A lot has been said about ROI for PV installations. Everyone wants to know what kind of return they can expect on their PV installation. ROI is a tool, one of many, that helps to evaluate a potential investment and tells only a part of the story. Of course, the financial ROI is better than ever now with the introduction of Feed-In-Tariffs. However, the majority of the people tend to focus only on the direct income from the FITs and the related payback, and not on the less obvious but extremely important and beneficial advantages such as:
- Future security against rising energy prices.
- PV systems installations financed by a third-party owner.
- Added home value.
Future security against rising energy prices. – It is certain that energy prices are rising and will continue to do so in the next 10 years at least. The days of cheap abundant fossil fuel are becoming history. Therefore, someone who has invested in a PV installation, with FITs will be secured against the high energy prices of tomorrow. Let us remind ourselves that a FIT contract has a duration of 25 years, index related.
A PV systems installation financed by a third-party owner – The world of “third-party-owned systems” has brought an innovative business model that benefits both the homeowner and PV system owner. It’s been interesting helping consumers understand this business model. With the third party owning the equipment on the roof, the homeowner enjoys the benefits of the kWh’s generated by the system. In addition, this business model has zero operating cost for the homeowner. For example, when an inverter fails, the third party is responsible for repair. This has enhanced the case for PV immensely and spurned the growth of thousands of new PV roofs.
Added home value – It goes without saying that a house or commercial building with PVs installed, will be resold in a much higher price than an equivalent one with PVs installed. Why is that? Simply, because you are selling a house that generates an income and consumes much less electricity than the houses with no PV.
Below is a brief summary of the Feed In Tariff scheme
- FITs provide a secured income over 20-25 years of electricity generation.
- A secured generation rate up to 42p/kWh over 25 years. Index linked
- A secured export rate of 3.1p/kWh over 25 years. Index linked.
- Offset grid supplied electricity (OFGEM forecasts 40% increase in cost over next decade (average cost to be over 20p/kWh in 2020).
- A typical homeowner can expect to achieve an average IRR of 7-9%. Higher levels are achievable when combined with grants or for particularly efficient systems/locations
If you would like to know more about implementation of Feed In Tariffs and PV systems , feel free to contact our Low Zero Carbon consultants on Tel: +44 (0) 845 0091625, Email: mail@syntegra-epc.co.uk
