Financial advantages of a home Solar PV system
With the guarantee of a tax-free indexed linked income for 20 years and an annual return better than a cash ISA, solar PV is a smart investment.
If you have £5,640 (2012 limit for a cash ISA) to invest, where are you likely to get the best return on your money? For some time now, many people have simply chosen to put their money into an Individual Savings Account (ISA). A Cash ISA with its tax-free earnings has seemed like a safe bet, even if the level of 3% interest rate is a little, well, meager.
Comparing financial returns
Compare this with the 8-11% return that you could get on a solar panel installation on your roof and the ISA suddenly doesn’t look like such a smart move. The Feed-in Tariff that the government pays you for generating electricity from your solar panels is tax-free, just like the interest on your cash ISA, but at a considerably higher rate.
It’s also guaranteed for 20 years and it’s linked to the RPI so that it will rise with inflation. Also, you will save money on your electricity bill (25% on average, according to research from the Energy Savings Trust).
So what’s changed? Why haven’t people been choosing solar over ISAs? The answer, quite simply, is that it is only recently that the cost of installing a solar panel system has become comparable with the maximum amount of money that can be invested in an ISA. The annual cash limit for an ISA in 2012 is £5,640. It would not cost a lot more than this (typically £6000 to £7000) to fit a large (4KW) solar PV system – the maximum size for a residential property – and smaller systems would, of course, be much closer to this figure.
The sums are straightforward: for not a lot more than the maximum allowable cash ISA, solar panels provide a much stronger return – guaranteed, tax-free, and inflation-proofed. A typical payback period for a 4 KW system (to double your original investment) would be between 7 to 9 years depending on the direction and angle of your roof. The same money invested into a cash ISA at say 3% would take 22 years to double your original investment.
The Bottom Line
A DOC Solar & Electrical Installation
The new government regulations on Feed in Tariffs have turned solar panels into one of the most important investments a home owner can make. Not only can a home owner improve their carbon footprint they can also save a remarkable amount of money in the long term. Installing solar panels under the current feed in tariff scheme outstrips most other forms of investments a home owner can make. Also if you are lucky enough not to need the cash you are paid and save on your bill you could invest that into an ISA on a monthly basis netting yourself an even bigger profit from investing in solar panels.
To find out how we can help you and your family please get in touch.