Solar photovoltaics ROI now up to 12.5%

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People seem to have been put off solar PV by all the media hype about the reductions to the feed-in tariffs, but the irony is that, despite the fiasco, returns are now just as good (if not better!) than they were at this time last year.

The four major solar trade associations have today come together for the first time to try and counteract the negative press and explain the current opportunities, which are significant. Where else can you get 12% return on your money, TAX free with the added benefit of saving CO2?

Last year, in 2011, the feed-in tariff was 43.3p per unit. It was the year when everyone started talking about solar, and PV systems were hailed as a smart new alternative to investing in banks and building societies.

Fast forward one year, and the feed-in tariff has fallen to 21p after a lengthy and confusing court case. Media interest has waned and news stories have mainly taken a negative slant, focusing on government's mishandling of the tariff change and the resulting challenges for industry.

But the fact is, solar PV is still just as wise an investment now as it ever was. Evo Energy recently released the figures below, which explain how the different rates compare. Because of the huge drop in the price of a domestic PV system the return on investment (ROI) is better than ever and with energy prices increasing steadily, it's a great time to invest.

This is Money reports that "Tesco Home Efficiency has cut 20 per cent off it solar panels and says that a 3.92KWp system would cost £6,799 – Energy Saving Trust projections give an annual total return of £851 for this larger system, delivering a potential tax-free return of 12.5%".

The feed-in tariff will fall again in July, so there are now only nine weeks to get your quote, arrange a site survey and schedule your installation. Be quick, and you could benefit from returns of up to 12.5%

----- Additional Note 28 May 2012 ------
The feed-in tariff for solar photovoltaic panels fitted to existing homes will be cut by about a quarter, from 21p per kWh to 16p, and the length of payments reduced from 25 to 20 years. However, the Department of Energy and Climate Change said financial returns would still be around 6% for homeowners, down from the 7-10% when the scheme launched in 2010, as panel costs have fallen.

The changes take effect on 1 August, one month later than planned, after the government missed a legal deadline for making the changes on 1 July. Future tariff rates will also be assessed every three months and automatically cut or held depending on the number of panels installed in the last quarter, the government said.