Feed in Tariff is not dead yet!
You may well remember the buzz around the home solar panel system from 2005-2010, everyone seem to be making a packet from having solar panels installed but when the tariff was reduced in 2011 everything seemed to go quiet, but why?
In 2005 a 4kW (approx. 16 panels) domestic solar system would have set you back about £15,000, today the same kit can be installed at a fraction of the cost, usually around the £6,000 mark. So you see, even though the Feed in Tariff has been reduced over the years it does not mean that you are making any less profit.
But! The question you MUST ask yourself is ‘when is the next FIT price reduction?’ and we shall be answering that in just a moment…
Milford Haven Solar Farm | South Wales
Jumping on the Solar Band Wagon
The easiest and fastest way for any fool to become rich has always been to simply copy successful people. You do not have to copy the rich people at the same scale they are operating at, just follow their investment strategy with what you have.
But here we shall go one better, with the help of some kind informative friends at Celtic Green Energy we shall not only share with you what the rich are investing in but why it makes sense to do it.
As you have no doubt guessed by now, yes the rich boys and girls out there are investing in solar energy, not content with just making a small fortune from covering their own roof tops in solar panels they are buying up acres of land, not to build houses, but to install as many solar panels as possible!
Lincolnshire – Rich developers plan to install 87,330 solar panels on an 121 acre plot.
Knebworth – Rich developers are attempting to gain permission to install a 40 acre solar farm.
Dorset – Rich developers plan to install 112,000 solar panels on an 175 acre plot, this should provide approx. 6,000 homes with electricity and earn themselves an absolute fortune for years to come.
These are just 3 cases picked from news articles posted in the last few days! This is happening all over the UK, why? Because the rich understand how the Feed In Tariff system works.
Feed In Tariff | How it Works
Most people in the UK have absolutely no idea how the Feed In Tariff works, if they did they would all be buying up solar PV systems!
With the FIT you are actually paid twice on the same electricity that you generate AND you get paid the same even if you don’t even feed any electricity back into the grid.
This is how it works:
A good size system for a house would be 4kW (approx. 16 panels) this is likely to produce roughly 3,800 kWh of electricity per year.
You get paid a generation tariff on 100% of the electricity that you are expected to produce.
Then you get an additional payment on 50% of the electricity you are expected to produce which is known as the export tariff. Then on top of all that you can factor in the savings from not having to buy electric from the grid – Home solar systems are very lucrative which is why so many installers offer to fit them for free if they can collect the FIT payments.
Notice how we said ‘you are expected to produce’, in order to claim an income from the FIT you MUST have had the system installed by an MCS accredited installer like Celtic Green Energy. They then, using a bunch of sophisticated computer software work out how much electricity your system is expected to produce over the next 20 years! taking into account things like shading and degradation of the system etc.
Today with a standard 4kW Solar Panel Kit you would expect to pay around £6,000 to have it installed – you would then expect to recoup around £19,754 on your investment paid back over the next 20 years. Some even use these payments to cover their mortgage each month.
Understanding the FIT Rates
|System capacity||Lower Rate||Medium Rate||Higher Rate|
|4kW or less||6.38||12.94||14.38|
You will only ever be paid on the lower rate if the property that the system is installed on does not have an Energy Performance Certificate (EPC) or if the EPC shows a rating of under grade D. Medium is only paid when you are already being paid out
How to Invest With No Money!
OK, so you get it, the race is on, who can get to own 25 solar panel installations the quickest! Lol, if only it was that easy right?
Well maybe it’s not as unattainable as you might think, the best way people have found to pay for the installation when having no cash on hand has been to re-mortgage. Getting an extra £6,000 out on your mortgage is pennies on a 20-30 year mortgage but in most cases the feed in tariff can cover the entire monthly mortgage payment.
But why stop there? Why not get out £12,000 and do your neighbours roof at the same time on a ‘rent your roof’ strategy.
As you can see in the table above, the FIT is paid on system far bigger than 4kW so if you have the roof roof space, or know someone that has then you really could make yourself a small fortune quite easily.
Get creative, work out how you can afford it, the bank may not be willing to lend you £2,000-£3,000 for a holiday in California but you can bet they will have no problem approving a loan for home improvements like installing an income producing system like solar.
Why Warren Doubles his Solar Investment
Alternative Ways to Invest in Solar
As we said early in this post ‘the easiest way to get rich is to copy rich people’, earlier this year one of the richest and most successful investors of all time, Warren Buffet, announced that he would be personally investing £30 billion into solar and wind energy.
His company Berkshire Hathaway is worth over $55 billion, but they will now be investing over half of the companies net-worth in installing solar and wind farms in countries around the world, why? because if you hadn’t realised yet the return on a solar panel is better than gold!
So here is an idea, if physically installing solar systems is not your cup of tea then why not open up a trading account to buy shares in renewable energy companies? Day trading accounts will even allow you to buy shares on margin i.e. with £100 you could in theory hold £1,000 worth of shares. Obviously, there can be downsides to this form of investing so please act responsibly.
Some people have recently used sites like indiegogo and kickstarter to source funds from ‘the crowd’ to pay off their mortgage, student loan, start a business and why not to pay to install renewable energy and help make the world a better place 🙂
Successful crowd funding campaigns are not achieved easily, it will take significant promotion on your part to gain enough traction before the real power of the crowd takes over.
More Ways to Earn from Renewable Energy
How to Get Paid!
Taking the leap into solar is made easy these days by great experienced and qualified installers, however please check that the installer is MCS accredited before having any work carried out otherwise you will not be getting a penny!
- Get an up to date EPC carried out on the property
- Have your MCS accredited installer fit the solar system and register it on the MCS central database.
- Contact your chosen FIT provider (this does not have to be your current electricity provider) and ask for an FIT application form.
- Send your FIT provider a copy of your EPC, MCS certificate and the filled in FIT application form.
- The FIT provider will then contact you to let you know how much and when you will be paid each month and also if you will need to send them meter readings.
Job done! Yes, it really is that easy… What have you been waiting for? For myself, well I just did not understand how it all worked or just how much you get paid back, once I realised the income potential getting a 4kW solar panel kit installed really was a no brainer.
Be warned… The feed in tariff has seen incremental reductions over the years so it makes sense to get these systems installed sooner rather than later.
The next feed in tariff reductions will be made on:
- January 2015 – 3.5%(roughly 0.5p)
- April 2015 – 3.5%(roughly 0.5p)
If you have any questions regarding solar PV or just want to say thanks for a great article then please feel free to comment below, thanks.