New 21p feed in tariffs

The UK government has reduced the Feed in Tariff for PV solar installations installed after 12th December 2011 from 43.3 pence/kWh to 21 pence/kWh. The question that immediately comes to mind is: Is it now worth installing a solar PV system? The following figures may help you answer this question.

Back in July 2010 we received a number of quotations that estimated the income from our 3.78 kWp PV system we eventually installed for £16075. The quotation estimated £1627 per annum income as follows:

By a simple calculation, this meant that we would pay back the original investment in less than 10 years.

However the actual income for the first year was significantly higher at £1955 as follows:

If this annual income continues it will pay back the original investment in just over 8 years.

On further analysis the first year was considered low, based on average sunshine figures, see: ‘Actual Generation - High or Low?‘, the average annual income should be considerably higher at £2313 as follows:

If I am correct about this link between sunshine hours and kWh our PV solar system may pay back the original investment in less than 7 years.

The original guidance for estimating the number of kWh generated in a year by a solar PV system was very conservative. In the first year our system generated 25% more than the original estimate. I now consider the first year a poor year, I expect an average year to be 50% higher than the original estimate.

At the 21 p/kWh Feed in Tariff this average annual income will come down to: £1278 as follows:

The cost of an equivalent PV solar installations have already significantly reduced. The challenge now for the PV solar industry is to reduce its costs so that a 4 kWp system can be installed for less than £12000, it may then be possible to pay off the original investment in less than 10 years.