If you didn’t already know it, you can get solar panels fitted to your home to provide hot water or electricity for you and your family. However in 2010 the UK government stopped its grant scheme to help people buy solar panels and replaced it with a Feed in Tariff (FIT) that means the government pays you to generate electricity. But is this new tariff worth it? And what are solar panels, and how do they work? Read on to find out.

What is solar power?

Solar power is the harnessing of the suns energy and turning it into electricity that we can use to run kettles, TV’s and anything else we care to hook up to the national grid. It is a free source of renewable energy that will eventually run out – sounds like a contradiction but it’s true, the sun will eventually run out but it will be a few billion years so we don’t need to worry about it yet.

Solar energy is collected by panels of photovoltaic (PV) cells that are grouped together and are positioned for maximum exposure to the sun. Therefore you will usually find them on roofs when connected to people’s homes. PV cells are about 20% efficient, which means for all the sun that hits them only 20% gets turned into electricity. It might not sound much, but it can be enough to power a home – it just depends on how many cells you put on your roof. We’ll look at the maths a little bit later.

The old grant

Until 2010 the UK government provided grants to people who wanted to get solar panels installed on their homes. Like all grants, there were criteria to be met, forms to be filled and various hoops to jump through. For various reasons, the grants didn’t provide enough of an incentive to get people interested in having PV cells installed, and so in April 2010 the new Feed in Tariff (FIT) was introduced, and updated in December 2011.

The Feed in Tariff

At its most basic, the FIT is a system whereby the government pays you to generate electricity. Your home is connected to the national grid and you become a small power station feeding in to it instead of merely consuming its sparky goodness.

The tariff pays up to the following set prices (it can vary depending on the size of the installation and amount of electricity that it is expected to generate):

• Electricity generated and used is paid at a rate of 21p per kWh (kilowatt hour)
• Electricity generated and unused which has been fed back into the national grid is paid at a rate of 3.1p per kWh

At these prices an average UK home could earn £500 tax free, and there is a guaranteed payment term of 25 years. You don’t need a calculator to work out that over the term of the agreement you could get approximately £12,500 tax free. Nice.

However, you might need a calculator to work out whether solar panels are worth the investment for you and your family. Fortunately we have done some of the working out for you.

Let’s do the maths

Before we begin we need to make some assumptions. Every home is unique so we cannot plan for everyone but if you take note of what’s going on you can do your own bit of maths to work out if getting PV cells are worth it. We should also remind you that there are two schemes available – one for hot water solar panels and one for electricity generation. We’re going to concentrate on the latter.

·       Assumption 1 – Because solar power is a renewable source of energy it’s environmental credentials are strong (assuming the production of the cells is not hugely damaging to the planet of course, but that’s another matter entirely) so we’re going to focus on the money side of things

·       Assumption 2 – The average UK home uses 3,300kWh of electricity a year

·       Assumption 3 – The amount being paid by the tariff will never change – £500 per year for 25 years

·       Assumption 4 – Solar panels are currently 20% efficient but they’re expected to improve in the next few years, which could increase their viability tremendously. We can’t plan for that so need to assume the panels are for life once installed and will produce a steady amount of power.

Solar panels of a size 1.4m² can generate 360 to 400w of electricity in an 8 hour period. Solar panel installers typically recommend 8 panels, which means between 2.8 and 3.2kWh of electricity being produced in one day by one roof. If we multiply 3.2kWh by 365 to calculate the amount of electricity generated in 1 year we get 1,168kWh.

With the average UK home using 3,300kWh of electric power in a year, that’s over a third of your electricity coming from the sun. Prices vary from one energy supplier  to another so only you can know how much money that could save you. But don’t forget that you are being paid for the amount of electricity your solar panel installation generates, so you need do £500 minus whatever your revised bill is. Presumably you’ve made money?

Of course you need to balance this with the upfront cost of the installation, and this is where many people shy away from solar panel systems. The cost of an installation varies depending on the property, the number of panels, type of roof, etc., but you could be looking at £11,000 for an average system. This is why it is important to get several quotes.

This article was written by Rob Powell from Confused.com, the price comparison website.