Consumer interest in renewable energy is growing, but this year has brought major changes to the way people are paid for generating energy using solar power. The modifications are likely to impact those considering installing solar panels, but is it still worth getting solar in 2020?
This guide will explore the benefits of solar energy and provide an insight into new tariffs and what they mean for potential customers and owners of existing solar PV systems. If you’re thinking about switching to solar, here’s everything you need to know before you make a decision.
A Brief Introduction To Solar
Solar power is an increasingly popular option, as consumers look for greener ways to run their households. Solar panels utilise photovoltaic energy to convert sunlight into power. In the vast majority of cases, these panels are fitted to the roof.
One question that often pops up when people are considering investing in solar power is whether it’s worth doing this in the UK, a country famed for its unpredictable and unreliable weather. We Brits spend hours talking about the fact that we never seem to get a decent summer and bemoaning the necessity to dress for four seasons in a day. We tend to think of solar panels basking in fields and sparkling on the roofs of homes in California or Arizona, rather than in chillier climes back home. The reality is that solar panels don’t need to be exposed to continual sunlight to generate sufficient power. Even on an overcast day, they can produce energy.
Another concern for homeowners and business managers exploring the possibility of switching to solar energy is the cost. Most of us work to a budget, and it’s always wise to weigh up the financial pros and cons before taking the plunge. Installation costs have fallen dramatically in the UK in the last decade, but tariffs are changing, so it’s advisable to gather all the information possible to help you decide whether solar energy makes financial sense for you. This guide will cover the ins and outs of the new tariff system, and provide information about the potential cost savings offered by solar power.
What Is The Solar Grid Trade Scheme?
If you’re researching solar at the moment, there’s a good chance that you’ve come across news headlines or features that talk about a new tariff system. The solar panel grid trade scheme is a means of paying customers for the energy they generate via solar PV systems.
While research suggests that up to 90% of consumers are happy with their solar installations, many have expressed frustration at the inability to benefit from excess energy that is produced, but not used. It is very unlikely that a homeowner would ever use all the energy generated by their system, so what happens to the energy in reserve? To utilise resources more effectively, the government has created a new system for grid trade solar energy. This new scheme replaced the Feed-in-Tariff strategy and is an element of the Smart Export Guarantee or SEG. Under new guidelines issued by the government, all energy companies that provide resources to more than 150,000 customers must agree to buy excess renewable energy, for example, wind and solar power, from customers who have these systems at home. The new recommendations mean that all the big energy companies are obliged to pay customers for the excess energy they produce.
How Is The New Scheme Different To Feed-in-Tariffs?
The Government’s Feed-in-Tariff was launched as an incentive to encourage consumers to invest in sustainable energy. It was available to customers until March 2019, but those who were already benefiting from the scheme will continue to do so. As part of the new SEG, which has replaced FiT, all energy companies that supply more than 150,000 customers will be required to provide an SEG tariff by 1st January 2020. Unlike the FiT tariff, the SEG price will be decided by the individual energy supplier, rather than Ofgem. Some energy companies are already offering an SEG tariff, and once others follow suit, customers will be able to compare prices and find deals that suit them.
Under the previous regime, export payments were capped at 50% of the energy generated by the system. The amount of energy exported back to the grid was not formally measured, meaning that every household receives a similar payment, regardless of the amount they actually export. The SEG is different because it calculates payments based on measurements. Unlike with FiT, there are no long-term fixed-rate contracts. Customers will be able to shop around and opt for a variable rate or a short-term fixed-rate, which represents the current market value of energy. While the FiT comprised two tariffs, a generation and an export payment, the SEG will focus solely on exports. This might mean that it takes longer for consumers to see a return on their investment, but it could potentially be more lucrative. Under the FiT, the export rate was set at 5.38p/kWh.
How Does The Solar Grid Trade Scheme Work?
There are several components involved in the process of generating solar energy and exporting it back to the grid via the solar grid trade scheme. These include:
- Solar panels (usually fitted on the roof)
- Battery, battery storage and a solar power hub
- Solar energy generated by the home system, as well as a supply from the grid
Once you’re creating energy, you can then store it ready to sell back to the grid and benefit from bill credits, which reduce the cost of electricity.
To get the best out of your system, it pays to explore different components and products carefully before buying. Investing in high-quality batteries and autonomous solar hubs can improve performance and efficiency at the same time as ensuring you get the best exchange rates.
What happens if I already have solar panels?
If you already have solar panels, and you have been receiving payments through the FiT, the new scheme will not apply to you now, and you can continue to claim payments for the next 20-25 years.
What Are The Advantages Of Getting Solar In 2020?
The most common reason people consider investing in solar panels is to save money on energy bills. With new tariffs coming into play and changes afoot in the world of solar trading, it’s crucial to explore the benefits available to customers in 2020. The guidelines set out the process of selling energy back to the grid, but what does that actually mean for customers? At the moment, there is a degree of uncertainty when it comes to calculating how much money households could save or make by buying into solar energy, due to the fact that some companies haven’t released their SEG rates yet. Long-term contracts and fixed rates have also been replaced, so it’s slightly more difficult to calculate savings over a period of time. Nevertheless, there are several advantages of getting solar in 2020, including:
Did you know that the average homeowner only uses around 27% of the energy they generate? This means that over 70% could be exported, rather than wasted. With new guidelines in place and the relevant technology and equipment (batteries and solar hubs), it’s now possible for homeowners to reap the financial rewards of selling energy back to the grid. By using a smart battery, you can also make use of the energy you have stored on days when your solar panels don’t generate as much power due to the weather. Most of us use less energy when it’s hot and sunny, so it makes sense to be able to draw on reserves when it’s grey and miserable, and your electricity consumption increases.
Another consideration when it comes to financial gains is the fluctuations in prices, which are dictated by changes in the market and peak and off-peak periods. If you’re able to store the energy you produce, you can export at a time when prices are high, boosting your revenue. By storing energy, you can also access reserves at peak times, meaning that you don’t have to rely on the grid to supply your home at a time when prices are at their highest.
The average homeowner is expected to save around £80 per year through selling energy back to the grid, but most significantly, being able to access your own stores throughout the year will boost savings up to an average of £400 per year.
Investing in solar panels may also make financial sense for homeowners looking to increase the value of their homes. While solar panels will not appeal to every buyer, more and more people are taking an interest in renewable energy sources, and the potential return on investment may make your home more attractive to buyers looking to do their bit for the planet and cut bills at the same time.
It’s also worth thinking about the future of non-renewable energy. According to the Office for National Statistics, the average energy bill increases by over 6.9% per year. This is a substantial rise, which means that in 15 years time, the cost will be more than 2.7 times higher than it is now. Investing in solar PV is a means of saving money now, but also in the future. Using solar panels not only enables you to produce energy, which you can export back to the grid, but it also reduces the amount of energy you use from the grid. This could save you hundreds of pounds every year.
Running costs are also significantly lower with solar energy. Once you’ve paid for installation, you won’t have to worry about spending hundreds, or even thousands of pounds, to keep your system in good working order.
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Environmental impact
Thanks to ground-breaking documentaries and the media spotlight, we are more conscious of the environment than ever before. Most people are actively trying to make changes to their lifestyles in order to protect the planet, and reducing energy consumption at home is an excellent place to start. Investing in solar energy reduces dependency on sources of electricity that are not renewable, and this is even more pertinent at a time when it’s possible to sell excess energy back to the grid. Many people are trying to reduce their individual carbon footprint, and switching to renewable is a change that can be made alongside a raft of others, including driving electric or hybrid cars, walking or cycling to work, and recycling plastic, paper, and glass. It’s also possible to use the solar energy you generate to facilitate more eco-friendly ways of living. You could use the electricity to charge an electric car, for example.
Buying solar panels now represents a positive step forward that will benefit you in the next few months, as well as the next few decades. Greener energy is the future, and the sooner you get on board, the sooner you can start enjoying the benefits.
There has already been a shift in societal attitudes, but solar panels are not yet the norm. By buying into solar in 2020, you’ll be doing your bit for the environment, but you could also play an important role in influencing and inspiring others. The more people embrace solar energy, the more likely the trend is to continue gathering pace.
Can Businesses Benefit From The New Grid Trade Scheme?
The new solar panel grid trade scheme was introduced to benefit homeowners primarily, but businesses can also take advantage of this new system. Companies can enjoy the financial and environmental benefits of investing in solar energy, but they can also boost their brand image and lower their carbon footprint.
While buying solar panels could help to lower energy bills, businesses can also utilise their dedication to greener ways of operating as a PR exercise. Many consumers are actively looking for products and services offered by companies with eco-friendly policies, and being seen to be green is hugely positive. Switching to solar demonstrates a commitment to the environment, which could make your business more appealing to buyers than your competitors.
Another advantage of solar energy for businesses is easy, hassle-free maintenance. Once the system has been installed, company owners don’t have to devote time and money to maintaining it, which is another factor that lowers running costs.
How Much Does It Cost To Go Solar In 2020?
For most people who are toying with the idea of investing in solar panels, the numbers are a priority. If you’re thinking of installing solar PV, you probably want to know exactly how much it’s going to cost, how much you’re going to save, and how long it is going to take you to see a return on your investment. With tariffs changing, you might be wondering whether now is the best time to make a change.
The cost of installation and buying solar panels has fallen significantly and taking lifetime maintenance costs into consideration, you can probably expect to pay around £8,000 for the system. The average 4kWp solar system, which comprises around 13-16 individual panels, will generate approximately 3,500kWh per year, which equates to almost 90,000 kWh over a lifetime taking minor deceleration over time into account. Without export payments, this represents a price of 9p/kWh. This is significantly cheaper than standard tariffs charged by energy suppliers, especially during peak hours.
To benefit from the grid trade system and lower your bills, it makes sense to focus on using the energy you produce and storing the excess. Export rates are estimated at around 5p/kWh, but tariffs will vary according to the individual supplier. While exporting can generate money, most homeowners will benefit from saving money on electricity provided by the grid, and this is where the difference will be felt.
How much energy does a solar panel produce?
If you’re looking out of the window and the skies are grey, or you’ve recently been caught in a sudden downpour even though it’s the height of summer, you may be thinking that solar power isn’t a viable option in the UK. While it is true that exposure to sunlight can affect the amount of energy generated, you don’t need searing heat and bright sunshine to power your home. The output of a solar panel will depend on the location and the technology used within the system, but typically, in the UK, you can expect a yield of 700-900kWh per year per kilowatt of PV. This means that the average 3.5kW system (south-facing) will produce approximately 3,000kWh per year.
Maximising the benefits of solar in 2020
Solar energy offers a host of benefits, but there are steps you can take to ensure you get the most out of your system. These include:
- Choosing the best location: when you’re buying a house, it’s very common for estate agents to use a south-facing garden as a major selling point. Just as the location of the garden matters to homeowners wanting to while away hours in the sunshine, the position of the house can also impact solar panel output. South-facing panels will enjoy prolonged exposure to sunlight, increasing productivity.
- Battery storage: battery storage offers the opportunity to generate and store energy, which gives you access to supplies whenever you need them. With a store in place, you can reduce reliance on the grid, access supplies at times when you would usually be paying peak prices, and create a reserve to draw on when the weather is poor.
- Energy usage: swapping to solar may encourage you to make changes to the way you use energy. When you use electricity from the grid, it’s common to increase consumption during the mornings and evenings when prices tend to be higher. With a solar system, it often makes sense to utilise appliances during the daytime hours. You can modify your usage according to your needs and the tariffs you pay.
Conclusion: is it worth getting solar in 2020?
Yes. It is definitely worth going solar in 2020!
There’s a huge amount of media attention on renewable energy at the moment due to changes in tariffs and incentives and a growing interest in greener living. If you’re thinking about installing solar panels, there are several key factors to consider.
For many households, saving money is the main reason to think about investing in solar panels. The government’s FiT scheme has now been replaced with the SEG, and this will impact customers who are on the verge of switching to solar. If you already have solar panels, the change will not affect you for the next 20 years, and you’ll continue to receive payments under the terms of the FiT agreement. If you don’t already have a solar PV system, you should focus on the financial ins and outs of the SEG scheme. Energy companies that supply more than 150,000 customers will be required to provide an SEG tariff by 2020, but at the moment, not every supplier has specified a rate. This means that it’s difficult for consumers to get an idea of the level export rates will be set at, but also that it’s virtually impossible to compare prices and choose the best provider. By 1st January, it will be clear to see which deal is best based on the fixed and variable rates specified by the main energy companies.
Despite the uncertainty created by the transition period, there is a whole host of reasons to consider solar energy. Producing and storing energy through renewable resources will save you money in the long-run and reduce your carbon footprint. While you might not generate a huge income from exporting excess energy, the fact that you can use stores will reduce the amount of electricity you take from the grid, dramatically lowering your energy bills. It may take some time to recoup your money, but if you’re prepared to focus on the long-term, installing a solar system at home could save you thousands of pounds in a lifetime. At a time when saving the planet has become a pressing task for all, investing in solar will also have untold environmental benefits. As solar panels become more popular, you might also find that going green makes your home more valuable in the future.
Go solar in 2020 today!
