UPDATE: The Feed-In Tariff is now closed for new applications. To find out about the new scheme designed to replace it, click here.
There are now over half a million properties in the UK with solar panels on the roof. While many households have chosen to invest in solar panels to benefit from both the Feed-in Tariff and the free electricity produced, others have had them installed by companies offering ‘free solar panels’.
Free solar panels were popular almost the minute the Feed-in Tariff was launched. You can learn more about the Feed-in Tariff by clicking here, but basically it was a payment made by the Government for producing electricity with solar panels. Initially the FiT was extremely generous, with each unit of electricity produced by the solar panels being worth approximately 43 pence. Compare this to buying a unit of electricity from the grid; you pay about 10 – 12 pence at the moment.
The reason for the generosity of the Feed-in Tariff was to help people cover the installation costs of the solar panels on their roof. When first launched, the FiT was paid for the first 25 years of operation, so for 25 years the household would receive 43 pence for every unit of electricity produced by the solar system on their roof. This made the payback extremely quick (just 6-8 years in most cases) – and then the household would still benefit from the free electricity and continued payments.
As time went on, the Feed-in Tariff was cut. The first big cut was on the 3rd March 2011, when the FiT was cut from 43 pence down to 21 pence – still generous, especially when you take in to account the cost of getting solar panels installed on your property had all but halved in that time! Since then, the FiT has continued to decrease (it is now just 4.03 pence per kWh of electricity produced – so roughly a tenth of what it was just 5 years ago), but certainly when the levels of payment were higher there were a huge number of companies out there offering free solar panels.
Why did companies offer free solar panels?
The offer from these companies was pretty simple – homeowners made use of the free electricity the panels generated and the installers took the Feed-in Tariff payments. Loads of people snapped up this arrangement – A Shade Greener, one of the biggest companies offering free solar panels, installed over 67,000 solar systems!
Obviously for solar installers to offer the free solar panels, there were a few conditions to be met – the most important thing was that the solar panels were always producing electricity (when the sun was shining). For example, if the household needed to remove the panels for a period to do repairs, they would have to compensate the company for any loss of FIT income. There was a benefit though; since the install companies wanted panels to keep producing electricity, – if any issues occurred with the panels (i.e. inverter blowing), then they would act very quickly to get the system back up and running.
Why might someone want to remove free panels?
The contracts tend to last for the full term of the Feed-in tariff and so if the homeowner is looking to sell the property during the term of the FiT, the potential buyers (and banks offering mortgages) need to be happy with the arrangement since they would need to keep the panels in place on the roof.
We are sure this is going to become a more and more common situation, especially since the terms of the Feed-in contract were quite so long (25 years originally, although now just 20 years). In fact, it was a few years ago that the Council of Mortgage Lenders (CML) and RICS (Royal Institute of Chartered Surveyors) issued warnings that people could face problems when selling their home when free solar panels were installed.
Likewise, issues could also rear their heads when homeowners are looking to re-mortgage their properties, with some mortgage providers running miles when the term ‘solar lease’ is mentioned.
Just this week, we have had an email from a son whose mother has sadly just passed away – he is having real problems selling her property due the presence of the free solar panels, but as per the original signed contract the panels can’t be removed.
The only real solution is to find a buyer who is willing to take on the contract, or pay the install company to get out of the contract. Not quite the ‘free electricity’ deal that was signed up to originally.
Do you have free solar panels? How have they worked for you? Would you recommend this scheme to friends – let us know your thoughts below!