Solar as an investment

Currently Intrest rates are at historic lows, and returns from bonds or even equities and commodities are at low levels. So despite the capital expenditure required to et a PV system they can provide handsome returns.

So how does the Feed in Tariff (the mechanism for paying the owners of PV systems) work? Currently for every kWh (equivalent to a unit of electricity) the owner is paid by the electricity supplier a fixed sum, currently (Jult 2013) this is 14.9p. On top of that an additional 4.5p is paid for exporting the electricity to the grid if it is not used in your property. Also electricity generated by the PV system can be used in the home or business and therefore reduces the amount of energy taken from the grid, reducing your bills.
Feed in tariff contracts are for 20 years and the earnings from them are tax free. It is also a fact of life that electricity bills continue to rise, fortunately this makes the savings from PV generated electrcity even more valuable.

A 4kW system on a domestic property that is large, detached, south/south west or south east facing and unshaded (approx £5,000 to install) could provide a combined feed in tariff income and saving on your electricity bills of around £850 each year. This is a simple return on your investment of over 16%, paying for itself in just 6 years and providing income for a further 14 years.

For larger systems the returns on investment can be even more attractive, in excess of 20% with similar tax free 20 year contracts.