Worcestershire -based solar panel installer Eco2Solar has spoken
out against negative industry reactions to the recently announced
drop in Feed In Tariff (FIT) payable to homeowners who install
photovoltaic (PV) solar panels on their roof.
The Government announced on Monday (31st October) that the FIT
was to drop from its current level of 43.3 per kWh to 21p after
next April, for installations registered from 12 December 2011
onwards.
Whilst acknowledging that the unexpected timing of the change
will cause problems for the industry, Eco2Solar's managing director
Paul Hutchens believes that solar panels still represent a good
medium term investment for homeowners, and that many of the cost
and payback figures being quoted in the media are based on
incorrect assumptions.
Various reports have indicated that the drop in FIT will more
than double the payback period for the average system from around
eight to 18 years, making it an unattractive investment for most
domestic purchasers.
"Most reports are quoting an average £11,000 investment
for a 3kW system, whereas the real cost is more like £8,000,"
said Mr Hutchens. "It's true that annual returns of between 12% and
15% available with the current rate of FIT will no longer be
possible, but homeowners should still be able make a return of
around 10% per annum with a payback period of around 10 years.*
"This compares very favourably with the return you could expect
from leaving the money in a bank or building society, where after
the effects of inflation you would be lucky to see any profit at
all on your money."
The company admits that many of its competitors operating on the
'free solar' business model - where the panels are offered to the
homeowner free of charge, with the homeowner benefiting from free
electricity generated but the company receiving the Feed In Tariff
payments - are in a very difficult position following the
government announcement.
"The 'free solar' model is dead in the water," continued Mr
Hutchens, "and certainly companies like ours, which operate
differently and charge for the panels and installation, will
certainly need to look closely at costs and structure and work hard
to become even more competitive. But we all knew a reduction in the
tariff was coming, albeit not this sudden and severe.
"At the moment, Eco2Solar does not expect to have to make
redundancies. We are committed to helping customers make a solid
financial investment, achieve substantial savings on their energy
costs and contribute towards a greener, more sustainable
lifestyle.
"Solar energy is still, we believe, an industry with a bright
future."