Written by Lauren Thompson
At first sight, it's an offer you can't refuse: free solar panels and a promise to slash your electricity bills. So is there something that the energy companies aren't telling us? Lauren Thompson investigates.
Rogue salesmen are attempting to hoodwink householders into installing solar panels with promises of massive savings on energy bills.
Special incentives give householders around £700 a year for electricity they generate. Almost 9,500 households received £182,059 between April 1 and June 30, 2010, by generating their own electricity, according to regulator Ofgem.
Chris Rigby, 58, is delighted with the solar PV panels he had installed on his home in January. He recently received a cheque from Scottish Power for £175, his first payment from the feed-in tariff. The six panels were installed by Solarcentury at a cost of £8,500, although he received a grant for £2,500 towards the work. Mr Rigby says on a sunny day the panels generate about 5-6 kWh, but this drops to just 1-2 kWh on a cloudy day. Mr Rigby (above with his stepdaughter Alex, 17, at their home in Wanstead, East London) also installed solar thermal panels on his roof seven years ago at a cost of £;2,500. He now does not have to use his boiler to heat water between May and September.
But critics warn many consumers are being misled over how the schemes work and how much money they can save.
An investigation by Which? earlier this year concluded that the thermal solar panel industry is blighted by mis-selling.
Ten out of 14 solar thermal panel companies made misleading claims about how much money a customer could save, and many used high-pressure selling techniques such as large discounts for signing up immediately.
Tim Weisselberg, at The Centre For Sustainable Energy, says: 'There are many cowboys over-charging for solar panels and more are bound to crop up in the coming months.'
Which? says misleading claims about solar thermal panels usually exaggerate how effective they actually are.
WHAT YOU NEED TO KNOW
There are two types of solar panels:
- SOLAR PV converts sunlight into electricity. These cost about £12,000 to install but can save £120 per year and make a further £800 a year from selling power back the the National Grid.
- SOLAR thermal panels convert energy from the sun to heat water. These cost about £4,000 and save about 10 per cent on your gas bill, or £55 per year.
It is solar PV panels that are the focus of attention because they generate electricity which can be sold back to energy companies via a special 'feed-in' tariff.
These tariffs were introduced in April 2010 to provide financial incentives for people to generate their own electricity, usually using solar panels or wind turbines.
The scheme was devised by the Government, but paid for by energy suppliers via a levy on all bills. Households are paid for the electricity they generate, whether or not they use it themselves. The standard rate is up to 41.3p per kilowatt hour (kWh) for electricity generated (known as the ' generation tariff ') and an extra 3p per kWh for any energy that is not used and is sold back to the grid (the 'export tariff').
All generation and export tariffs last for 25 years and are linked to the retail prices index (RPI) to ensure payments increase with inflation. households could save around £920 per year, according to the Energy Saving Trust.
This is made up of £770 per year from the generation tariff, £30 per year from the export tariff and a £120 per year reduction in current electricity bills.
The average household uses about 4,500 kWh of electricity every year and solar PV panels usually generate about 40 per cent of this, or 1,850 kWh per year. But because much of the electricity will be generated on sunny days when you don't use it, around half (925 kWh) of this production is likely to be sold back.
The average solar panel installation is 2.2 kilowatts, which has an average output of 5 kWh per day, depending on the weather. Panels will generate some electricity on a cloudy day, but work best in summer.
Individual households will receive the generation and export tariffs from their electricity supplier, normally every quarter. Experts say households would normally make their money back on the cost of solar panels within about 15 years, and would continue to profit from the feed-in tariff for a further ten years.
Energy suppliers pay for feed-in tariffs by adding about £8.50 to every household bill between 2011 and 2030, at a total cost of £6.7 billion to consumers.
A spokesman for British Gas says: 'Buying solar panels is one of the best investments around - the feed-in tariff is tax-free, index-linked and guaranteed by the Government.'
Prices can vary considerably, so get at least three quotes. British Gas, M&S and EDF, none of which were tested by Which?, have all recently started selling solar panels.
Only solar panels registered under the Microgeneration Certification Scheme (MCS) will qualify for the feed-in tariff (FIT) - go to website microgeneration-certification.org to find a registered installer in your area.
The installer will give you a certificate confirming FIT compliance, which you then show to your energy supplier to start receiving the feed-in tariff.
Some companies offer to sell panels on credit - British Gas, for example, offers a 0 per cent deal for two years, which means the cost is split into 24 equal payments.
Other companies will charge interest on the loan, but think carefully because this will erode savings on your energy bill.
The Energy Saving Trust has a wealth of information on solar panels and a useful calculator to see how long it of information on solar panels and a useful calculator to see how long it takes to make your money back. Go to energysavingtrust.org.uk.
Ciara and Gerry Bomford had solar thermal panels installed on their home in Abergavenny, South Wales, 18 months ago. They paid £4,000 and now the family do not need to use their boiler between April and September. The couple are not on the gas mains and instead use oil to heat their home. Ciara, 38, says: 'We used to fill our oil tank about once a year at a cost of £500, but now we can last 18 months before refilling.' The Bomfords say there's the odd day in summer when it is cloudy and the boiler need turning on, but generally, for six months of the year they have free hot water. 'With interest rates so low, we thought it would be a good long-term investment to use our savings to buy solar panels,' adds Ciara. 'We've had our house insulated, which has also helped reduce our energy consumption.'
If you don't want to pay for the panels, then you could sign up to a 'rent a roof' scheme. These are soaring in popularity after a glut of companies, including British Gas, starting offering free panels in return for pocketing the feed-in tariff.
This means you would pay less for your electricity, but you would not be paid for generating any. Average savings are claimed to be around £120 a year.
HomeSun, which is owned by Eaga, the same company administering the Warm Front scheme (which offers grants to certain people to provide heating improvements in their property), received 42,000 applications from homeowners for free solar panels in August.
The British Gas deal is available only to existing customers, but the supplier says that customers are free to switch energy suppliers once the panels are installed.
Consumer groups warn that householders should think carefully before entering into contracts with companies offering free panels. The contract normally ties you in for 25 years and there are potential downsides to installing something you do not own on your house.
Liz Laine, of Consumer Focus, says: 'Customers need to go into these deals with their eyes open. Asking the right questions and getting legal advice could help them avoid the potential pitfalls.'
Depending on the contract and the company, householders will not be able to remove the panels for 25 years, which may be a disadvantage if you are unhappy with them or are trying to sell your house and the new owners do not want to inherit the deal. After 25 years, the panels are yours to keep or throw away.
Ms Laine adds: 'Check the company will pay for maintenance and insurance of the panels - and whether or not they will be liable if the equipment causes damage to you or your neighbours.'
It is also worth remembering that you will benefit much more from free solar panels if you are in during the day, not out at work, when the sun is shining. However, working households can still benefit at weekends and on summer evenings, and energy generated during the day can power appliances such as fridges which are switched on all the time.
Consumer Focus has a useful list of questions to ask any company offering to install solar panels for free - go to consumerfocus.org.uk.
Not all houses will be suitable for solar panels. Your roof needs to be facing within 90 degrees of south, and not be overshadowed by trees or buildings. A structural assessment should also be carried out to see if your roof can take the weight.
You will need to ask your mortgage provider, building insurer and local planning officer for their permission to install solar panels, even if you are getting them for free.
You should also consider that when you sell your house, you will have to sell the solar panels with the property - you cannot remove them and install them on your new home.
Estate agent Jonathan Cunliffe, who works for Savills in Cornwall, says: 'While solar panels do not necessarily add value to a home, they are an increasingly appealing feature for buyers, especially if there is the opportunity to sell energy back to the grid. They are becoming a standard piece of kit on new-build homes.'
Finally, it is worth bearing in mind that the feed-in tariff is a new scheme and relatively few people have tried it. Publicity for the scheme is being ramped up and energy suppliers are likely to be pushing deals in the next few months.
Do your research and sums carefully, and shop around for the best deal. The amount of money you save on energy will depend on a host of factors including the size of your roof, the number of solar panels and, of course, the weather.
WHAT ABOUT WIND TURBINES?
These are also eligible for the feed-in tariff and can provide greater savings than solar panels, though your home is less likely to be suitable for them.
A wind turbine costs between £15,000 to £22,000 to install, but this should provide enough electricity for lighting and appliances in a typical home, according to the Energy Saving Trust. A 2.5 kWh turbine should generate around 4,000 kWh of electricity per year, which could mean income and savings of £1,300 per year.
However, your home may not be suitable if there are large obstacles such as buildings, trees or hills nearby, as turbines work best in exposed locations with an average wind speed of no less than 11 miles per hour. You will probably need planning permission, too.
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