Free solar panels: Too good to be true?

Being able to reduce utility bills while using renewable energy sources is an appealing prospect for anyone, whether they live alone, in a couple or as part of a family. The installation of solar energy panels offers that option to homeowners. Now those who are considering this route have an interesting new dilemma – buy them yourself or take up the offer of having them installed for free. Free? Too good to be true, surely? So how does this work?

‘Free’ solar panels from companies

Companies are now increasingly recognising the benefits of investing in the installation of electricity-generating solar panels in people’s homes. First of all – what do you get out of it? Well, you would be doing your bit in reducing the country’s carbon footprint, and then there is the small matter of the company installing £15,000-worth of roof solar panels for a small amount (typically £500) or at no cost. Nothing. Nada. Free. In return, their investment will give you £150-£230 worth of free generated electricity over the next 25 years. There’s that word again: free. It almost sounds like an offer you can’t refuse.

The feed-in-tariff system – what’s in it for them?

But of course companies are not going to throw free solar panels at you if there isn’t anything in it for them. It is the ‘feed in tariffs’, or FITs, that they are interested in. The FIT system was encouraged by the previous UK government to make photovoltaic panels (which convert the sun’s light energy to electricity) a more appealing investment to homes and businesses. Companies will be paid amounts from £900 to £1,450 a year for installing a series of PV panels to your home.

This is of course definitely something to consider if you are not in a financial position to generate the money for your own solar panel investment. There’s not much you have to do apart from being prepared for a few days of disruption while the panels are installed on your roof. The maintenance is also taken care of. You can then reap the benefits of having a substantial amount off your energy bills. It would typically knock off around 30 per cent, but there is the potential for a lot more if you make some changes in the way you use appliances and become more aware of energy wasting.

These 25-year deals are particularly beneficial for those who are in the home for most or all of the day. This includes the retired, stay-at-home parents and those who work or run a small business from home. The panels would be kept for the full term and, if the house is sold, would be passed on to the new owner as part of the property. When the term ends, you would keep the panels but not be entitled to any FITs, but would still benefit from savings on your energy bills and also have the opportunity to make earnings on any excess electricity used which was fed back into the grid. But those who do not spend as much time in their homes won’t be able to reap the full benefits of the panels.

Investing in your own panels

Companies are likely to make £11,000-£16,000 depending on the number and size of the solar panels. The FITs for every unit of electricity generated (regardless of whether you use it at the time or not) are currently at the rate of 41.3p per KWh. But if you feel your roof is suitable and you can make the investment, you could be benefiting from the FITs instead.

The panels and cost of installation can cost anything between £9,000 and £15,000 depending on the size of your system and have the potential to make you £20,000-worth of profit over 25 years. It may also be worth waiting to see if more companies decide to offer free panels to homeowners with more competitive deals, such as a share of the FITs. So, which deal would suit you best?