/ Home & Energy

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

Hi
My understanding of FIT is linked to targets our government have made to reduce CO2 emissions. If we don’t meet these targets penalties would be incurred. Just compare this: industry (our largest electricity user) pay around 6-10 pence per KWH, we can get paid 43 pence per KWH through FIT! That alone must say the cash is coming from else where other than the energy getting sold. Back to my understanding, we are getting money that, if targets are not met would get paid as penalties and I’m sure the penalties are far higher than what you could get paid through FIT. Though FIT will reduce as the years pass. Even if FIT just paid for the installation you’d benefit from free electricity, yes I know only during day light hours.
I’m not sure how the guarantee works, no doubt through an insurance, well that is what I would demand to cover me in the event a company folds, is that how new houses are covered, by 10 years or more.
Back to industry with the inverters. Inverters have been used for many many years. They are very reliable and as most electronic devices are being improved on all the time. The inverter should last 10 years, yes it will have to be replaced, though no-doubt with a more efficient and cheaper unit.
I live on the north kent coast in sight of wind turbine farms, pretty they are not! Within the last 3 weeks I’ve come across solar panels in fields. Not seeing them until I was about 3 yards away.
I agree there are concerns that need to be addressed for some, before they have them fitted, but I do believe solar panels are the way to go, well until The Large Hadron Collider comes up with a better solution!

jacksmith says:
11 October 2011

The FIT tarriff is secure from changes in government policy because it is not paid for by the government, it is paid by your energy supplier. The government passed a law requiring the suppliers to pay you a fixed fee for the FIT energy and allowing them to charge the rest of their customers more to raise the money. Therefore it follows that if you do not have a solar array on your roof which is giving you FIT income, you are paying for someone else to!
The 25 year guarantees on the panels are from the manufacturers and are based on accelerated ageing tests. If you buy from a company like Sharp you should be pretty safe with them still being around in 25 years time. The inverters are possibly less reliable, however extended guarantees are available – Fronius for example are currently offering twenty year warrantiies, (ten years free if you buy ten).. However Frank is right in that the inverter on a domestic system cots about £800 to £1500 and that will probably go down (and the efficiency increase) with time as the technology improves, so it may just be better to budget for a new one in 10-15 years,

Smiffy says:
14 October 2011

Thank you for this article. It and the comments have been very useful. The homesun salesman is coming this week and I am still undecided. I believe we are simply being used by a company to make them a lot of money and we are being given the sweetener of reduce costs when they are reaping the benefits. We have a south facing roof and plenty of income generating space. Still thinking what to do.

Smiffy,
Think very carefully and ask plenty of questions, perhaps based on the comments above.
Also check very carefully the credibility of any guarentee offered, non existent companies seldom pay out, so liability ideally needs to be lodged with a third party.
My view is Solar PV works, in many cases very well, but the deals on offer although not necessarily bad deals will not be as good as the sales person tells you.
My own biggest concern is that about £12,000 of my money would be “locked in” for the duration. If the whole enterprize goes sour there is no get out, short of selling up and moving, if you can.
I think it’s a case of “be fully aware of just what you’re getting into” benefits, short comings and all.

Recently had a visit from a company called Solar Energy Savings Ltd. offering a variation on the ‘Free Solar Panel’ systems. They are not REAL and not MCS registered although they indicated they employ companies who are. They operate in conjunction with a company called 360 Degree Money which ‘provide a marketing system designed to help businesses reward consumers with a free cash reward valid from 31 days after purchase and up to 7 years’.

Basically Solar Energy Savings will install a system of 20 panels for £20000. You get the FIT + export tariff + savings on energy usage guaranteed for 25 years. After 7 years 360 Degree Money will give you your £20000 back. The company brochure indicates they are based in Manchester (Global House, Bailey Lane) with offices in Aberdeen, Perth, Glasgow, York, Leeds, Birmingham etc.

Sounds too good to be true! Has anybody heard of them and are they legit?

Ianp,
Yep, sounds too good to be true to me too, and you know what they say about a deal that sounds too good to be true. It usually is.
I can’t quite see how the business case works for them, but perhaps there are elements of this deal you’ve not included.
I’m thinking, is some of the £20k you get back made up of 7 years feed in tariff receipts? even then I can’t see how it works for them.
Also what are the chances of there being anyone around to give you back your money in 7 years?
Sounds a bit like a company that gets loads of money in then files for bankruptcy only to restart in another name a week later and start the cycle all over.
If I were you I’d check this lot out very very carefully.

marc says:
9 January 2012

Hi Ian P

Did you ever use Solar Energy Savings? If so how was your experience of them?

Would be really interested to chat to you about it…

mart says:
17 October 2011

Prices of solar panels has drpped and there has never been a better time to invest. The payback time is 7 years. If you can afford it, than you should buy your own. Companies would not be offering solar panels installations if they coulkd not get the money back in 5-7 years. After that they will get payments for the balance of 25 years. Speak to good MCS installers and customers who have had them fitted http://www.exploresolar.co.uk

Richard Corso says:
22 October 2011

No alternative power system be it wind or solar has a return on investment over 7 years that’s a fact. Many of these huge 600 feet 5 Mega Watt installed capacity Wind Turbines never pay back their investment cost over 25 years so a piddling group of PV Cells on a residential roof top will never show a return on investment if it was not for the subsidy (the FIT) that currently exists. Future Governments may remove the FIT so what happens then – does the company who installed them remove them? – Work checking out the legal package before jumping into bed with what some have called Cowboy operators. Lets hope that if the FIT is removed that the PV suppliers do not look to you to pay the difference!

jacksmith says:
18 October 2011

Just a thought for those worried about investing in a solar array now, then selling your home before you have the money back. The Feed-in-tariff you get from your energy suppler is guaranteed in law for 25 years at the rate when you apply, and index linked. The government has indicated that the feed in tariff for new systems is likely to go down by 8 percent or so each year and in a few years withdrawn (as it has been in Germany) for any new applicants. Therefore if you have a system locked into the highest feed in tariff available (probably this year’s tariff) you have quite a valuable asset to sell and one which is probably unavailable to anyone else who does not already have it.
Of course that does not apply to rent-a-roof schemes, only to purchased systems.

Roy Kimber says:
19 October 2011

I’m currently considering a ‘rent the roof’ scheme from a company that’s done two other houses in the street. No money to pay, they cover the installation and upkeep of the panels, and also insurance for the system (and the contract holds them liable for any damage caused due to installing and maintaining the system – so no worries about having to fork out for ‘leaky roofs’!)
They take the profit for the Feed-in (obviously), but we get the electricity, and as two thirds of our energy bills our currently down to electricity that sounds fine to me!
As to selling – the catch is that any buyer has to agree to have the lease signed over the them, and they can’t remove the panels until the 25 years is up – but as they’ll be benefiting from the free electricity, and currently energy prices just seem to be going up, then I think we’re going to go for it (also, we have the right to buy the system within the first 10 years if we want to, which we may consider should we come into some unexpected cash).
I appreciate that it would be more profitable in the long term to buy the system outright and benefit from the (surprisingly high) FIT, as well as the free electricity, but like many in this country not lucky enough to have £15k sitting around spare, unwilling to take a loan, and currently undergoing a ‘pay freeze’ (which in this economy is the same as a pay cut, since everything BUT pay seems to be going up) I can’t even consider that as a viable option at the moment, so as I’m lucky enough to have a totally south-facing roof, I’ll take the free electricity, thanks very much!

AH - Poole says:
28 October 2011

I am considering rent-a-roof. Not looked into it too much, but can’t help thinking the technology is still quite new. The supplier would surely want to maximise the power from my roof, so if the technology improves, they will presumably replace the panels, whilst those who purchased a system will be waiting for them to payback before replacing.
Maybe newer panels will generate power with less light, so rent-a-roof customers would get power as light fails into the evening or earlier int he morning. Alternatively UPSs/household batteries may become cheaper/commonplace. 25 years is a long time and technology is sure to advance in this area as it is such a hot topic.
Comments?

Jill says:
2 November 2011

I cannot find any information about the cost of maintaining these systems. 25 years is a long time what are the complications if I move house?

gregg says:
3 November 2011

is the 360 money a good idea ?

Now here is a twist or sting in the tail!

Ashford Borough Council have announced
“been forced to pull out of a £1million solar panel scheme for its buildings after the Government proposed to slash subsidies for solar electricity production.”
The article continues
“According to the government, reduced subsidies for domestic solar electricity production have been proposed as part of an urgent effort to keep the Feed-in Tariffs (FITs) scheme budget under control and reflect the plummeting costs of the technology.

The proposals, subject to consultation, would introduce a new tariff for schemes up to 4kW in size of 21p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW, to ensure those schemes receive a consistent rate of return.”

Full article at http://www.kentnews.co.uk/news/ashford_pulls_the_plug_on_1m_solar_panel_project_1_1126417

PeterM says:
28 January 2012

Have had a visit from Solar Energy Savings today. Representative had very superficial view of the technical aspects and the actual cost/saving relationship. Most of the sales pitch directed at the 360 offer (for those of you this company – they give you your entire outlay back after a given number of years – 5 if we signed up immediately. You get all the FITs) – Too good to be true – that always sounds warning bells. They claim that all money invested is insured through a Swiss underwriter. I smell a company that is basically a finance speculator using solar energy sales to make the operation look acceptable. Why would a company give all the money back??? Something smells.

My roof has been surveyed and approved for 15 solar panels, however, on reading the Lease it says they are renting the “airspace above the roof” only and not the roof itself. I rang them and asked what would happen if, say, a tile came off my roof under the panels, who would be responsible for the cost of removing the panels to have the repair carried out. I was told twice that I would only have to pay in the event of “deliberate damage” cased to the roof and not for a tile coming off in a storm. I wasn’t satisfied with that as nowhere in the Lease did it say anything about deliberate damage. After two weeks I eventually managed to speak to someone in their legal department. After pressing him, it would appear that ANY repair to the roof under the panels would result in me having to pay for the cost of removing and replacing the panels. When I asked how much that would cost he said somewhere in the region of £800.00 plus the loss of electricity whilst the panels were off! Beware and read your Lease carefully!

Pam,
Your experience confirms what I always suspected.
Free solar PV is a deal that is clearly not as good as it seems.
All you get is a modest saving on your electricity bill (not really much for renting out your roof) and the “ECO Bling” while they get all the FiT cash.
I think it’s a real cheek to also charge for loss of generation while they carry out repairs you have to pay for, but which you didn’t cause.

Like you said read the small print, then don’t do it.

James says:
1 March 2012

…well it confirms what I always thought after reading all of the above comments, if something is to good to be true it usually is. I`m going to sit on the fence a bit longer to see what happens i this industry before I commit to any solar investments.

Roy Kimber says:
4 March 2012

Since my previous comment last year, we decided not to go with the ‘Rent a Roof’ scheme after all. We were in a position to do it, and had an appointment for a company rep to come round to collect our contract, when the government announced that in just a few weeks they’d be slashing the FIT in half (from 43p to about 21pm I believe?)

Reasoning that if they did our house within the next couple of weeks then the company would make twice what they would if they installed the system after the price cut, I called them up, and said that we would go ahead with the installation, but only if they agreed to give us the money that the electricity company paid for any electricity not used by us and fed back to the grid (ie: so we’d benefit from ALL the electricity generated, either by using it, or by getting cash for it). I worked out that this amount – paid at something like 3p per unit – would only come to about £50 to £60, and the company would still be raking in about £3500 from the use of our roof if they agreed to my terms, compared to half that once the deadline for new installations had passed.

The company responded that they would not agree to this, because ‘they had lots of costs, like insuring the system’. So basically, they weren’t prepared for ANY of the money generated by the system to come to us.

That decision, coupled with the clause about us having to pay for the system to be removed if the roof ever needed repairing (anywhere up to £1000) AND having to pay them for any hours they lost out on the FIT while repairs were taking place, together with the relatively meager amount of cash we’d be saving (plus we’d have to change how we lived, effectively – not doing our washing, etc whenever was most convenient, but running the machine at the time when there was the most sun!) led us to realise that this really was NOT a good deal for the consumer. As their salesman had (surprisingly honestly) put it ‘they need our roof, more than we need them’! I’ve not gone ahead with it, and am SO glad that we didn’t. Almost everyone I speak to about house buying/selling since then has told me that they’d be loath to buy one which involved having to take on a solar panel contract, and recently we’ve had some very high winds. I remember sitting inside, listening to the winds rattle the windows, and feeling VERY relieved that I didn’t have to worry about a roof tile falling off… or at least if I did, I only had to worry about getting it fixed, not paying a company a ton of cash to move their panels in order to do so! ;O)

JDM says:
7 March 2012

It’s difficult to understand why people don’t go for the ‘rent a roof’ scheme. It cost you nothing at all, you get free electric during daylight (use your dishwasher and laundry items etc on a timer if at work) but just pay for what you would use in darkness hours anyway. The installer has laid out for the costs and future repairs and in return gets the FiT you don’t use. Jeeez, the Brits do like to whine about everything. I’m ashamed to be one!

Well JDM it’s your roof and your choice, so if you want to go for it, go for it.
Anyone else tempted I’d advise to think carefully and weigh up the advantages and disadvantages.
The only advantage I can see is free electricity when the sun shines. Trouble is that’s the very time you won’t be needing much, and even if you make a point of running appliances during the day I doubt you’ll save much more than £15 per month, perhaps £20 tops.
Now the disadvantages, and there are plenty. One commenter has already mentioned charges to remove panels if roof repaires are needed, plus compensation to the installer for loss of FiT. Then there is house saleability, some people hate the things and even people who like them might think twice about buying a place with a “sub-let” contract in place.

All in all a summary of the deal amounts to you letting your roof space for about £15 per month and still being liable for roof repairs, and having to pay for solar array removal to carry out roof repairs, and being responsible for continued FiT for the installer while any roof repairs are being done, and all for a 25 year locked in contract period.
Like I said JDM if you think that a good deal go for it. Myself I think I’ll pass.

If you’re really keen on Solar PV buy them outright, but even then don’t expect the 25 year working life expectancy to really be much better than leaving your £10k or so in a good savings account, money you could get at anytime. Interest rates won’t always be as low as they are now. But to be fair I think the purchased Solar PV route will actually return a little more over 25 years (but not much more) and is fine if you’re happy to be in a “locked in” deal.

Roy Kimber says:
7 March 2012

Very constructive comments in that last post there! Clearly the whole concept of discussing pros and cons of something has passed you by JDM – you’re right, why bother thinking about something which is after all only a 25-year commitment, could potentially reduce the value of your home or make it even more difficult to sell in a housing market which is – at best – unpredictable and may (if repairs to your roof are required) actually end up costing you money, all for – at most – savings of less than £20 per month on your electricity bills?
No, you’re right, we should just jump on that ‘awesome deal’ without a second thought! Got an interest in a Solar Panel company have we JDM? Oh, and if you’re really ‘a Brit’ (which I seriously doubt based on your language) then I suspect you’re an ex-pat. If you don’t like ‘whinging’ as you put it, then why on earth were you reading a discussion forum in the first place? If all you want to read is people evangelising Rent-the-roof schemes then go and look at any of the Solar Panel fitter websites where there are glowing testimonials galore and absolutely NO doubts or suggestions of negative aspects to the schemes whatsoever – I’m sure some of those testimonials might ever be from real people too!

Dov F says:
26 March 2012

[Hello Dov F, we have had to remove your comment due to potentially libellious comments. We will however try to look into the company mentioned. Thanks, mods.]

Roy Kimber says:
27 March 2012

With regards to Dov F’s (now deleted) comments – I can’t speak to the specific company he was talking about, but whenever you’re paying ANY companies for a product or a service, be wary of anyone who charges up front.

Most reputable companies should be willing to do the work first – then bill you when it’s completed, particularly for anything relating to your house, as – clearly – they know where you live, so will easily be able to take legal action if you don’t pay!

There ARE unscrupulous business people out there who are setting up companies, offering a service (online and via direct mail) taking money from customers for products, services and offers of finance, and then simply not supplying anything, refusing to reply to any further queries with regards to whatever was offered, or to getting the money back. After a few months, they then wind the company up, and simply set up another near-identical company with a different name.

These businesses are very difficult to prosecute, because often many of their company officers are dupes, or even fictional, and it’s extremely difficult to get your money back from them once they’ve got it.

I speak as a police officer currently looking into five companies (so far) which were all set up – one after the other – by a specific individual, and which have scammed people out of large sums of money in a fraudulent loans scheme. I’ve NOT come across a fraudulent Solar Panels company yet, but with so many of them out there, and so much money in the market, the Solar industry certainly would make an attractive playground for a fraudster!

If you’re going to give ANY person or company cash up front for something, particularly one that does its business online, then make sure you check up on that company first, and if you DO get scammed by someone, then start by speaking to Trading Standards, and then consider reporting it to the police as a fraud. This may sound obvious, but I’ve already come across people who lost thousands of pounds to scam artists, reported it to Trading Standards, but who never bothered to inform the police!

jacksmith says:
27 March 2012

Well, I would like to declare an interest here as I am from a nationwide electrical installer who both installs for rent-a-roof schemes and installs directly for paying customers.Both schemes work and I am sure have many satisfied customrs. I do not have solar panels myself as I live in a rented property, but personally if were a homeowner and I had any savings at all I would buy a system outright. Here’s why: I would make about the same income from the FIT from two panels (500w) on my shed roof as from the energy saving from twelve ‘free’ panels (3kW) on my house. In the end though there is never much return if you don’t have a stake to invest.

cpauls says:
5 May 2012

Very interested in Jacksmith’s comment here about making the
same amount of energy with two purchased panels as with 12 free ones. How much would it cost to buy and install two panels, anyone have an idea?