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Date: 2024-04-28 Page is: DBtxt003.php txt00009529

Burgess COMMENTARY

Peter Burgess

What is solar?

Solar takes advantage of a free and powerful energy source – the sun.

In a single hour, the sun transmits more energy to the earth's surface than the world uses in a year.

Solar converts this energy into electricity, making it a simple, clean and cost-effective way to power our lives. It’s dependable, too – because unlike fossil fuels, the sun’s energy is unlimited.

Just imagine what that could do for your wallet, your bottom line and the environment.

Read more about THE solar century

What are solar panels?

Placed on roofs or on the ground, solar panels capture the sunlight and convert it into electricity.

And you don’t need to live somewhere warm and sunny, because solar needs only light not heat. Even the UK gets 60% of the sunlight (or solar radiation) found at the Equator.

It’s true that the more light the panels receive, the more electricity they can generate. But they still work on cloudy days – just as a solar-powered calculator does.

Their full name is solar photovoltaic panels, or PV. (“Photo” means “light” and “volts” means electricity.) At Solarcentury, we usually just say “solar” for short.

How do solar panels work?

You’ve probably seen solar panels on roofs, or maybe on the ground. The panels are frames made up of solar PV cells (these are layers of monocrystalline or polycrystalline silicon – a handy fact for your next quiz):

  1. The sun’s radiation hits these cells and is converted to direct current (DC) energy.
  2. This DC energy travels to an electrical device called an inverter, which converts DC energy into alternating current (AC) energy.
  3. The AC electricity produced is just like the power supplied by your utility company, and can go directly to power things like computers and lights.
  4. Or the power produced can be exported back to the mains national electricity grid and get redistributed around the country.

 

Why should I choose solar?

There are so many reasons, it’s difficult to summarise…

At the moment we rely on fossil fuels, and increasingly on imports. But the sun’s energy is unlimited, so it’s a secure source of power for the future.

Unlimited and reliable

When electricity providers hike up their prices, the sun keeps shining for free. Solar panels produce energy from daylight, so they still work on overcast days. You can generate your own free power, and stop worrying about soaring bills.

Free

With government tariffs and payback schemes, you can earn money from producing solar power – even if you use it all yourself. It’s low-risk, with predictable year-on year-yields giving you a better rate of return than an ISA!

Learn more about the financial incentives below.

Money-earning

Solar is fuss-free, easy to install and very low-maintenance. The power from the panels is warrantied for 25 years and expected to continue generating for many years beyond its guaranteed life. All you need to get started is a building or some land – and it’s quiet, with little visual impact.

Easy

Unlike fossil fuels which create harmful air pollution and global warming, electricity created from the sun is clean. So a typical home with solar could save a tonne of carbon dioxide a year, while an acre of solar could save an amazing 10,000 tonnes.

Clean

The UK government has committed to generate 15% of the UK’s energy from renewable sources by 2020 – but by 2010, the UK had only reached 3.2% of its target. By choosing solar, you make an investment you can be proud of and show you’re commitment to clean, renewable energy. What’s more, you’ll be supporting British installers and the UK economy in these tough times.

An investment to be proud of

Financial incentives

Of course we’re all concerned when the government makes changes to renewable incentives – but as energy prices rise and solar panel prices fall, solar is still a wise investment. The proof is in the numbers.



For solar on rooftops:

You can make or save money in three ways:

What’s more, you’ll be independent from rising electricity costs.


Make an income from the feed-in tariff.

Whats the feed-in tariff?

What’s the feed-in tariff?

It’s a government policy introduced in 2010 to encourage the uptake of renewable energy in the UK. It rewards you for any energy you generate from a solar installation, regardless of whether you use the electricity or not.

The income is guaranteed for 20 years and is index-linked, meaning it will go up each year with inflation. If electricity prices go up more than inflation – which they have for the past decade – your savings would grow even quicker. And unlike many other investments, it’s also tax-free for homeowners.

Make money by selling surplus electricity to your energy provider.

Reduce your electricity bills forever!

Solar vs. ISA.

See how the numbers look compared with an ISA:
Solar PV Cash ISA
Initial investment £5,760 £5,760
Income + savings year 1 £700 £175
20 year profit £13,750 £4,500
Return on investment 13% 3.0%
Payback 7 years n/a

The estimated payback figures are based on the below assumptions, true at time of publication:

1. A south facing roof at 35° angle with 850kWh/kWp irradiance, typical for the UK (source: SAP)

2. Using annual electricity consumption of 4000kWh, typical for a 3 bedroom household in the UK

3. With an energy performance rating A-D

4. Assumed 50% used of the solar energy produced, typical for a 3 bedroom household in the UK (source: Energy Saving Trust)

5. Investment based on a 3.3kWp solar installation, typical for a 3 bedroom home in the UK (source: Ofgem)

6. Income of 14.38p per unit of electricity generated, from the government Feed-in Tariff, index linked for 20 years, for a retrofit installation (source: DECC / Ofgem)

7. Income of 4.77p per unit if electricity exported back to the grid (source: DECC / Ofgem)

8. Savings of 14.5p per unit of electricity, at 6% annual inflation (source: DECC Quarterly Energy Prices, 10 year average )

9. Profit after cost of installation, not including maintenance costs

10. Return being tax-free, with the average annual return over 20 yrs

11. Payback being the time taken to recover the initial outlay

For utility scale systems:

Renewable Obligation Certificates (ROCs) are currently the government’s main financial incentive to develop large-scale roof and ground-mounted renewable electricity generation.

Introduced in 2002, ROCs require electricity suppliers to deliver an annual proportion of electricity from renewable sources, or pay a fine. ROCs are traded separately to the actual electricity itself and work as a bonus premium on top of the price paid for the unit. You can find out more on the Ofgem website.
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