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Are ‘free’ solar panel offers too good to be true?

Man fitting solar panels on roof

Following the introduction of Feed-in Tariffs, many companies are now offering free solar panels if you rent them your roof. It’s one way to avoid stumping up thousands of pounds for solar panels, but is there a catch?

In April last year, the Government introduced the long awaited Feed-in Tariff (FIT) scheme, which offers payments in exchange for generating renewable electricity.

The scheme promises good financial return. For example, for solar photovoltaics (PV), you can earn a 7-10% tax-free return, translating into £25,000 or more over the scheme’s 25-year period.

This is good news for those who can afford to buy a solar PV or a wind turbine. But what about the rest of us who don’t have £14,000 to stump up for a PV system?

Are ‘rent-a-roof’ schemes worth it?

Well, more and more companies have seen the opportunity and are offering ‘free’ solar PV in exchange for renting your roof.

The benefits are that you don’t have to put any money up front and often you’ll get to use the free electricity produced by the system. Plus, you don’t have the hassle of organising installation and the ‘rent-a-roof’ company will often cover maintenance of the system.

But what are the cons? By literally renting your roof for 25 years (the period of the FIT scheme), the company pockets the FIT payments, which means that once the investment in the system has paid itself back, all the profit goes to the company.

Which? research showed that whilst the offer of ‘free’ solar panels might be tempting, you would be financially better off paying for the PV system yourself, even by taking out a loan. Our calculations revealed that you could be up to £10,500 better off over the 25-year period with a loan.

Who pays for FIT?

FIT is paid for by a levy on energy bills. So, in effect, we’re all contributing to it. If you’re able to install renewable electricity on your property and claim FIT, then you’re benefiting from the scheme.

But what if you live in a flat? Or rent? Then you’re contributing to a scheme that you will never be able to benefit from.

Most importantly, while it might still be OK for other householders to benefit from FIT for the ‘common good’ of increasing our renewable capacity and reducing our impact on climate change; is it right that companies pocket the income?

Do you think companies should be allowed to benefit from FIT through ‘rent-a-roof’ schemes? Would you consider the FIT scheme – or would you rather invest the money yourself and buy a PV system upfront?

Comments
Alan says:
2 March 2011

must be a con

dave says:
2 March 2012

must be if you say so. mmmmmm

Martin - NuVision says:
9 March 2011

Interesting article which is absolutely right in pointing out the pros and cons of so called free solar pv systems.

Typical reaction as borne out by the comment above is that this must be some kind of con or scam and I for one am grateful for this post.

[Mods: Hi Martin, we just removed the link as it didn’t add to your comment. Thanks.]

With the feed in tariff the company providing these PV arrays has a profitable business case. They simply hire your roof. When the sun shines you get electricity for free, great, except when the sun shines you won’t be needing much electricity. When it gets dark and cold and the PV panels are producing nothing you pay for your electricity same as you do now.
The only way I can see significant savings for the house owner is by using the sunny free energy producing time to charge a big bank of batteries which you then put through an inverter (to make 240v AC) when it’s dark and cold.
Can’t see the installation company being too keen on you doing that though.

In fact the whole PV thing is a bit iffy. If you buy them, and they ain’t cheap, you rely on the feed in tariff to give you the payback and “perhaps” an eventual profit. This profit will be heavily dependant on how much sun you get and how long the PV cells actually last. They say 20 to 30 years but who knows, that can only be an esimate.

Having said all that alternatives like PV are not bad things, it’s just the cost and perhaps the ethical fairness of the feed in tariff.
The 40 odd pence paid to an alternative energy producer has to come from somewhere, and that somewhere incudes the less well off, people who could never afford to get in on the game themselves.

The whole objective is to reduce our Co2 output.
My approach would be to first get all those office blocks to turn their lights off at night (heating too probably). Then get public buildings and larger business buildings to install PV arrays by law, and without any enhanced feed in tariff. Then as the cost of PV panels comes down through economies of scale roll out grant supported installation to domestic buildings.
Of course another good idea would be to start actually making the things in the UK, jobs, exports, wealth creation etc.

jacksmith says:
5 August 2011

The output from a PV system is very predictable over the longer term. This is because the amount of solar radiation is far more dependant on the angle of the sun than on the weather. Clouds tend to diffuse or scatter, rather than block, the radiation so the panels will still produce with no direct sunlight.The seasons and time of day are precisely predictable. Temperature has an inverse effect, in cooler weather the panels are more efficient at converting radiation to current. The planets are not going to rearrange themselves any time soon, so don’t think its fair to describe the predicted output from solar panel system as ‘iffy’. In any case, the figures used in SAP calculations by MCS installers are pretty pessimistic for those of us in the South of the country, so systems here tend to outperform the sales data quite well.

Art4Art'sache says:
27 September 2011

Chris of Gloucester is admirably rational, & Jack Smith’s reply is encouraging. All the reports & data for my particular location, support my decision to sign up for a 4Kw system on my West- facing roof closing all my trivial investment accounts to pay for it. I read these comments immediately after I signed up & now have 7 days to re- consider. The “iffy” tag probably could be more correctly applied to the patter from sales reps who may have less familiarity with technology than with their commission rates so not unnaturally, gloss the figures where they can.

Richard Corso says:
21 October 2011

There are a number of PV Cell manufacturers in the UK. Here’s a few:
http://www.g24i.com/
http://www.sharp-world.com/corporate/news/100729.html

Although I’ve already made one comment I’d like to make a further observation on the subject.
Which? research suggests the possibility of buying a PV array with a loan and with the feed in tariff profiting by perhaps £10,500 over the 25 year life of the system.

Now I’m very much in favour of renewables including PV (it’s just the cost) but I’m not at all sure you have your sums right, and if you have they must be based on some very debatable data.

Interest rates over the next 25 years? (didn’t see the recession coming on like it did, did we so any prediction on interest rates has to be flawed?)
Weather forecast over 25 years? (the Met office can’t be accurate the day after tomorrow because of the complexity of the weather so little chance over 25 years?).
Life of a PV array and efficiency over that life? (know of any 25 year old panels still working at good efficiency? What’s being installed now didn’t exist 25 years ago so who knows?)

I’d say the result could just as easily be a loss of several thousand with assumptions just as credible as those “Which? research” must have used. So it’s really a bit of an unknown isn’t it?
One can only make a judgement. Mine would be small profit if you buy outright, a loss if you borrow, and a loss either way if the units don’t last longer than 20 years or maintain good efficiency.

To be fair though electricity costs will almost certainly increase over the next 25 years. This more so than would otherwise be the case because of the feed in tariff we’re all paying for, but which benefits (maybe, very maybe) only the relatively few.

Richard Mackney says:
16 March 2011

Thanks for the article. Very interesting.

I feel that this is something available to me now with no cost to me that allows me to save on my carbon footprint and instantly on my electricity bill. I can see that the company will be making money out of it, they have the insurance and maintenance to worry about for 25 years – not me.

If we all sit back and say it’s too good to be true no-one will act and no-one will be creating green electricity regardless of who makes the money.

I would be very worried if I took a 15k loan out to install and maintain my own panels – I’d probably get very upset when the sun isn’t shining and be counting the days until I cover my initial outlay and start earning.

If the only concern is ‘who’ pockets the most money from my roof space then I’m still up for renting out my roof.

Cheers

Richard

John says:
18 March 2011

I have a 3.995Kw PV system fitted and monitor the results daily.To date my average saving has been approximatelt £32/week based on feed in tarriff plus not having to pay for my electricity as my generation has matched my usage. I agree that the exact lifetime is not known but the panel manufacturers guarantee 90% efficiency after 10 years and 80 % after 25years and PV panels have been around for some time now so reliable data has been built up.I treat the installation a little like an annuity, invest money now, not looking for a payback time but for a rising income. If anyone can tell me of an annuity that pays approx 10% per annum tax free and index linked to the RPI ,I would be very interested.

The example qouted in Which! actually showed a DIY pacyback of 100 years!

So the math is all wrong.

I have installed a partnership Solar PV with Homesun and its working out just fine.
As I work from home – I am generating 3kwh at the moment (instantaneous reading)

The cost to me so far – NOTHING.

james says:
1 April 2011

I am still yet to be persuaded that this is anything other than a take from the poor to feed the rich scheme. Only wealthy individuals (who do not need the FIT) or wealthy businesses (ditto) can afford the capital. That leaves most people (who previously could at least get some funding towards the cost) to actually pay the tariff which goes to someone else who already has lots of money. Rent a roof schemes are a variation, where an organisation with lots of money reaps the benefits, while you are left with £100/year benefit (which is not too appealing, given a potential insurance premium, and some minor cleaning/maintenance issues)….
Its also interesting that solar PV gets the highest FIT – the main reason being that it is one of the worst (i.e. least cost effective) technologies, so needs more incentive. Therefore we are (slightly) being encouraged to install systems which are proven to have very long paybacks.

We’ve (wifey and I) have been thinking of this option for a while now. Last week we visited friends and unbeknown to us they had Solar PV Panels fitted April 2011.
They have a 4KW system, to date they have made £444 pounds in FIT, plus on top of this they have savings in free electricity. What I don’t know is what they have paid for whilst the system is not producing (at night).
Our friends are precise on what they want. They researched the whole concept, the products used and when to an installer with what they wanted.
For them it works and is a viable proposition. They live in Yorkshire, we live in Kent. We get more sunshine and it is stronger. On their experience thus far, albeit short, we are now going to talk with installers.
As to “Buy Outright” or “Rent our Roof” We will look to “Buy Outright” as I can see too many if’s and but’s with “Rent our Roof”, Moving home before 25 years, roof repairs where the solar panels are who pays?
April this year I drove through Europe, I was amazed (Belgium in particular) at the number of buildings with Solar Panels fitted, residential, businesses and farm buildings. In some case the whole side of one roof was a mass of solar panels.
Solar panels looks to be growing quicker in popularity than wind turbines. I’m on the side of Solar PV’s.

I’m very interested in the idea of installing solar pv panels for my electricity. The feed in tariff scheme (FIT) is clearly an attraction and all the sums and experience from others seems to confirm that
However, I can’t seem to find anything or anyone who will tell me how the 25 year guarantee works.

I’m a realist (or cynic maybe) but I can’t think of anything I would trust governments to stick to over a period of 25 years.

I can all too easily foresee, after a few years, a government being “really sorry but we just can’t afford these payments at the moment”
How does the guarantee work? Is there some independently funded guarantee scheme?
I obviously don’t want to be left with an expensive investment that will never pay for itself, so what’s to stop the FIT drying up?

Alan says:
10 June 2011

We live on the south coast and have had 12 solar panels installed for 3 months. They have generated over a 1200kw in this time. This is on a rent a roof scheme, fully maintained by the company, and this cost us absolutely nothing. The feed in tariff goes to the company. We get free electricity all day, even when cloudy. So the washing machine etc is always used during the day. The way I see it is, this cost us nothing and we get free electricity. We were not in a position to borrow money to buy these panels so this was ideal for us. There are always individual reasons why this is not suitable but how can free electric be a bad thing?

Anne says:
24 June 2011

We are in our 70s and have been approached by Sunsure to fit panels to our roof, as I dont think we will live for 25yrs, would this rent a roof be good for us? As pensioners any savings would be useful?

Janice says:
25 June 2011

I am having my solar panels fitted tomorrow through the local councils rent a roof scheme. I am not in the position to get a loan and have my own panels fitted so this has come as something I feel will benefit me. So what if someone else ie the company that puts the panels up or the council cream off most of the money, if I only save a pound a week and the system has cost me nothing who am I to complain and no maintenance costs, better the pound in my pocket than in someone elses.

Russ says:
29 June 2011

Hi,
I have just had a free system through a company called “A SHADE GREENER”
16 panels, I looked at buying via a loan but we were not willing to have our standard of living affected by yet more money being taken away each month.
Its easy to say buy and its a good long term investment but a lot of familys now have to live from month to month.
So i agree with the prev post any savings are welcome with the free panels.

Russ.

alan says:
9 June 2014

I RUSS, having ashade greener round this week, R,U, sill happy with your panels, and your cheap electric, bills alan.

Pete says:
20 July 2011

I’m currently in the process of engaging a company to rent my roof. I have a young family and a house that we’re likely to stay in for the long term (providing I can continue to keep up mortgage payments etc) and therefore see out the term of the 25 year contract. Our house also consumes a lot of energy in the day, with my wife looking after the house and our two young children. So the benefits immediately appear obvious.

What I’m sensing from the comments above is that people who have purchased or rented panels are generally happy and promoting the benefits but, I’m wondering about the longer term. The panels will be less efficient and transfer ownership to the homeowner after the contract, meaning it’s likely a re-investment will be required, which will possibly eat up any return if purchased, or leave me stuck with panels on my roof that aren’t efficient and a potentially decreased house value if I decide to sell up (who wants unsightly panels that aren’t generating any power after 35 years?). There may be the option to take up another rental agreement for another set of panels but, this would be dependent on the FIT scheme being available or buying outright when supply and demand reduces the cost of the technology (although what would be the cost of removal and wastage of the old panels).

Another consideration is the added complication if we decide to sell up in the 25 years. The new owners will need to buy out the rental contract or negotiate the house price so that they are purchased outright. This is likely to add more complication and stress to moving house as well as additional solicitors fees to arrange.

jacksmith says:
5 August 2011

If you sell your house having signed a contract with a third party allowing solar panels to be placed on the roof for 25 years, this will involve legal costs and possible delays. It could also be unattractive to a purchaser who might be considering extending the property or converting the loft. Your agreement will probably also allow the roof tenant access rights to the house and loft for meter reading and maintenance; not all purchasers could live with that. If the roof or chimney requires maintenance there could be substantial bills for removing and replacing the panels, not to mention arguments about why the roof is leaking in the first place! As the house owner you have little say over the quality of the work in your house and on your roof, as you are not paying for it. All this for under a hundred quid a year! IHMO you would be better off buying a smaller system yourself, even the smallest system you can buy (three panels, about 600watts) would earn you 2 or 3 times that.

cyril smith says:
5 September 2011

If the Government wants to reduce carbon emissions then it should use our tax to provide a totally free installation for any householder who wants one and make the energy company pay the household for the electricity generated. Instead, as is usual, it wants the electorate to pay so that it can waste £billions on things we do not need.

I think Jack Smith have hit the nail on the head with this one – it’s not about who is making the money – it’s who is taking liability for the roof, how are they mounting it on the roof using the correct mounting kit to protect the roof or using the cheapest mounting kit, as they don’t care too much if the roof leaks.

If you want to sell the house who is going to buy it? – i would not be interested if someone else ‘owned my roof’, plenty of houses out I’ll go somewhere else, buying is already complicated enough without that. Also are mortgage companies going to charge a premium because there is a tenant on the roof (buy-to-let style) cutting down the pool of people interested. Loads of questions.

I work for a solar installer, we get approached by investors who want to partner with us on this basis, while I can see the business for us (easy sell, lots of installations, money in place) I don’t see it as good/fair for the customers, cheap mounting equipment and they take no/little liability/risk on the house. until we see a deal we think is fair for everyone we don’t get involved.

I’m sure it is suitable for people – but please read and understand the small print before getting involved, make sure every base is covered. I believe these schemes can work but should be regulated for domestic properties making sure the homeowner is not inhibited.

PigzleFly says:
5 October 2011

Does anyone have a view on what the consequences are when and if one wants to sell a house with a leased-out roof and solar array?

jacksmith says:
5 October 2011

Just a comment about the lifetime of Solar systems – it is often commented that this technology is ‘new’ but it is not. Solar arrays have been used since 1958 to power the satellites we depend on daily for phones, tv, internet, gps, research and defence. They have also been used for almost as long on buildings. One of the largest solar panel installations Sharp put in at the time was to power a remote Ogami lighthouse in Japan in 1966, the first photovoltaically powered lighthouse in the world. That makes solar technology older than mobile phones, microwaves, personal computers, calculators, the internet, and any more technologies we have learned not to be afraid of. You can be sure that NASA would not send $100million satellites into deep space powered by solar panels if they did not know exactly how long the panels would last for!

Unconvinced says:
11 October 2011

My next door neighbour has just had these installed on a house identical to ours so I thought I’d do some investigating. The whole benefits of solar panels hinges on the FIT which is apparently “guaranteed” by the Government for 25 years…oh yeah? so was the state pension age. In a few years time whichever government is in power will say…”sorry we can’t afford it now so we’ll cut the FIT by 50% and so on”. Secondly those who have the systems claim they are “guaranteed” (that word again!) for 10, 20, 25 years. Who by? the installation company? They’ll probably have disappeared as soon as the current feeding frenzy for solar panels wanes. Thirdly, hardly anyone mentions the inverter, a very expensive bit of kit necessary to convert the DC voltage from the panel to AC mains. I’ve experience of these in UPS and stand-by power supplies. They are notoriously unreliable, often failing to “start” one day but fine again the next. If the inverter doesn’t start, there’s no current being fed to the mains so no FIT that day! Who will maintain these inverters? I’d estimate you’d need major repairs or replacement maybe 5-6 times over the 25 year period and at well over £2,000 a pop this isn’t cheap. I suppose if I had a spare £12k or so play with I might invest in solar panels as an experiment but for the average family there’s too much risk. I’m sure those who have just had the panels fitted will be delighted with the immediate results. I wonder how they’ll feel 5 or 10 years down the line when problems start to occur.