Why were the Dragons in the Den so surprised by solar PV?
Solar PV got an airing on Dragons’ Den last night, but given its growing popularity, I was surprised that the Dragons thought it was a new idea! So here’s a recap for the Dragons on solar and the Feed-in Tariff.
At last! Summer seems to have arrived and some are thinking about whether they can cash in on sunny days. There has been an increase of 400% in solar sales since this time last year as more people decide to invest in this new technology.
Perhaps it could only be a matter of time before a solar entrepreneur walked into the Dragons’ Den – and last night it finally happened. He explained how a fortune can be made by selling panels to homeowners looking to get cheaper bills, earn money via the government Feed-in-Tariff (FIT) scheme, and reduce their carbon footprint.
Deborah Meaden was keen to invest in the business mainly because she’d already invested in another – clearly she can spot a growing market! By the end of the pitch, tha Dragons were doing battle for the opportunity to invest in the idea.
Don’t be blinded by solar promises
No doubt some people will really benefit from it with cheaper bills, a lower carbon footprint, and the chance to earn money back from the FIT scheme. But I’m not sure the business warranted such unqualified love from our Dragons.
There are two types of solar technology – solar hot water or thermal and solar photovoltaic (solar PV). Solar thermal uses the sun’s energy to heat up a home’s hot water. Solar PV transforms energy from the sun into electricity that is used in our homes – this was what the entrepreneur was offering.
The systems are expensive – around £10-12,000 – but the government’s ‘Feed-in Tariff’ (FIT) scheme is helping people make money from solar PV (solar thermal is not eligible). It was this that had our Dragons reaching for the chequebooks. Why? FIT pays money to homeowners for generating electricity, at a premium rate, meaning that many are falling over themselves to have panels installed and get some of this cash.
How fit is the Feed-in Tariff?
This may seem like a win-win scenario but remember that this is not ‘free’ money. Everyone pays for FIT through their electricity bills, and the Government is going to review the level of tariffs from April 2012 onwards – a fact the Dragons would have been wise to ask about. Although panels installed this year won’t be affected, if the level of FIT drops next year then solar PV might not look like such a great investment, and sales of the systems could start to decrease.
A recent change to FIT meant that large-scale solar farms were no longer eligible for such high subsidies. We supported this change partly because the amount of subsidy needs to be kept under control. When many people are already struggling with their energy bills, it’s important that the Government has a clear idea of the impact of schemes such as FIT.
Shiny happy salespeople
You also need to watch out for companies making claims that can’t be backed up. Our undercover investigation into solar panels showed up some clear problems with misselling. Some of the solar PV salespeople offered discounts that were only valid for 24 hours, for example. We were also worried by quotes made by salespeople who were not qualified surveyors.
Of course, that’s not to say all salespeople are unscrupulous, but it is important to highlight that solar PV is a technology that will be relatively new to most people. Not only that, but the returns generated can vary greatly depending on the type of property you have, which way your roof faces, etc. Because of this it is really important to make sure that consumers aren’t blinded by sharp sales patter, ending up stuck in a deal that gives poor returns, or doesn’t live up to their expectations.
Sunday’s Dragons’ Den would have been a great opportunity to highlight the pros and cons of solar PV and encourage people to look around before buying. The fact is that although it looks like a good investment, the returns will vary greatly between households – and this could prove a problem for future sales, if the Dragons haven’t done their research.
We advise anyone who is looking to get solar PV to have a thorough look round and do their homework. Perhaps the next time a solar entrepreneur walks into the Den our Dragons won’t be so surprised by this ‘new idea’ that’s been around for a while…
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