Solar so good for our house

It was with some trepidation that I went into the cellar this week to take some meter readings in order to find out how the solar panels we had fitted on our house exactly a year ago have been performing. Was the hefty sum of £8,500 we forked out last year a good investment or a waste of money?

Well, the news is better than I had expected. We, a family of four, have produced 92% of our electricity usage from the roof of a century-old terraced house in south-east London - laying to rest the idea that Britain is not sunny enough for solar power. It also disproves any suggestion this sort of technology only works in state-of-the-art, modern detached houses.

Not only will we not pay for any electricity, we should get a rebate of about £50 once a payment from the so-called renewables obligation (RO) scheme, which rewards microgeneration schemes with cash, is included.
n all, the saving for the past year will be around £500, giving a return on our investment of 6%, which is not subject to tax. Next year, when the payments from the RO scheme will double for photovoltaic (PV) solar installations, we will get about £150 back, giving a total return of 7%. That will rise further if energy prices continue to climb - which is likely after oil prices hit yet another high this week.

There is an important caveat here. I received a 50% grant for the system from the government's low-carbon buildings programme - the total cost of buying and installing the panels was £17,000. Unfortunately, the government is so pathetic at supporting low-carbon technologies that it last year cut the maximum grant to £2,500 because the scheme was so popular. As a result, demand has collapsed to the extent that the small company that fitted my system has gone out of business.

That means your return on a system purchased now will be lower - little more than 3% for one like mine this year, rising to close on 4% when the RO payments increase next year. Still, 4% that is not taxable is comparable to a building society account that you do pay tax on.

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