The drastic changes to the UK solar market in 2012, have left many people wondering if PV solar panels remain a good investment?

What do you stand to save?

Firstly, from November 2012 solar panels can cost anywhere from £4,000 to £8,000 to install. While this is a considerable sum of money for most people, it has actually fallen by about 40% this year alone and solar panels could save the average household £140 a year on electricity bills.

The energy regulator - Ofgem -has forecast standard electricity prices will rise 20% by 2020 which adds to the appeal of solar panels as solar panels offer consumers a method of being independent from the national grid or drastically reduces dependence on it.

However, in most cases the initial outlay of capital investment will not be recovered for seven to ten years.

Feed-In Tariffs

However, a government scheme, launched in April 2010, paints a much better financial picture. The scheme, known as Feed-In Tariffs (FiTS), pays sonar panels owners for the electricity they produce, even when they use it in their own home.

However, the rate at which this Feed-in Tariff pays out has fallen as the result of recent changes in policy. The scheme now offers 15.44p per unit of electricity produced and a bonus 4.5p per unit for any unused electricity which is returned to the national grid. Even at these reduced rates, approximately £850 a year can be made following this scheme. It gets even better. The UK government has promised this scheme will last at least 20 years and all payments will rise with inflation and, most importantly, be tax free.

For a complete look at the current and propose changes to FITs have a look at this table:

Of course, users who made the switch to solar a few years ago would have seen much more generous returns. But as can be seen, there is still a steady supply of revenue available at the reduced rates.

Obviously, the amount of energy you can expect to generate depends to a large degree on location; put simply, the closer to the sunny south west, the better! But taking a rough average, a 3 bedroom house in the South East of the UK, with normal electricity usage, and 2.5kw Solar PV panels could expect to earn more than £850 per annum.

In all, it is safely estimated that over 20 years a profit of up to £10,000 can be made.

Energy Saving Benefits

The UK is set to face increasingly high energy costs over the coming decades, as climate policy tightens and oil prices rise. Figures from the Department of Energy and Climate Change show electricity prices are expected to rise 40% over the next 10 years.

Energy companies are legally bound by the Government to pay out Feed in Tariffs for 20 years. This money has to be recouped from somewhere and energy companies are likely to raise their prices even more to cover these pay outs. Energy customers who do not install solar panels will effectively be subsidising those who do.

Are there any drawbacks?

Of course it cannot all be good news. While the UK government has promised to run the scheme for 20 years, subsequent governments could change the payment system so it becomes less profitable. It should also be noted that solar panel systems may come down in price as their popularity grows. This means paying £5,000 may not seem like a good deal in later years.

However, on balance with the promise of a substantial profit and savings on existing electricity bills there is little doubt solar panels are indeed a good investment for most homeowners. To learn how money you could earn from the scheme, have a look at the Energy Saving Trust Solar Energy Calculator.

To find out how much solar panels will cost to install where you live, please use the form at the top of this page or give our Eco Experts a call at: 0207 424 3132.