exposed to sunlight a chemical reaction takes place, the electrons within the panels start to move and, with the use of conductive strips and cables, DC (Direct Current) electricity is generated.
In order for the generated electricity to be used in our homes and businesses the DC electricity needs to be converted to AC (Alternating Current) electricity. This is done using a very complex device called an inverter, and put simply – DC goes in and usable AC comes out.
What’s the Incentive to Install Solar PV?
Solar PV has been around for many years but before 2010 it was extremely expensive to have fitted, with the average 4KW (kilowatt) system costing in excess of £20,000. On 1st April 2010 the government introduced the Feed In Tariff, or FIT; a tax-free payment scheme giving users regular payments for every kilowatt of generated electricity from a PV system. Payments were guaranteed for 20 years, and what you signed up to at the start is the minimum you receive for the entirety of the 20 years, with the possibility of more as they are index-linked and will rise with inflation.
Then what Happened?
The Feed In Tariff payment incentive worked so well that by 2011 the government needed to drastically cut the tariff in order to slow down the number of installations and avoid the money set aside for this purpose from running out.By 2012 the tariff had been cut by more than 50%, leaving consumers and installers with little faith in the whole
system. It has since been under a quarterly review and, in short, the tariff is likely to be reduced every three months.
But the Good News is …
Despite this, it is still an excellent investment which pays back a much better interest rate than any ISA or high interest savings account with no risk to your money, providing it is installed by a good accredited company. With the Feed In Tariff and the electricity consumption savings made, you can be paid back in just over seven years, and as the Feed In Tariff is paid for 20 years you can then have 13 years of investment profit. Reinvesting your FIT payments and savings into an ISA means you save twice, and both are tax-free.
Written by Ian Hall
Hall’s Energy Solutions Ltd
07973 601138