Although summer is nearly over, now might be the best time to buy solar panels. Will you be rushing out to buy some?
A government scheme, called the Feed-in Tariff, pays owners of solar photovoltaic (PV) panels for each unit of electricity their solar system produces. The rate of the Feed-in Tariff was very generous when it was first launched in 2010, but has since been cut a few times to manage a big uptake of solar PV panels amongst householders.
Once you sign up to the Feed-in Tariff the rate is guaranteed for the next 20 years. This has meant that buying a solar PV system has been a good financial investment for many, with the initial upfront cost likely to be recuperated in about 8-12 years. The remaining years of Feed-in Tariff income are then straight profit.
Should you buy solar panels now?
Three things play a part in why now might be the best time to buy solar panels:
1. Price of solar panels have been coming down
Our survey of solar panel owning Which? members found that while they used to pay on average £11,329 for a solar system back in 2011, those who splashed out this year have paid just £6,750 on average.
2. But at the same time the rate of FiT is dropping
The government’s proposing a big cut to the payments solar panel owners get for generating their own electricity. Currently, the Feed-in Tariff pays 12.92p per kWh for any electricity generated, but the government is proposing to cut this by 87% to 1.63p from January. Those already on the Feed-in tariff though will keep the rate they signed up for.
Nothing has been confirmed yet and this proposal is going through a period of consultation but it feels that whatever the final outcome will be, it’s very likely there will be further cuts to the Feed-in Tariff rate.
3. Prices could go up by 15%
A recent EU ruling is likely to push costs of solar PV systems up by 15%. The EU concluded that the 5% VAT currently charged in the UK for energy-saving materials for housing (including insulation, as well as solar panels) violates the EU’s VAT Directive. So VAT would have to be charged at 20% on solar panels.
The government’s studying the judgement and considering its next steps, so we’ll have to see which way this one will go.
Any change as a result of the ruling wouldn’t be retrospective and wouldn’t affect anyone who had already pre-ordered or prepaid for their solar panels.
So what do you think? Should we rush to buy solar panels before January next year?