Sunday, 6 June 2010

Tax Incentives for Renewable Energy.

I have recently received a quote for a Photovoltaic system for my house (2.96KWp PV system). One of the main incentives is the 41 pence per KWh feed in tariff I will get which according to the surveyor will work out something like:
This system will produce 2222 KWh’s per annum and save 1262 kg’s of CO2 emissions annually on a 70degree off South facing roof at 23 degrees and unshaded. This system will generate an income of about £918.00 and offset £333.00 of imported electricity based on feed-in-tarrifs introduced April 2010.

Therefore with an income/benefit of £1251 pa I can expect to pay off the cost of the PV system in 9 years or a return on investment of 11%, which seems a bit ambitious when governmental figures suggests the FIT return on this investment is 5 to 8%. The Government (or the European Union) have imposed a 5% rate of VAT on renewable energy projects compared to the 17.5% standard rate saving nearly £1500 on my project as well.

The feed in tariff and the tax breaks have convinced me of the value of going for a renwable energy system...and of course we mustn't forget the 1262 Kgs of carbon emissions reduction that this project would deliver (according to the commercial supplier)

1 comment:

Jasper said...

There is also due to be an incentive for installing solar thermal panels (to provide the water heating) - the Renewable Heat Incentive. Due to start in April 2011, the RHI is taking over from the Low Carbon Buildings Programme grants, which have already been ended. But it's not entirely clear at the moment whether the Coalition Government will go ahead with the scheme (which the Labour government came up with). So people interested in clean energy from the sun have been left in limbo. However, the relevant Government Minister, Hugo Swire, did suggest recently that its implementation is being looked at as part of the wider energy policies, so all's not lost.

Remember that you will maximise your savings by insuring your home is well insulated, and perhaps by considering an energy monitor. Some SolarUK clients report that increased awareness of their energy use is in itself an incentive to use less electricity.